Latest / Selling on Giants: The eCommerce Marketplace Podcast / Amazon Fee Increase EXPOSED: “Temporary” Surcharge, Margin Pressure, and eCommerce Strategy Shifts

Transcript

Amazon Fee Increase EXPOSED: “Temporary” Surcharge, Margin Pressure, and eCommerce Strategy Shifts · Selling on Giants: The eCommerce Marketplace Podcast

• 0:00
  SPEAKER_00: Welcome back to Selling on Giants.
• 0:02
  SPEAKER_00: This is the show where we break down what is actually happening across Amazon, Walmart, and e-commerce, and more importantly, what you should be doing about it if you are responsible for the PL.
• 0:14
  SPEAKER_00: This week is not a light one.
• 0:16
  SPEAKER_00: There are a lot of updates, but one in particular matters more than the rest because it hits every seller directly.
• 0:23
  SPEAKER_00: And it is something we have seen before.
• 0:25
  SPEAKER_00: Just packaged a little differently.
• 0:27
  SPEAKER_00: Let's get into it.
• 0:28
  SPEAKER_00: There is a point where incremental changes stop feeling incremental and start feeling like a pattern.
• 0:33
  SPEAKER_00: This week is one of those weeks.
• 0:35
  SPEAKER_00: Amazon just introduced what they are calling a temporary 3.5% fulfillment surcharge.
• 0:42
  SPEAKER_00: And if you have been operating on this platform long enough, you already know how to interpret that word.
• 0:48
  SPEAKER_00: Temporary.
• 0:49
  SPEAKER_00: It is almost never temporary.
• 0:51
  SPEAKER_00: It is a test, and if it holds, it stays.
• 0:55
  SPEAKER_00: This surcharge hits FBA, MCF, and Buy with Prime, which means it touches almost every fulfillment pathway sellers rely on.
• 1:04
  SPEAKER_00: It is calculated on fulfillment fees, not product price.
• 1:08
  SPEAKER_00: And while Amazon frames it as a response to fuel and logistics costs, the reality is much simpler.
• 1:15
  SPEAKER_00: This is margin compression at scale.
• 1:17
  SPEAKER_00: And what makes this one different is not the size of the fee, it is the timing.
• 1:21
  SPEAKER_00: Because this is not happening in isolation.
• 1:24
  SPEAKER_00: Ad costs are already up, competition is tighter, conversion is more sensitive to pricing, and now fulfillment just got more expensive again.
• 1:33
  SPEAKER_00: So you are getting squeezed from both sides.
• 1:35
  SPEAKER_00: Costs go up, pricing flexibility stays limited, and that gap is where margins disappear.
• 1:40
  SPEAKER_00: Now let's call this out directly because most sellers will try to rationalize this.
• 1:45
  SPEAKER_00: They will say it is only a few cents per unit.
• 1:47
  SPEAKER_00: It is temporary, it will normalize.
• 1:50
  SPEAKER_00: That is not how this works.
• 1:51
  SPEAKER_00: At scale, a few cents becomes thousands of dollars a month, and across a portfolio, it becomes meaningful pressure on contribution margin.
• 2:00
  SPEAKER_00: This is not a one-time hit.
• 2:02
  SPEAKER_00: This is part of a trend.
• 2:03
  SPEAKER_00: Amazon protects its economics and sellers absorb variability.
• 2:07
  SPEAKER_00: So the real question is not whether this fee is fair.
• 2:10
  SPEAKER_00: The real question is what you are going to do about it.
• 2:13
  SPEAKER_00: Because doing nothing is not a strategy.
• 2:15
  SPEAKER_00: Let's get practical.
• 2:17
  SPEAKER_00: First, packaging.
• 2:18
  SPEAKER_00: Most brands are not optimizing packaging for fees.
• 2:21
  SPEAKER_00: They are optimizing for convenience or legacy decisions, and that has to change.
• 2:26
  SPEAKER_00: Small dimensional adjustments can move you into a lower fee tier, and reducing weight, tightening packaging, and qualifying for SIPP all matter more now because every inch and every ounce has a cost tied to it.
• 2:40
  SPEAKER_00: Second, fulfillment mix.
• 2:42
  SPEAKER_00: FBA is not the only option, even if it is the easiest.
• 2:46
  SPEAKER_00: There are scenarios where fulfilled by merchant makes more sense, especially on slower moving SKUs, oversized items or products where you already have strong logistics in place.
• 2:57
  SPEAKER_00: You do not have to move everything, but you should not default everything either.
• 3:02
  SPEAKER_00: Third, promotions.
• 3:04
  SPEAKER_00: Prime Day is coming, and Amazon continues to push performance-based fees on deals, including upfront fees, variable fees, and stricter discount requirements.
• 3:15
  SPEAKER_00: This is where brands lose discipline by chasing volume and giving up margin.
• 3:20
  SPEAKER_00: You do not need maximum participation.
• 3:22
  SPEAKER_00: You need controlled participation with select SKUs, clear margin thresholds, and a willingness to sit out where it does not make sense.
• 3:31
