>[Amazon] said it had absorbed costs whenever possible, and only increased fees to address permanent costs
I wish journalists would stop simply reprinting intentionally misleading company spin like this without any attempt to refute it. Fuel costs are one of the least sticky price increases imaginable and are already decreasing after they peaked last once. Plus no one knows what inflation will be like in a year. There is nothing close to permanent about these cost increases.
The most charitable interpretation of these comments is that past increases were only because of permanent issues and this new surcharge represents a change in that policy. However if that is the case, this comment should more clearly denote that change and explain why this temporary increase is different and requires a change in policy.
Once the airlines discovered the "fees" trick every company has been salivating to get onboard.
I hate it - I don't CARE where the money is going, just charge me the price and don't try to pretend that various "fees" are affecting it. It's bad enough with listing various taxes, but made up "surcharges" are just accounting trickery.
I was trying to book a cabin over the Christmas holiday last year. They would list the cabin at $200 a night, and then add $100 "service fee" and $50 "cleaning fee" for my 3 day stay. What?! Surprised I didn't get an electric bill with it. I was so pissed off, I said forget it.
If you want $250 a night, then list $250 a night. Don't try and pull a fast one with some bullshit fees at the checkout.
In the context of short term lettings, it is actually a fairly logical thing, because there's a fairly constant overhead per new letting (admin of a new customer plus the cleaning).
It also incentivises longer stays, which is obviously in they interests to make it disproportionate, so I'm not saying that there's no ulterior motive, but it's not axiomatically unfair to reward longer lets (or penalise shorter lets) that don't incur so many one-off costs.
I have no problem with per-stay fees, and agree they make total sense.
My qualm is that they sometimes aren't included in the advertised price of the listing, which makes comparing listings much more difficult, and incentivizes owners to create huge cleaning fees to artificially lower their advertised price-per-night.
At least on Airbnb, they do show the total alongside the nightly rate. The nightly rate is emphasized, for no reason other than that it's smaller - but the total is shown right next to it.
Can you sort by the real price though? Obviously not, because it’s an intentional dark pattern. If all fixed fees were identical across Airbnb this would be much less heinous.
Airbnb in the UK lists and sorts by the total price. You can see the breakdown between nightly and one-off when you click through, but the headline price includes it. I think this might be too avoid breaking a regulation under Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and/or Consumer Protection from Unfair Trading Regulations 2008.
I see your point and also the other side. If the fees are based on costs based on the changeover (i.e. cleaning up before you arrive, after you leave), then a fixed $250 would cost someone staying 6 nights $75 more than $200 nightly +$150 fees (n=6; totalNightly=200+($150/n);).
They do it because it works, so you must be in the minority.
People often lament the lack of practical training for things like personal finance and media literacy in schools. We should add consumer awareness to that list. We are raising kids to become obedient little consumers.
FTC/FCC are supposed to protect people from misleading stuff like this and level the playing field so that companies can remain competitive without resorting to dark patterns because their competitors are.
Alternatively, we could, as a country, ban the display of partial charges on advertisement. In Europe it's standard for sales taxes and other charges to be included in prices displayed to consumers. We just don't do that over here because... I guess we like charging a stupid tax? That's what it is in the end, if you think the broom for 19.95 actually costs 19.95 and budget for that we'll punish you for not properly doing advanced mathematics.
This happened to me a bunch of times as a child visiting US from Chile where they don't break out the tax, saying Oh I can get this 4.95 thing at the BullshMart, then you take $5 and you get there and oh you need to come up with 38 cents in tax, sorry, waste of a trip. I get it if you live in USA you can adapt, but if you're coming from a different country it's a burden and it's wrong.
And weirdly it's the same right-wing guys in each country including the tax in Chile and breaking it out in US. In USA of course they want the citizens to hate taxes because taxes in USA support democracy, and they figure by making it a painful hidden cost they will get me, for instance, to hate taxes instead of putting them first. And I did in fact hate them when I visited, the trick worked on me, despite being an excellent math student.
In Chile, it's because the state needs money from somewhere for concrete, courts and cops (the three things right-wing guys actually think taxes are good for) and also for incredibly shitty orphanages and "albergues" whose purpose is be able to construct arguments around that there are in fact
already orphanages and "albergues" to deny real assistance...So they have regressive taxes, mostly paid for by VAT. So poor people and to a lesser extent the middle class don't protest that they're the tax base, they hide the tax. And in fact if you look at fancy magazines like Ed, an interior design magazine in Chile, they do break out the tax to communicate that you can get out of paying it, tee hee, or split it with the seller, on a $4000 USD Ottoman.
