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Thursday, April 14, 2022

Fuel & Inflation Charge Effect on Fashion Industry

Amazon announced on April 13, 2022 that they would be implementing a 5% fuel & inflation surcharge to help offset rising costs.  They will not be adding this cost direct to consumers as the fees will be charges given to third-party sellers who utilize Amazon's fulfillment services.  Although the charge is not direct to the consumer, the odds are rather good that the third party sellers will increase their cost to consumers.

How will this fuel & inflation charge effect the fashion industry?

Companies that have the ability to pass on the cost to consumers, will obviously go that route.  They can adjust their selling price to cover the full cost of the 5% charge, or they can possibly share the cost with consumers.  In other words, lose a bit of margin in order to avoid potentially losing some customers due to high prices.  Certainly a tight rope to walk.

Some companies may decide to simply take the 5% hit to their margin.  However, seeing that Amazon as adding the cost across the board, my guess is that it would be a good decision for most clothing & footwear companies to add the charge to their selling price.  If they had their clothes and shoes properly priced previously for optimal sales, adding the fuel & inflation would keep them pretty much at status quo.

The 5 percent fuel and inflation fee will be an added fee to the fees that Amazon already collects from third-party sellers using Fulfilment by Amazon services to store, pack and ship their goods.  This is not across the board on all products being sold on Amazon.

Amazon wrote on their website, "Starting on April 28, 2022, a 5% fuel and inflation surcharge will be applied to FBA fulfillment fees. The surcharge is subject to change."

Regarding Apparel, Amazon posted the following:

FBA fulfillment fees changes for apparel

On April 28, 2022, we will implement the following fee changes for apparel items in the Clothing & Accessories category. The greater of unit weight or dimensional weight will be used to calculate the shipping weight for all standard-size units more than 0.75 lb and oversize units, except for special oversize. For more information, view the Calculate the shipping weight section further down this page.

See their site for the chart and more information. 


Learn more about the FBA program (Fulfillment by Amazon).

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