With the Federal Trade Commission breathing down Amazon's neck, you'd expect the retail giant to lie low and not make any decisions that could draw more attention to the company. It looks like Amazon doesn't mind the added pressure as it charges sellers for shipping their products.
Amazon's Pay or Pay Situation
Amazon vendors can choose to use the retailer's logistics services or go with the Seller Fulfilled Prime service. Some choose the latter since it would cost them less to ship their own products. Amazon, on the other hand, would be missing out on fulfillment fees.
The retail giant has found a way to "encourage" sellers to opt for the company's own logistics service as they implement extra charges for those who don't. Around thousands of sellers will be affected by the change this coming October.
Internal documents show that the affected sellers will have to pay a 2% fee on each sale, as mentioned in Ars Technica. While 2% might seem like a small percentage, it would take a huge chunk of the vendor's revenue over time.
A furniture seller claims that with the extra fees, they stand to lose $1 million worth of sales in a year. Some would argue that it's Amazon's way of forcing sellers to use the company's logistics services since they will be paying extra fees anyway.
Amazon hasn't been too kind to its sellers. Reports say that the company has increased its fulfillment fees and mandatory advertising expenses, which leads to it getting around 50% of the seller's revenue all in all.
For fulfillment specifically, Amazon would be getting 20% to 35% of the seller's revenue, which explains why others would rather ship their items themselves. Sadly for customers, this change might cost products to increase in price in order for sellers to still profit from the sales.
The company is yet to give an official explanation as to why the extra fees are implemented, although a spokesperson explained that it will "help cover the costs of running a separate infrastructure and measuring its effectiveness."
The FTC is Keeping an Eye on Amazon
Amazon representatives have attended meetings with commissioners from the FTC to discuss its potential antitrust lawsuit. So far, there is no official statement why Amazon is called on by the agency, but the FTC has been probing the e-commerce giant for years.
FTC Chair Linda Khan is expected to file an antitrust lawsuit against Amazon, especially since the meeting was considered a "last rites" event, which is where the retailer should convince the agency that they did nothing wrong.
It is usually a step that precedes a lawsuit, as mentioned in Politico. It's still unclear what the charges will be since Amazon has been linked to many controversies from unsafe working environments to unfair labor practices.
The retail giant's employees have come forward with complaints and even arranged unions and protests to urge the company to treat them fairly. So far, it does not look good for Amazon, given that the FTC has been combing through records meticulously.
