Amazon (NASDAQ:AMZN) has reportedly levied an unexpected 2% new fee on its merchants. The fees apply to sellers who choose to ship products sold on the e-commerce platform themselves. It is worth highlighting that the company’s move comes at a time when the threat of The Federal Trade Commission (FTC) filing an antitrust lawsuit against AMZN continues to loom.
Starting October 1, the fee will be introduced for participants in Amazon’s Seller Fulfilled Prime program. This program enables merchants to offer products with the Prime badge, making them responsible for ensuring swift delivery and weekend shipping without opting for AMZN’s fulfillment services. Importantly, these sellers will also be liable to pay commissions ranging between 8% and 15% for each sale.
The company launched this program in 2015. However, enrollments closed in 2019 as more merchants chose Amazon’s fulfillment services, given the need to meet the high delivery standards.
The impact of the most recent fee hike is likely to be borne by consumers eventually through elevated product prices. This is because merchants are already struggling to make profits amid slowing e-commerce sales.
FTC’s Lawsuit
Interestingly, the FTC’s lawsuit is expected to focus on Amazon’s treatment of its merchants and whether the company is improperly leveraging its vast market presence.
Particularly, the regulator is likely to raise concerns that AMZN is coercing sellers to use its in-house logistics services. In addition, the lawsuit might include accusations that Amazon makes merchants buy advertisements in exchange for improved visibility in customer search results.
Is Amazon a Buy, Hold, or Sell?
Analysts maintain a bullish outlook on Amazon’s stock due to the promising potential of Amazon Web Services (AWS), driven by emerging opportunities in generative AI.
Overall, AMZN stock commands a Strong Buy consensus rating based on 40 Buys and one Hold assigned in the past three months. On top of that, the 12-month average price target of $174.13 per share implies an 29% upside potential. Shares of the company have already gained 57.4% so far in 2023.
