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Amazon reportedly increases supplier fees to offset rising costs

Company looks at raising transportation fees as it compete with Walmart

Amazon is charging certain suppliers more in transportation fees while planning to make it harder for shoppers to purchase certain less-profitable products online, in an effort to offset rising shipping costs, Bloomberg has reported,citing sources close to the matter.

Amazon is raising transportation fees for its suppliers of beverages, diapers and other expensive-to-ship products to offload rising shipping costs. While it has typically subtracted the cost to move inventory through distribution from what it pays for bulk orders from its supplier partners, Amazon now plans to “significantly increase” deductions.

The company has been willing to take a hit in the millions to ensure that products are in stock as it fights retail giants such as Walmart. However, the model is becoming unsustainable as the company sells more household products.

"Fulfillment expenses -- the cost of storing, packing and shipping goods -- surged 43% in 2017 to $25 billion, outpacing revenue growth of 31% that year," according to Bloomberg. Amazon declined Bloomberg's request for comment.

Additionally, it's making it more difficult for shoppers to purchase small orders of less-expensive personal care items (soap, lipstick, etc.) from big name brands that are a challenge to sell online unless part of a bigger order.

For years, Amazon has designated these items as “add-ons” that must be combined with a larger basket of products costing at least $25. Now, according to sources, Amazon will expand the number of these items to most personal and health care items that cost less than $7.

Amazon has also been examining and tweaking supplier fees at Whole Foods, the organic grocery chain it purchased last year for US$13.7 billion. Earlier this year it was reported that the company was placing limits on how products are sold and merchandised in-store at the cost of the supplier.

A version of this article appeared at

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