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Amazon DOES Something Its Never Done Before and its own Likely to Make Holiday Shopping MORE COSTLY THIS SEASON

A lot of people think about Amazon because the place you head to buy, well, basically everything, and–more importantly–have it delivered inside a day or two. That is true, but what a lot of people don’t believe about is that over fifty percent of everything in love with Amazon.com isn’t actually sold by Amazon. They’re in love with behalf of third-party sellers. Needless to say, nearly all those sales are fulfilled by Amazon, which consists of network of warehouses and drivers to obtain orders to customers quickly.

For all those sellers, the vacation shopping season just got a bit more expensive. That’s because, in accordance with CNBC, Amazon notified sellers last month that it could impose a surcharge of 35 centsper item for which consists of fulfillment service between October 15 and January 14.

To be clear, those sellers already pay Amazon for the privilege of storing their products in its warehouses and for handling those orders. This additional “surcharge” is along with fees that some sellers may take up around 1 / 2 of what they charge customers.

Amazon, because of its part, says it’s making the change because of the increased expense of, well, everything at this time:

“Our selling partners are incredibly vital that you us, which is not a choice we made lightly,” Amazon said within an email. “The complete industry sees increases in fulfillment and logistics costs through the holiday peak period because of the concentrated level of shipments. We’ve previously absorbed these cost increases, but seasonal expenses are reaching new heights.”

I understand that 35 cents doesn’t look like a whole lot, but consider that it’ll hit sellers of less costly items harder than those that sell higher-end products. In the event that you sell something for $5.00 on Amazon, 35 cents will be a lot harder to soak up than if your item is $100.

In both cases, however, that expense is most probably likely to get passed along to consumers. At the same time that many folks are worried about the price tag on from gas to groceries, the theory that holiday shopping is approximately to obtain additional expensive isn’t good news for anybody.

The reason why Amazon is adding the fee is pretty obvious. Some analysts estimate the business could add just as much as $800 million in revenue through the holiday quarter consequently.That may not look like lots of money for an organization how big is Amazon, but consider that it is basically free money. You can find no new costs connected with those fees–it’s virtually all profit because it offsets a cost the company had been paying.

The truth is, when everybody else does something, you can bother making a choice to use the truth that you are not as a competitive advantage. That is the position Amazon has had during the past. This season, however, it’s jumping in with your competition since it sees a good way to generate some cash.

It isn’t like small merchants who sell through Amazon’s fulfillment network can just opt to go someplace else. No, they’ll need to pay the fee, and perhaps which means they’ll either need to make less overall, or they’ll need to transfer the fee with their customers.

Sure, I assume you can argue making just as much money as you possibly can is what Amazon is meant to do. That is the point of in operation, right? The truth is, there’s a significant lesson here: free money always comes at a price. If you put in a fee because you can, your visitors notice. When things have more expensive just so that you can make use of the fact your visitors don’t have a selection, that costs you with techniques you can’t always measure on a profit and loss statement.

It’s interesting that Amazon points to other shippers within its justification for adding a fee. It’s true that FedEx, UPS, and USPS have historically added any occasion surcharge. Still, as every mother has said at least one time to a kid that used exactly the same excuse, because everyone else does it, doesn’t mean you need to too.

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