  SPEAKER_00: Fourth, pricing.
• 3:32
  SPEAKER_00: You cannot always pass costs through, but you also cannot absorb everything.
• 3:37
  SPEAKER_00: So pricing becomes a test, not a one-time decision.
• 3:41
  SPEAKER_00: You make incremental adjustments, watch conversion, monitor buy box behavior, and manage it actively.
• 3:48
  SPEAKER_00: And fifth, diversification.
• 3:50
  SPEAKER_00: If you are an Amazon-only brand right now, this is your signal.
• 3:54
  SPEAKER_00: You are too exposed.
• 3:55
  SPEAKER_00: Walmart has reach.
• 3:56
  SPEAKER_00: TikTok is still cheaper from an acquisition standpoint.
• 3:59
  SPEAKER_00: Your own DDC channel gives you control.
• 4:02
  SPEAKER_00: You do not need to replace Amazon, but you do need to reduce dependency.
• 4:06
  SPEAKER_00: Because every time fees go up, your entire business should not move with it.
• 4:10
  SPEAKER_00: Now step back for a second because this ties into a bigger pattern.
• 4:14
  SPEAKER_00: Amazon is increasing fees, but they are also increasing control.
• 4:18
  SPEAKER_00: They are guiding expansion decisions through their tools, simplifying access to data while keeping it inside their ecosystem and standardizing fulfillment in ways that reduce your control over the customer experience.
• 4:33
  SPEAKER_00: This is where things start to feel heavy for a lot of brands.
• 4:36
  SPEAKER_00: Margins tighten, decisions slow down, and teams start reacting instead of operating.
• 4:41
  SPEAKER_00: That is usually the signal that structure is not keeping up with scale.
• 4:46
  SPEAKER_00: And that is where we spend most of our time at Bellivix.
• 4:49
  SPEAKER_00: We help brands simplify decision making by turning all of this complexity into a clear operating plan so teams know exactly what to prioritize and how to execute without hesitation.
• 5:01
  SPEAKER_00: Bellovics has helped brands generate over$500 million on Amazon.
• 5:06
  SPEAKER_00: We are a verified ad partner and we stay hands-on in execution because that is what actually moves performance.
• 5:14
  SPEAKER_00: If things feel more complicated than they should or slower than they used to, you can learn more at Bellovix.com.
• 5:21
  SPEAKER_00: Now let's keep going because this is not just about fees.
• 5:24
  SPEAKER_00: Discovery itself is changing.
• 5:26
  SPEAKER_00: Reddit is showing up more in search and AI-generated answers, which means community conversation is influencing visibility before a customer even reaches your product page.
• 5:36
  SPEAKER_00: At the same time, AI is moving deeper into decision making.
• 5:40
  SPEAKER_00: Not just reporting what happened, but recommending and executing what to do next across pricing, inventory, and campaigns.
• 5:48
  SPEAKER_00: That loop is getting compressed, which means the advantage shifts from doing the work to managing the system that does the work.
• 5:55
  SPEAKER_00: And if your data is not clean, those systems do not help you, they hurt you.
• 5:59
  SPEAKER_00: Which is why product data is becoming infrastructure.
• 6:02
  SPEAKER_00: PIM systems are becoming necessary to maintain consistency across Amazon, Walmart, Shopify, and whatever comes next.
• 6:10
  SPEAKER_00: Because discovery is no longer just keyword-driven.
• 6:13
  SPEAKER_00: It is structured, it is data-driven, and it is interpreted by systems.
• 6:17
  SPEAKER_00: At the same time, advertising is starting to move into AI environments with early signals that product feeds and shopping placements will show up inside AI-generated responses.
• 6:28
  SPEAKER_00: That creates another paid channel, another layer of competition, and eventually more cost pressure.
• 6:35
  SPEAKER_00: Then you layer in regulation, which is becoming more fragmented at the state level, creating more complexity, more overhead, and less flexibility for brands operating across regions.
• 6:46
  SPEAKER_00: So when you zoom out, the pattern becomes very clear.
• 6:50
  SPEAKER_00: Fees are increasing, control is consolidating, discovery is shifting, and complexity is rising.
• 6:56
  SPEAKER_00: Which means the edge is not in hacks, it is in execution.
• 7:00
  SPEAKER_00: Clean data, clear systems, fast decisions.
• 7:04
  SPEAKER_00: That is what holds up in this kind of environment.
• 7:06
  SPEAKER_00: If this episode gave you a clearer view of what is actually happening, take a second to leave a review or share this with a friend or colleague who needs to hear it.
• 7:16
  SPEAKER_00: It helps more operators stay ahead of what is changing.
• 7:19
  SPEAKER_00: Mr.
• 7:19
  SPEAKER_00: Will here signing off from selling on giants.
• 7:22
  SPEAKER_00: Let's keep building.