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Amazon adds 5% ‘fuel and inflation surcharge’ to seller fees
- Blackstrat 5y agoThis is hardly unexpected. If you are old enough to have been an adult during the Carter years, you would have expected this. Many of the charges are enumerated separately because US government regulations require their enumeration, e.g., your phone bill. Regardless, this is caused by the election of Biden and the resurrection of demonstrably failed policies of the past. Feel free to downvote me but facts are facts.
- rektide 5y agoThis is a huge increase. This reads like the spiritual end to Amazon free shipping.
- AnssiH 5y agoFBA fulfillment of e.g. 1-2 lbs "large standard" item now costs $5.40 instead of the previous $5.14. Does not seem that huge to me. Note that the general referral fees are not affected, only the FBA fulfillment fees.
- deleted 5y ago[deleted]
- paxys 5y ago"Free shipping" has always just made its way into the product price. Similarly stuff you buy will now be 5% more expensive to make up for this.
- jcadam 5y ago"inflation" surcharge... one would think inflation would be baked into the price already.
- missedthecue 5y agoThis is it getting baked into the price.
- chomp 5y agoI think they were referring to the "end-buyer" price. I think what GP missed is that this price is likely going to get baked into the end-buyer price, but not by Amazon. The reason it's likely not baked by Amazon is because Amazon's fulfillment has costs that don't get recouped until an item is sold. If Amazon moves seller goods back and forth through its warehouses, Amazon might never make the money back on the fulfillment service if the item never sells. Sellers will wind up conveying this additional charge back into their item's price.
- jcadam 5y agoGood points. I just wonder why Amazon wouldn't raise the base rate they charge sellers rather than tacking on a "surcharge." It's not as if inflation is transitory :D
- dragonwriter 5y agoA surcharge externalizes the blame. Same reason B2C companies do it all the time. While Amazon is notionally B2B, it's got lots of small sellers that probably behave more like consumers, and the business that don't just won't care how the price is characterized.
- Someone1234 5y agoNo, this is just greed. Amazon's business model is "skimming off the top." Essentially take x% of whatever. If prices rise due to external factors and Amazon's x% remains identical then their real-term income increase inline with inflation. This is double-dipping. Prices rise, Amazon makes more, now they want "and 5% more" on top because reasons. PS - Although this argument only applies to inflation adjustments, not fuel.
- azth 5y ago"Transitory inflation", isn't that what the fed said?
- cm2187 5y agomore than a year ago
- maxk42 5y agoMany were skeptical and they were right to be skeptical. We're now experiencing inflation the likes of which we've not seen for decades. And it isn't over. It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
- chii 5y agotransitory likely refers to the fact that supply chains and production of "stuffs" halted for an extended period of time due to the pandemic. The Feds made a prediction, where all else being equal, that they expected supply chains to free up "soon", and it isn't a systemic issue. They guessed wrong, as the world wasn't ready to return back to prior productivity levels. This prediction, however, isn't supposed to be used as a basis for decision making for the common person.
- vorpalhex 5y agoMost of the market called out the Fed for using the term "transitory" considering the Government was printing money left and right. Now we have had a huge inflation jump as predicted. The Fed had access to the same, if not better, data than everyone else. A big part of shortages was a rise in demand.
- jdlyga 5y agoI bet we're still paying fuel surcharges added back during the last gas price spike 15 years ago.
- willis936 5y agoProfit margin hike surcharge*.
- jdrc 5y agoWhy don't they just increase the fees? Calling it a surcharge implies inflation is temporary which it isn't! Is this a marketing gimmick for the generations who have never seen inflation before?
