Amazon fee increases from 4th April 2013

Posted: March 29, 2013 by Rizwan Riyad in Finance, News, world
Tags: , , , , , , ,
Anger as Amazon introduces punishing fee hikes for the third-party traders who generate millions for the online giant
  • Small traders selling DVDs and tyres through Amazon among those affected
  • UK sellers offering electronic accessories will see fees rise from 7% to 12%
  • Hikes imposed amid concern over growing dominance of internet giant
  • Two million third-party traders across the globe use Amazon
  • Pre-Christmas 2012 two in five items bought on site were sold by third party

Small traders who sell their products through Amazon are facing potentially crippling fee hikes set to be imposed by the internet giant.

Third-party traders selling items like electronic accessories, automotive parts and tyres through the website will see fees soar – rising as high as 15% in some cases.

Sellers who use the world’s biggest online retailer to reach customers – and collectively generate huge amounts of business for Amazon – have reacted with dismay to the increases, with some traders suggesting the added financial burden could see their businesses fold completely.

Dominance: The world's biggest internet retailer is imposing punishing fee increases on small traders who sell their goods through the websiteDominance: The world’s biggest internet retailer is imposing punishing fee increases on small traders who sell their goods through the website

‘We don’t know if this will push us under,’ one anonymous UK trader has said of the hikes.

Vendor fees on electronic goods such as headphones and memory cards will go up from seven per cent to 12 per cent for the busiest UK-based traders from 4 April, according to a report in the Guardian.

Amazon is introducing fee increases for third-party vendors

Fees for UK traders using Amazon to sell automotive parts will go up from 12 per cent to 15 per cent.

For German sellers offering tyres through the site, fees will rise from seven per cent to 10 per cent after the Easter weekend, while seller fees for French traders offering DVDs, music and video games on Amazon will go up from 10 per cent to 15 per cent.

Small traders in the UK using the site to sell automotive parts will see fees go from 12 per cent to 15 per cent.

Traders have reacted with fury to the hikes, becoming the latest group to rail against the seemingly unstoppable rise of the online giant, which has already been accused of placing the future of the high street book shop in jeopardy. As independent bookshops continue to close at an alarming rate, Amazon credited e-book sales for Christmas sales of £13.5billion in 2012.

At the end of 2012 the ‘tax scrimping’ retailer was branded ‘immoral’ after it emerged its UK arm had recorded a pre-tax profit of £74million the previous year – but paid just £1.8million in tax.

Third-party traders play a significant role in the online business, with two million globally selling through Amazon. In the pre-Christmas period in 2012, two in five items bought on Amazon were sold by third-party traders.

Growing: Traders are the latest group to express concern at the seemingly unstoppable rise of the online giant, which has already been accused of jeopardising the future of the high street book shopGrowing: Traders are the latest group to express concern at the seemingly unstoppable rise of the online giant, which has already been accused of jeopardising the future of the high street book shop

Another British trader – who generates in excess of £1million in sales through Amazon – said the increases had prompted him to switch his attention to eBay, which he said offered a less costly means of doing business.

The seller said eBay also passed on payments to traders quickly, while Amazon holds on to payments for two to three weeks.

‘It’s a huge strain on a small business not being able to access cash we’re owed from Amazon. And they’re making an absolute fortune in interest.’

The traders who spoke out against Amazon did so on condition of anonymity amid concern over how the retailer would respond.

Similar increases came into effect in the U.S. in January.

Amazon has not commented on the reaction to the fee increases.

AMAZON: THE RISE AND RISE OF THE WORLD’S BIGGEST ONLINE RETAILER

In less than 20 years Amazon has gone from an online bookstore run from founder Jeff Bezos’s garage, to the world’s biggest online retailer.

One of the first big firms to start selling goods over the internet, Amazon rapidly diversified adding DVDs, CDs and video games to its online offering, along with clothes, furniture and toys.

Today the Seattle-based firm generates billions in profits and has separate websites in the UK, Canada, France, Germany, Italy, Spain, Brazil, Japan and China.

The popularity of ebooks is key to the success of the online giant, and Amazon reported record revenues at the start of the year in a clear indication of the continued mass migration of shoppers from the high street to the web.

It racked up sales of £13.5bn in the fourth quarter of 2012, up from £10bn in the same period of the previous year. Kindle e-book sales -up a whopping 70 per cent – were credited for the surge in profits.

Overall sales were up by 22 per cent, driven by the popularity of Amazon’s Kindle Fire tablet.

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