Amazon's New Fees Spark Seller Backlash and FTC Scrutiny

The concerns raised by longtime US-based Amazon sellers signal a potentially critical juncture for the e-commerce giant's marketplace. The imposition of new fees by Amazon, on top of the substantial share it already takes from sales—averaging at least 50% when handling storage and shipping—threatens the viability of many small and mid-sized businesses that supply over 60% of the goods sold on Amazon globally. These additional fees have escalated to the point where the Federal Trade Commission has initiated an investigation, underlining the gravity of the situation.

Sellers fear that these changes could precipitate an "extinction event" for Amazon's third-party merchants. While not all will disappear—some will adapt—the environment on Amazon may become unsustainable for many current sellers. The challenge is twofold: unsophisticated sellers may not anticipate how variable costs will impact them, potentially pricing too low and damaging their finances irreparably. 

Meanwhile, more astute sellers understand the looming threat but find themselves trapped between needing to raise prices and the competitive pressure to keep them low, especially against less experienced or overseas competitors who might circumvent these fees.

Amit Bhasker, a seasoned Amazon seller and Co-founder of AMZPro, predicts a wave of bankruptcies as margins erode under these pressures. 

Amazon argues that the fee changes are comparatively mild and that many sellers will actually see a decrease in fees per unit sold. The company claims these adjustments offer sellers more choice in how they manage fulfillment. However, sellers contest the variability and implementation of these fees, particularly the "inbound placement fee," which alters how inventory is shipped and distributed across Amazon's network, potentially increasing costs for sellers.

This dispute highlights a broader tension within Amazon's marketplace, revealing a delicate balance between the company's revenue strategies and the sustainability of its seller community. As these changes unfold, the future of many Amazon sellers—and possibly the character of the marketplace itself—hangs in the balance.