- PlanckMeasure80 5y agoIt may be when the supply chain gets back into shape
- jdrc 5y agoIt says fuel and inflation surcharge, not supply chain
- croutonwagon 5y agoright but it could also be temporary and Amazon may remove it surcharges when the prices pull back and stabilize. Not that I agree with Amazon here, but it makes sense not to just increase the fee overall and have it itemized if its anticipated to be temporary (even if thats temporary on the scale of say...1 year)
- jdrc 5y agoWhile inflation may go down, it won't turn negative, so pretending like it could do so is disingenuous
- croutonwagon 5y agoThere have been periods of negative inflation [1][2]. Though thats not really the point either. Gas prices DO fluctuate and recently have done so drastically (48% or so YoY). They are a contributor to the overall inflationary trend recently. Though aren't the only cause, or even primary IMHO, they are probably one of the biggest that are noticeable to the common person and one that doesn't scale well. In 2006 after Katrina i was paying well above $3.00/gallon for gas. That got better over the years and really good in the last year or two. Then its bounced back up. So again, if Amazon sees this as a temporary trend and cost to their service, it makes sense to itemize it off to allow the option of its removal when it stabilizes and/or reverts, rather than lump it in with their standard bottom line service charge and have to explain not one, but two changes to that down the line (an increase and then decrease). [1] - https://www.macrotrends.net/2497/historical-inflation-rate-by-year https://www.macrotrends.net/2497/historical-inflation-rate-b... [2] - https://i.redd.it/zij9zxups3t81.jpg https://i.redd.it/zij9zxups3t81.jpg
- slg 5y ago>[Amazon] said it had absorbed costs whenever possible, and only increased fees to address permanent costs I wish journalists would stop simply reprinting intentionally misleading company spin like this without any attempt to refute it. Fuel costs are one of the least sticky price increases imaginable and are already decreasing after they peaked last once. Plus no one knows what inflation will be like in a year. There is nothing close to permanent about these cost increases. The most charitable interpretation of these comments is that past increases were only because of permanent issues and this new surcharge represents a change in that policy. However if that is the case, this comment should more clearly denote that change and explain why this temporary increase is different and requires a change in policy.
- bombcar 5y agoOnce the airlines discovered the "fees" trick every company has been salivating to get onboard. I hate it - I don't CARE where the money is going, just charge me the price and don't try to pretend that various "fees" are affecting it. It's bad enough with listing various taxes, but made up "surcharges" are just accounting trickery.
- dylan604 5y agoOr, you know, call it a shipping charge. If offering free shipping is too expensive, don't offer free shipping.
- hypertele-Xii 5y agoFree shipping plus additional fees for fuel, vehicle maintenance and driver salaries. Love it.
- doubled112 5y agoThis does sound like shipping fees with extra steps.
- chihuahua 5y ago
- nimbius 5y agoseems like amazon is trying to have their cake and eat it too. Fuel surcharges only make sense if you own a fleet, but amazon drivers are independent contractors. Similarly, an "inflation" surcharge doesnt make a lot of sense when every other industry just raises prices. Do Amazon sellers see any of this 5% when they have already likely raised their prices in response to inflation? i suspect not. inflation has been unbearable for nearly a year now, so why 5% now? It might be a tentative connection, but i think this has to do more with the unionization of an Amazon warehouse. Jeff knows tides are turning, and 5% would help to bolster quarterly earnings reports if and when healthcare, retirement, and a living wage is offered to union warehouse workers during contract negotiation. It would also help weather the storm if workers did choose to strike. This parlour trick only pans out if organized labor remains restricted to a single warehouse; its not scalable or repeatable. If the union boss is to be believed, then Amazon is looking at massive unionization across its warehouses and a potential precipitous decline in revenue in the coming years.
- bombcar 5y agoAmazon does own a fleet: https://www.businessinsider.com/amazon-double-delivery-fleet-exclusive-incubator-freight-2021-2 https://www.businessinsider.com/amazon-double-delivery-fleet... - but they should just raise prices and not pretend they're not.
- tyrfing 5y agoThe arrangement described there is convoluted, but it's misleading to say they own the fleet. They (or an affiliate) do own the vehicles, but lease them to "independent contractors" who happen to exclusively work with Amazon and drive Amazon branded vehicles, but are responsible for things like paying for gas. Of course, Amazon won't let them maintain any sort of margins, so they certainly don't have much room to absorb additional costs.
- qiskit 5y agoAmazon is so gigantic at this point that the surcharge is like a tax. Amazon's market cap has fluctuated between the GDP of canada and south korea. Might as well view it as a country.
- downrightmike 5y agoThe only thing stopping them from meeting the monopoly definition and being required to break up, is the low prices to consumers. That's it, that's the only thing protecting them and this has been being questioned in the last few years.
- sfe22 5y agoMaybe they are a “monopoly” because of the cheap and good services they provide. The only bad monopolies are the ones using violence to hold on to it. Examples include mafia, terrorists, talibans, governments etc.
- noasaservice 5y agoWhatever. I use Scamazon as a replacement plan to replace (for free) broken goods that I have bought previously. And since I can return broken crap to Kohls, makes doing this easy.
- dessant 5y agoAmazon seems to have started to reach even for pennies. I have been a light user of AWS services for the past several years, and my monthly bill was usually below 0.2 USD. They never bothered to take such small amounts from the registered card. Last month's 0.14 USD bill was the first one I had to pay. :)
- stjohnswarts 5y agoThis is a side note. I've thought about setting up an AWS account just to play around with, what is the likelihood of a senior embedded c/c++ programmer really screwing up and end running up several thousand-dollar bill just because he put an innocuous infinite loop somewhere out of ignorance? :) Is there some trigger you can set such that CPU usage/bandwidth usage won't do something that you will never financially recover from since I won't have any knowledgeable devs to look to.