> This happened to me a bunch of times as a child visiting US from Chile where they don't break out the tax, saying Oh I can get this 4.95 thing at the BullshMart, then you take $5 and you get there and oh you need to come up with 38 cents in tax, sorry, waste of a trip. I get it if you live in USA you can adapt, but if you're coming from a different country it's a burden and it's wrong.
It's more that if you're not a child you're almost never spending the exact full contents of your wallet.
Why bother with an already lost war like "consumer education"? Fuel charges, cleaning costs, etc. are all the cost of doing business. Require companies to list the out the door price. If your distributor switches from fuel to electric they can lower their prices and do more business.
This just sets up Amazon to charge a flat fee while they lower their costs and reap all the benefits.
I have here a UPS bill for customs, the total charge comes to 44.45, the GST + PST (taxes, for the non-Canadians) due on the package was 4.98 + 6.97 the charges are as follows:
Entry Prep Fee: 19.95 (Basically shipping and handling through the port, even though UPS has an automated system for this)
Bond Fee: 6.00 (A surcharge to get more money in case charging all these BS fees causes you to not want to pay the fees)
COD/Online Fee: 5.00 (An additional surcharge to try and cover the risk of charging you so many surcharges)
Customs GST: 4.98 (the real number)
CA BC PST: 6.97 (the other half of the real number)
Brokerage GST/HST: 1.30 (taxes on the majority of their BS fees)
COD GST: .25 (taxes on their COD surcharge)
When I'm being asked to pay taxes on BS charges your company isn't actually paying... that's when I get truly irate. (Just a PSA for anyone shipping to Canada, please send packages via USPS not a fancy package carrier, CanadaPost is amazing compared to all the private companies up here)
Las Vegas hotels are horrible at this. You now have resort fees which sometimes are as much as the stated room rate! Pay attention to those fees when booking resorts!
LV pioneered this for what's essentially just a hotel room, but now I'm seeing it everywhere. A three-star hotel in RandoCity will tack on a resort fee.
Kind of like how Door Dash and others show free delivery, or $1.99 delivery. Then when you checkout, you have a "service" charge as well as a request to tip (i.e. actually pay because we aren't paying them anything) the delivery driver.
Kind of what MercadoLivre does. The seller pay extra to offer "free shipping", the product is listed as free shipping but depending on what it will cost MercadoLivre they add a surcharge during checkout.
Sales tax is added at the register, not as part of the price tag. This is a good system, as it lets people be aware of what voting for sales taxes costs them.
C'mon - do people really vote with sales tax in mind? I'd take the EU system any day of the week. If prices for <insert regular thing I buy> go up substantially and i find out that VAT went up then I have a reasonable claim that the government is responsible for affordability.
They are specifically calling it a "fuel and inflation surcharge" and not an "inflation and fuel surcharge" or even simply an "inflation surcharge." Fuel costs are at least 50% of the public explanation for this fee and there is no reason to believe that fuel prices will be this high next month let alone permanently.
Exactly. I am not asking for the reporters' opinion. I am asking for the reporter to try to reveal the truth to the reader. That is their job. Their job isn't to reprint press releases. They should ask for clarification and evidence.
There needs to be a greater degree of skepticism in the way the media covers powerful people, companies, and organizations. Amazon saying something doesn't mean that statement is true. It is the reporter's job to determine if it is true before passing that statement along to the reader. When the reporter is unable to confirm it as truth, the reporter should denote that lack of confirmation before repeating the statement. When the reporter can confirm something is false, such as the implication that fuel price increases are permanent, the reporter should note that as a lie.
Flat Earth News is a good book that digs into why news outlets pushing PR statements verbatim (alongside other problems) became a thing.
Basically fewer journalists with more column inches to fill using syndicated pieces and barely editing them mean the same company release can appear across all the platforms with minimal contextualisation.
>> Plus no one knows what inflation will be like in a year.
I wish people would stop thinking inflation is some mythical thing that can not be predicted... We know what it will be... High... because the people controlling the policies making inflation high still believe they are not the cause and are busy shifting the blame
> I wish journalists would stop simply reprinting intentionally misleading company spin like this without any attempt to refute it.
I agree that it's annoying to see outlets printing company spin but they would need evidence to refute such claims, especially nowadays where everyone is being accused of spreading misinformation and having an agenda.
How could they go about that on a per-statement basis and what would such a refutation look like?
Make it clear this is an un-substantiated claim by the company. This isn't print media another sentence costs nothing. "Amazon refused to comment on specific costs," "no details of absorbed costs were provided," or just use language like "Amazon claims X." This would require thinking about press releases instead of regurgitating them though.
