Imagine being an Amazon seller, striving to balance costs while delivering quality service to customers. Now, an unexpected announcement threatens to shrink profit margins even more: Amazon is increasing fees for its Multichannel Fulfillment (MCF) service. This adjustment adds fresh pressure to sellers already grappling with multiple challenges.
Amazon’s U.S. marketplace recently announced it will raise fees for sellers using its services to fulfill orders placed outside Amazon, under the Multichannel Fulfillment program. The new rates take effect May 9. Amazon stated the move aims to ensure MCF pricing remains competitive within the third-party logistics market. Additionally, starting August 1, MCF orders shipped to Hawaii, Puerto Rico, the U.S. Virgin Islands, and Alaska will incur extra surcharges—100% for standard-size items and up to 200% for oversized goods.
What Is Multichannel Fulfillment?
MCF is a logistics service Amazon offers sellers, enabling them to leverage Amazon’s warehousing and delivery network for orders originating from non-Amazon channels, such as their own websites or other e-commerce platforms. This allows sellers to tap into Amazon’s robust logistics infrastructure without building and managing complex storage and distribution systems themselves.
Impact of the Fee Adjustments
The specific effects of the pricing changes can be seen in these examples:
- Small standard-size items (e.g., mobile device cases, 2–6 oz): The base fee rises from $5.29 to $5.35, a $0.06 increase (about 1.13%).
- Large standard-size items (e.g., T-shirts, 12–16 oz): The base fee jumps from $6.20 to $7.45, a $1.25 hike (roughly 20.16%).
While the per-order increase may seem minor, the cumulative cost for high-volume sellers could be substantial. In the fiercely competitive e-commerce landscape, where profit margins are often razor-thin, even slight fee hikes can significantly dent profitability.
Amazon’s Justification
Amazon noted that since the pandemic, it has made major enhancements to its shipping and fulfillment network, including achieving a 97% on-time delivery rate and more than doubling U.S. fulfillment center capacity. The company has also opened over 350 new logistics centers, sorting hubs, regional air hubs, and delivery stations across the U.S. These improvements have undoubtedly boosted efficiency and service quality—but sellers now bear the cost of these upgrades through higher fees.
Broader Implications
Sellers using Fulfillment by Amazon (FBA) may not directly rely on MCF, but adjustments to Amazon’s logistics fees could indirectly affect them. The MCF increase adds another layer of cost pressure, forcing sellers to reassess pricing strategies and operational efficiency. Some may explore alternative third-party logistics providers to maintain competitiveness.