How Much Amazon Could Profit from Its New Holiday Seller Fee
Wall Street was pleased with
move to state a holiday fees for sellers. Analysts see the fee bringing in hundreds of millions of dollars in profit.
Citing higher expenses during the holiday season,
com (ticker: AMZN) said it will impose a 35-cent per item “peak fulfillment fee” on merchants that use the Fulfillment by Amazon (FBA) service to sell products in the US and Canada from Oct. 15 through Jan. 14. If a seller uses FBA, Amazon handles picking, packing, and shipping items.
‘ Lloyd Walmsley, who has a Buy rating on the stock, sees the fee adding roughly $870 million in additional revenue in the fourth quarter. Walmsley now estimates approximately $7.4 billion in total consolidated operating income and profit margins of 4.6% for the fourth quarter, higher than his previous projection of about $6.5 billion in operating income and 4.1% margins.
On the other hand,
Brian Nowak, who has the equivalent of a Buy rating on Amazon shares, calculates an increase of $570 million in Ebit, or earnings before interest and taxes, during the same period. He said the fee speaks to Amazon’s confidence in sellers sticking around despite higher charges and reliable consumer demand.
This isn’t the first time Amazon has introduced new fees this year. In fact, it has raised prices for both sellers and consumers.
In January, Amazon raised FBA fees by an average of 5% due to cost increases. And in April, the company began charging sellers a 5% fuel and inflation surcharge.
In February, the company raised the price of a Prime membership in the US to $14.99 monthly from $12.99, with annual subscriptions rising to $139 from $119. It was the first price hike for consumers since 2018.
Write to Karishma Vanjani at [email protected]