Amazon CEO Andy Jassy said the company needed to add a fuel and inflation surcharge to deal with rising costs tied to inflation, the coronavirus pandemic and the war in Ukraine.
“At a certain point, you can’t keep absorbing all those costs and run a business that’s economic,” Jassy told CNBC’s Andrew Ross Sorkin in a “Squawk Box” interview on Thursday.
Amazon has tried to assume all those costs wherever possible, Jassy said, but it became increasingly untenable as the pandemic continued and after Russia invaded Ukraine earlier this year. On Wednesday, Amazon imposed a 5% fee to U.S. third-party sellers who use its shipping and storage services.
The surcharge will go into effect in about two weeks for sellers who use Amazon’s Fulfillment by Amazon program. Merchants pay to have their inventory stored in Amazon’s warehouses and to make use of the company’s supply chain and shipping operations.
“We’re very aware that sellers have costs as well,” Jassy said. “We’ll keep looking at how costs evolve and revisit.”