Amazon hits brake on controversial Seller Fee Policy after backlash

Amazon introduces reimbursement offer to alleviate seller discontent over new fee policies, sparking debate on fairness and implications for e-commerce operations.

By Raunak Bose
New Update

Amazon (Image via TechFirstNow)

Amazon has come out with a reimbursement offer for many of their sellers from a controversial new fee scheduled to come into force on the 1st of April. In a recent post on LinkedIn, Dharmesh Mehta (a VP at Amazon) admitted that Amazon would, in fact, charge sellers the fee on the specified date, but would eventually credit them equivalent to the amount due back by April 30. Such a transitional period will give sellers a chance to see how it would affect their businesses without immediately burdening them with the cost.

The penalty for low stock, as its name implies, is directed at sellers who fail to consistently keep large enough stock of their products in Amazon's storage facilities. This decision by Amazon seems to have caught mixed reactions from sellers, some of whom are happy and thankful while others express discontent with the fee policy and its execution.

Controversy surrounds Amazon after receiving mixed reactions from sellers on the New Fee Policy

As a policy change, Amazon requires vendors in the US market to place the product in stock. Before the change, the product was kept in a single Amazon warehouse, and the company undertook all of the shipping tasks. Amazon has recently unveiled a novel initiative termed the 'Inbound Placement Fee,' targeting vendors neglecting to diversify their inventory across at least four Amazon warehouses.

The introduction of these new charges has spurred even more resentment and disappointment among sellers who account for more than 60% of all the goods being sold on Amazon worldwide. The question of the fairness of the excess inventory rate has been asked, most specifically as Amazon already levies additional charges for excess inventory at its own warehouses.

Judah Bergman (Founder of Jool Baby) & Issac Sultan (CEO of Jool Baby)
Left - Judah Bergman (Founder of Jool Baby) & Right - Issac Sultan (CEO of Jool Baby) (Image via LinkedIn)

Judah Bergman, who started Jool Baby, a company selling baby products, talked about how tough it is to deal with the new charges for having low inventory, along with the regular fees. He compared it to threading a needle perfectly to avoid big financial losses.

Some sellers are thinking of different ways to ship and store their products instead of using Amazon's Fulfilment by Amazon (FBA) program because of these new fees. However, using FBA helps products qualify for Amazon Prime's free shipping, which boosts sales. Still, more sellers are looking into options like Amazon Warehousing and Distribution (AWD) because of the new fees.

The rapidly changing market environment poses tough questions about sales planning and operational models for the sellers, which is in fact a measure to stay competitive and alleviate financial strains. In short, while adjusting to the constantly shifting rules of e-commerce, sellers are involved in the necessary work for optimizing the network and keeping up with the competitive environment.

Explore More Topics:

Latest Stories