Amazon is placing a 5% “fuel and inflation surcharge” on products sold through the platform, as inflation continues to rise.
The online shopping giant announced that it was adding the surcharge Wednesday. It also posted a message on its Seller Central website detailing a sample fee schedule. The surcharge will be implemented on April 28, and will affect all products from sellers whose inventory Amazon warehouses, packs, and delivers through its fulfillment service. The fee is also subject to change.
“In 2022, we expected a return to normalcy as Covid-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” Amazon said in an email to sellers, via CNN Business. “It is unclear if these inflationary costs will go up or down, or for how long they will persist.”
“Like many, we have experienced significant cost increases and absorbed them, wherever possible, to reduce the impact on our selling partners,” Amazon added. “When we did increase fees, we were focused on addressing permanent costs and ensuring our fees were competitive with those charged by other service providers.”
The New York Times reported that Amazon had previously announced fee increases in November that were scheduled to take effect in January, but the company said in its email that those fees were not enough. Amazon said further that fuel surcharges are a “mechanism broadly used across supply chain providers.” Other shipping companies like FedEx and UPS have fuel surcharges that are tied to fuel price indexes.
Amazon CEO Andy Jassy defended the decision in a CNBC interview, saying that supply chain challenges and inflationary pressures, which he blamed on the Russian invasion of Ukraine, were the key factors that influenced the decision. “The last thing we ever want to do is have to raise costs for our sellers,” Jassy told CNBC. “Sellers for us are so important and so critical to the business, and in the early part of the pandemic … right or wrong we just absorbed all those costs for sellers, in part because we thought some of those would attenuate as we got to the beginning of this year and some of the impacts of COVID changed. But with the war in Ukraine and all the inflationary pieces that happened thereafter, at a certain point, you can’t keep absorbing all those costs and run a business that’s economic. And so, I think that we’re very aware that sellers have costs as well. They’re very important customers for us, and partners, and we’ll keep looking at how costs evolve and revisit.”
Wholesale inflation surged to a new record high Wednesday, as The Daily Wire reported. The Producer Price Index rose 11.2% annually between March 2021 and March 2022. That number was the highest annual rate on record, according to Bureau Of Labor Statistics data dating back to 2010. The Consumer Price Index also rose to a record rate, climbing 8.5% annually in March.
Amazon is the latest company to impose new costs on customers amid the inflation crisis. Grocery delivery service Instacart announced it was implementing a gas surcharge in March, and rideshare services Uber and Lyft both announced they would be putting up a similar surcharge to cope with high gas prices around the country.