- danlugo92 5y agoFake email plus anonymous gift card.
- KyeRussell 5y agoAnything can happen. AWS gives you tools to manage costs, and bill shock stories are usually told by people that didn’t know about those tools. AWS unofficially gives their customers a once-off bill amnesty (within certain not publicly defined parameters) on the proviso that you set up cost alerting properly. I had to play this card at my current employer when I forgot to scale down an RDS instance. They’re very nice about it.
- dessant 5y agoYou could catch such issues early by setting up a billing alarm. https://docs.aws.amazon.com/AmazonCloudWatch/latest/monitoring/monitor_estimated_charges_with_cloudwatch.html https://docs.aws.amazon.com/AmazonCloudWatch/latest/monitori...
- smm11 5y agoHas there ever been a company or industry that absorbs material costs, rather than passing it down to the consumer? This is the ONLY trickle-down that is actually a thing.
- traceroute66 5y agoFirst, regarding inflation surcharge, well that's the norm in business contracts. I can't recall ever reading a business contract that didn't have an indexation clause. Regarding other surcharges e.g. fuel, I would say, to be fair to Amazon, that they are coming late to a game that has been going for a while now. Once in a while, I get a phone call from $well_known_international_shipping_company trying to lure my business away from their competitors. Shipping salesdroid sends me a nice Excel spreadsheet showing the breakdown of all the nice cheap shipping rates for various weights and destinations. All designed to make you think "that looks awesome, where do I sign". But for the last few years or so, the spreasheet has changed to include some small-print at the bottom "A fuel surcharge will apply to the Rates, calculated in accordance with the methodology at $url unless otherwise specified in the Rates, $shippingCo may from time to time elect to revise its fuel surcharge table".
- spookthesunset 5y agoIt does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract. No way does the vendor want to assume the risk of fuel prices going through the roof and being forced to eat into their margin. At most they should share that risk with the customer—it isn’t like the vendor or the customer has much control over fuel prices.
- DavidPeiffer 5y ago> It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract. Totally agree. Interestingly as a consumer, the only time I've seen this is on my garbage collection when I moved to a new city. I've seen contracts arranged as "Market index price per pound of $commodity plus _x_ per pound for processing". If you're worried about costs varying significantly, you can go hedge the commodity. I've also heard of "transportation costs paid by supplier up to _x_, with all costs in excess split 50/50 with the customer" as a way of keeping incentives aligned but sharing risk.
- paxys 5y agoIt's hilarious to me that services like Uber and Lyft, who prided themselves on their free market variable pricing, now need to add explicit fuel surcharges because of market conditions. Why isn't your magical free market accounting for it already in the ride price?
- staticassertion 5y agoI'm not advocating for Uber and Lyft or a free market or whatever, but isn't the "free market accounting for it already in the ride price" exactly because they adjusted their prices?
- paxys 5y agoThey adjust their prices by the minute depending on ride demand and how many drivers on the road in the area. There's no reason fuel prices wouldn't already fit into that same calculation. Instead there's a new line item added to the final bill for the surcharge.
- lost-found 5y agoSo you’re complaining about them being more transparent in their pricing? Interesting take.
- 8ytecoder 5y agoI wouldn’t call this transparency. It’s designed to cause confusion. Throwing too much information and too many fees to confuse the heck out of you and hope that you’d say “whatever” and book it.
- ceejayoz 5y agoFuel was always included in the price. Now it's not, at least not entirely. They're not moving it out of the price out of a desire for transparency; they're trying to raise prices without getting yelled at. There's not a "driver surcharge" and a "working doors surcharge" and a "seatbelt surcharge", right?
- Vladimof 5y agoI avoid Amazon whenever I can... unless it is the cheapest source (which doesn't happen very often).
- VBprogrammer 5y agoAt least it's less than inflation is currently running year on year. In the UK mobile phone / broadband companies have taken to adding a CPI (customer price index, a measure of inflation) + 3.9% year on year increase in to contracts. It's complete bullshit, if for no other reason than 3.9% is nearly twice the target inflation target without loading that further.
- jasonpeacock 5y agobrb, asking my manager for 5% raise to match...
- KyeRussell 5y agoThis “service fee” style confusing pricing seems to be something that the US uniquely has a tolerance for. Outside of airlines and maybe hotels, it’s very uncommon in Australia. When US multinationals started doing it here (Uber is notorious for it), it came across as fairly uniquely slimy. It fools absolutely nobody to the point where I can’t possibly imagine why you’d even try it in this market unless you’re extremely tone deaf.