4 ms·

"inflation" surcharge... one would think inflation would be baked into the price already.

by jcadam 5y ago

missedthecue 5y ago
This is it getting baked into the price.
- chomp 5y ago
  I 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 ago
    Good 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 ago
      A 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 ago
  No, 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.
  - savant_penguin 5y ago
    Funny how businesses weren't greedy a few weeks ago, and just after inflation kicks in they all become greedy. It's all about greed and nothing to do with money printing
    - jjoonathan 5y ago
      Funny how it's all about money printing and not about greed. Businesses? Greedy? No way! Couldn't be. Dude, this is capitalism. Everybody uses every excuse, from the most justified to the least justified. Assuming it's greed is dumb, but assuming it isn't greed is spectacularly dumb.
    - Someone1234 5y ago
      It is a percentage increase, not a fixed increase. And their normal fees are structured as percentages. Therefore, their existing fee structure adapted automatically to changes like money supply (or more specifically differences in exchange rates for their suppliers/third parties). If it was a fixed increase, I'd be a lot less critical. But percentages piled on already percentage fee structures strikes of profiteering from their market position, and using the economic climate as a lazy excuse.
- jsnell 5y ago
  I think the point is that Amazon is already taking a percentage cut. If there is inflation, the prices of the good would be raised by the seller and that automatically increased how much Amazon makes. Them increasing the size of the percentage-based cut suggests that the work Amazon does (logistics, selling access to the users' eyeballs) would be more sensitive to inflation than what the manufacturers and sellers do. Seems unlikely.
  - vorpalhex 5y ago
    Gas is more expensive. FBA requires Amazon to buy gas to run trucks to perform fulfillment.
  - AnssiH 5y ago
    This is not increasing the percentage-based cut (referral fee), this is increasing the fulfillment fee which is size/weight based.
    - jsnell 5y ago
      Thanks! That'd be a lot more reasonable, it just isn't how the article reads. Is the official announcement somewhere? (I.e. what you're saying seems to be that for a $100 item that they charged $5 to ship previously, they will now be charging $5.25. Hard to complain about that.)
      - dwringer 5y ago
        Good question which had me slightly concerned for a moment; there's official documentation of the upcoming change here[0]. It does seem that this is only applied to "fulfilled by Amazon" products (and will not apply to third party sales shipped by the third party), and is an additional 5% of the existing fulfillment fee tacked on. An example they give is of a small, standard 6-oz package where the fee will increase from $2.92 to $3.07. [0]https://sellercentral.amazon.com/gp/help/external/GABBX6GZPA8MSZGW?language=en_US https://sellercentral.amazon.com/gp/help/external/GABBX6GZPA...
jdrc 5y ago
Inflation of inflation
- jcadam 5y ago
  Inflation^2

"inflation" surcharge... one would think inflation would be baked into the price already.

by jcadam 5y ago

"inflation" surcharge... one would think inflation would be baked into the price already.

missedthecue 5y ago

This is it getting baked into the price.

chomp 5y ago
I 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 ago
  Good 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 ago
    A 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 ago
No, 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.
- savant_penguin 5y ago
  Funny how businesses weren't greedy a few weeks ago, and just after inflation kicks in they all become greedy. It's all about greed and nothing to do with money printing
  - jjoonathan 5y ago
    Funny how it's all about money printing and not about greed. Businesses? Greedy? No way! Couldn't be. Dude, this is capitalism. Everybody uses every excuse, from the most justified to the least justified. Assuming it's greed is dumb, but assuming it isn't greed is spectacularly dumb.
  - Someone1234 5y ago
    It is a percentage increase, not a fixed increase. And their normal fees are structured as percentages. Therefore, their existing fee structure adapted automatically to changes like money supply (or more specifically differences in exchange rates for their suppliers/third parties). If it was a fixed increase, I'd be a lot less critical. But percentages piled on already percentage fee structures strikes of profiteering from their market position, and using the economic climate as a lazy excuse.
jsnell 5y ago
I think the point is that Amazon is already taking a percentage cut. If there is inflation, the prices of the good would be raised by the seller and that automatically increased how much Amazon makes. Them increasing the size of the percentage-based cut suggests that the work Amazon does (logistics, selling access to the users' eyeballs) would be more sensitive to inflation than what the manufacturers and sellers do. Seems unlikely.
- vorpalhex 5y ago
  Gas is more expensive. FBA requires Amazon to buy gas to run trucks to perform fulfillment.
- AnssiH 5y ago
  This is not increasing the percentage-based cut (referral fee), this is increasing the fulfillment fee which is size/weight based.
  - jsnell 5y ago
    Thanks! That'd be a lot more reasonable, it just isn't how the article reads. Is the official announcement somewhere? (I.e. what you're saying seems to be that for a $100 item that they charged $5 to ship previously, they will now be charging $5.25. Hard to complain about that.)
    - dwringer 5y ago
      Good question which had me slightly concerned for a moment; there's official documentation of the upcoming change here[0]. It does seem that this is only applied to "fulfilled by Amazon" products (and will not apply to third party sales shipped by the third party), and is an additional 5% of the existing fulfillment fee tacked on. An example they give is of a small, standard 6-oz package where the fee will increase from $2.92 to $3.07. [0]https://sellercentral.amazon.com/gp/help/external/GABBX6GZPA8MSZGW?language=en_US https://sellercentral.amazon.com/gp/help/external/GABBX6GZPA...

jdrc 5y ago

Inflation of inflation

jcadam 5y ago
Inflation^2