Amazon Key in-car deliverySource: Amazon

What you need to know

  • Amazon is informing merchants on its platform of an impending fee hike of 3%.
  • The company says its increased spending on improving delivery times is part of the reason behind the increase.
  • However, it says it's committed to the Fulfilled by Amazon program, and the investments should help sellers grow sales overall.

While Amazon makes or stocks a lot of what it sells, it also boasts the largest community of third-party sellers on an e-commerce platform in the U.S., thanks to its Fulfilled by Amazon (FBA) program. The venture allows sellers to not only list their items on Amazon's online storefront but also rely on the tech giant for warehousing and shipping their products.

It's these services that Amazon is planning to charge more for. The company is already known for having the fastest delivery times in the business, and now also ships the majority of its packages via its in-house shipping service. However, it's continuing to invest in its shipping business and aims to halve delivery times for Prime users to just one day. The increased fees are aimed at servicing these improvements, as an email from Amazon to sellers explains:

Driven by FREE One-Day Delivery, this was the largest one-year investment we have ever made in FBA. Nevertheless, in 2020, we will make only moderate increases (about 3%) in fulfillment fees, below industry average, because we remain committed to your continued success.

The Seattle-based corporation also suggested to Reuters that while its fees may be going up slightly, the investments are helping sellers grow their sales overall, with the implication being that the added business should more than make up for the higher costs for its partners. Some referral fees for sellers may also go down in the near future. The new prices should go into effect starting February 18, 2020.

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