Era Of Free Or Cheap Shipping May Be Over
Posted by Richard on August 17, 2022
Could the days of free and low-cost shipping be coming to an end? For several years now, consumers have been able to rely on Amazon and its Prime program, which offers free and fast delivery, among other things. Other companies have also boasted free and low-cost delivery, but with rising fuel and labor costs, we may be approaching the close of an era.
Facing rising fuel costs, Amazon has begun charging sellers a 5 percent fuel surcharge on top of the fees already paid. Even if delivery itself remains free, products may become more expensive as sellers factor in higher shipping costs. Ultimately, these costs will likely end up passed on to customers in the form of higher prices.
Third-party retailers that sell goods through Amazon are a major revenue source for the retail giant. Amazon generated over $100 billion in fees paid by sellers in 2021. This means a 5 percent increase could net the company billions of dollars in revenue.
On the other hand, rising fees may encourage sellers to find lower-cost platforms where they can sell their goods. And if online shopping becomes more expensive, patronizing brick-and-mortar stores may become more tempting. Of course, Amazon is not the only web retailer, even if it’s the biggest. Competing websites also offer cheap or even free delivery. But these companies may also have to increase product prices or add delivery charges.
Amazon has already upped the cost of its Prime membership, which, among other things, provides people with fast and free shipping. Delivery companies like DoorDash may also have to raise rates. Could these developments portend the end of the free and cheap delivery era? We’ll have to wait and see what the future delivers.