Amazon sellers struggle as 65% raise prices amid rising fees

In 2024, inflation continued to be a significant concern for U.S. consumers despite its decline from previous years. The average price of goods sold by third-party sellers on Amazon saw an increase of 6.7% from December 2023 to December 2024, largely driven by rising Fulfillment by Amazon (FBA) fees. Scott Needham, the Founder and CEO of SmartScout, attributes these price increases to the acceleration of FBA fees, which have significantly impacted sellers' operations on the platform. With Amazon traditionally seen as a marketplace for affordable shopping, these price hikes represent a departure from that expectation. In an effort to manage their costs, nearly 65% of sellers reported raising their prices to cope with these increased FBA fees. Despite these adjustments, about 60% of those sellers indicated a decline in profits year over year. This suggests that the raises in prices have not successfully compensated for the more substantial expenses incurred from the FBA fees. Sellers face a growing burden as Amazon shifts more costs onto them through various new fees, including the Low-Inventory-Level Fee, which was set to take effect on April 1, 2024, impacting standard-size products with inventory levels below a specific threshold. As the situation develops, it has become evident that the elevated prices on Amazon resonate differently with consumers. A sizable portion of Amazon Prime members—39.5%—have noticed significantly higher prices compared to the previous year, especially for household essentials. This awareness surpasses that of the general U.S. adult population, which reflects a broader perception of inflation affecting their purchasing decisions. Recent surveys observed that online shopping due to price increases peaked at 24.3% among U.S. adults in December 2023, while the corresponding figure for Prime members was even higher at 29.4% in early 2022. Challenges faced by third-party sellers underscore the impact of inflation on consumer behavior. Retail sales registered a notable decline of -0.9% in January 2025, marking the most significant drop in two years. As inflationary pressures continue to mount, sellers are grappling with profitability and market dynamics that require them to adapt swiftly, leading to increased prices in an environment where consumers are becoming more price-sensitive.