Amazon has been painted as the villain in many scenarios, and that has only worsened over time. Back in mid-August, the retail giant decided to charge sellers an extra fee if they don't use the company's fulfillment centers. However, that is no longer happening as Amazon realized it was a bad idea.
Amazon Does a Good Thing
Initially, Amazon set a new policy where sellers will have to use their logistics services or pay an extra 2% for going with the Seller Fulfilled Prime service. Of course, sellers were outraged by the fee that's been added on top of Amazon's standard charge.
The good news is that Amazon decided to stop its plans which it referred to as a "brazen move." This could be a result of the Federal Trade Commission watching the retail company like a hawk as it prepares its antitrust lawsuit, as this will serve as another bullet for the FTC.
Amazon PR Manager Jonathan Hillson said that the 2% Seller Fulfilled Prime fee was intended to cover the company's costs, as mentioned in The Verge, given that Amazon will not get the fulfillment fees if the sellers decide to ship their products out themselves.
Hillson added that the company took the decision back out of fear that the "seller sentiment related to the fee" would affect their participation. The company framed it in a way where Amazon cares about seller feedback, saying that they are "committed to supporting sellers."
Most would agree that this was just prompted by the FTC's case, especially since it is focused on Amazon's treatment of its sellers. The antitrust lawsuit alleges that the company is forcing its vendors into arrangements they don't want to participate in.
What Was the Extra Charge For?
The 2% charge will let sellers keep the "Prime" label which offers a one to two-day delivery timetable, even though they decide not to use the company's logistics service and opt for the Seller Fulfilled Prime program instead.
What's bothersome for the sellers is that Amazon is already getting paid a commission of up to 15%, which is already a huge sum. The change would've affected thousands of sellers on the e-commerce platform, especially in the long run.
A furniture seller says that with the additional fees implemented for self-shipping, they will lose around $1 million worth of sales in a year, as mentioned in Ars Technica. This means that it might be cheaper for the sellers to use Amazon's logistic services anyway.
If sellers choose to go with Amazon's fulfillment center, the company would get 20% to 30% of their revenue. Amazon reasoned that the additional cost would "help cover the costs of running a separate infrastructure and measuring its effectiveness."
It's a breath of relief for sellers that the company is halting its additional fees, especially since reports say that Amazon has increased its mandatory advertising expenses. As for those who use Amazon logistics, shipping fees are increased as well, which could take up to 50% of their revenue with advertising included.
