Amazon’s New Fees Squeeze Small Business Owners Amidst Shifting Operating Costs

According to recent reports, Amazon’s new fees have left small business owners feeling caught in an economic vice. These fees, implemented earlier this year, shift more of Amazon’s operating costs onto merchants who account for the majority of products sold on the platform. This comes at a difficult time for online merchants, as American consumers are increasingly opting for cheaper products across nearly all categories, making it challenging to pass price hikes along to customers. Many merchants believe that Amazon is primarily benefitting from the higher fees, as evidenced by the company’s financial statements. For example, revenue from seller services, including the popular Fulfillment by Amazon logistics operation, increased faster than fulfillment expenses in each of the past seven quarters. As a result, some merchants are struggling to make a profit, with profit margins decreasing and shipping costs increasing dramatically. One merchant expects his profit margin to drop from 20% to 8%, while another is considering winding down his Amazon business due to unexpected fees resulting from changes in product size limits. Overall, the rising costs and complex fee structures are causing frustration among merchants, who feel that running a successful Amazon business now requires an entire department dedicated to managing the complexity.