Have you noticed that gas prices generally just sit there at the same price for YEARS at a time. They take various excuses (like this one) and do their 5-10 year bump. We'll be talking about gas being JUST $6 in 2030 and then the next crisis will bring it to $12 and it will, stay there for many years.
>Have you noticed that gas prices generally just sit there at the same price for YEARS at a time. They take various excuses (like this one) and do their 5-10 year bump.
This simply is not true. For example, gas was generally cheaper in the stretch from 2015-2021 than it was from 2011-2014[1].
I think the point is that Amazon is already taking a percentage cut. If there is inflation, the prices of the good would be raised by the seller and that automatically increased how much Amazon makes.
Them increasing the size of the percentage-based cut suggests that the work Amazon does (logistics, selling access to the users' eyeballs) would be more sensitive to inflation than what the manufacturers and sellers do. Seems unlikely.
Thanks! That'd be a lot more reasonable, it just isn't how the article reads. Is the official announcement somewhere?
(I.e. what you're saying seems to be that for a $100 item that they charged $5 to ship previously, they will now be charging $5.25. Hard to complain about that.)
Good question which had me slightly concerned for a moment; there's official documentation of the upcoming change here[0]. It does seem that this is only applied to "fulfilled by Amazon" products (and will not apply to third party sales shipped by the third party), and is an additional 5% of the existing fulfillment fee tacked on.
An example they give is of a small, standard 6-oz package where the fee will increase from $2.92 to $3.07.
> Them increasing the size of the percentage-based cut suggests that the work Amazon does (logistics, selling access to the users' eyeballs) would be more sensitive to inflation than what the manufacturers and sellers do. Seems unlikely.
For fulfilment? That's extremely heavily dependent on three things: fuel, amortized vehicle costs, and labor. Major drivers of inflation before the invasion were tight labor market in the post-COVID rebound, vehicle costs, and fuel, and the invasion added further pressure on fuel, so, yeah, I’m going to say it's perfectly reasonable to expect that fulfillment costs have gone up in relation to finished consumer goods before fulfillment.
This is common practice with most carriers like a FEDEX, UPS, post offices, etc. There's the contracted rate (or published rate for lower volume shippers) and then a "fuel surcharge" that's tacked on to offset the volatility of fuel and consumables. Usually it's lifted as market conditions change, though not always immediately as each company will often book fuel at a contracted price, even if higher to insure some price stability, so the surcharges don't match market conditions exactly.
With logistics companies it's typically easier to identify the incremental surcharge, as at first glance they've blended it as fee increases.
> If there is inflation, the prices of the good would be raised by the seller and that automatically increased how much Amazon makes.
I don't think that this is the case. If I sell XYZ product and my costs increased by 4% so I raise prices by 4%. Fuel costs for Amazon increased by 18%. The prices of the goods wouldn't necessarily offset what Amazon makes. And now you have to generalize this across all products they sell and all of their global logistical considerations...
I think they were referring to the "end-buyer" price.
I think what GP missed is that this price is likely going to get baked into the end-buyer price, but not by Amazon.
The reason it's likely not baked by Amazon is because Amazon's fulfillment has costs that don't get recouped until an item is sold. If Amazon moves seller goods back and forth through its warehouses, Amazon might never make the money back on the fulfillment service if the item never sells.
Sellers will wind up conveying this additional charge back into their item's price.
Good points. I just wonder why Amazon wouldn't raise the base rate they charge sellers rather than tacking on a "surcharge." It's not as if inflation is transitory :D
Same reason B2C companies do it all the time. While Amazon is notionally B2B, it's got lots of small sellers that probably behave more like consumers, and the business that don't just won't care how the price is characterized.
Amazon's business model is "skimming off the top." Essentially take x% of whatever. If prices rise due to external factors and Amazon's x% remains identical then their real-term income increase inline with inflation.
This is double-dipping. Prices rise, Amazon makes more, now they want "and 5% more" on top because reasons.
PS - Although this argument only applies to inflation adjustments, not fuel.
Funny how businesses weren't greedy a few weeks ago, and just after inflation kicks in they all become greedy. It's all about greed and nothing to do with money printing
It is a percentage increase, not a fixed increase. And their normal fees are structured as percentages. Therefore, their existing fee structure adapted automatically to changes like money supply (or more specifically differences in exchange rates for their suppliers/third parties).
If it was a fixed increase, I'd be a lot less critical. But percentages piled on already percentage fee structures strikes of profiteering from their market position, and using the economic climate as a lazy excuse.
Funny how it's all about money printing and not about greed. Businesses? Greedy? No way! Couldn't be.
Dude, this is capitalism. Everybody uses every excuse, from the most justified to the least justified. Assuming it's greed is dumb, but assuming it isn't greed is spectacularly dumb.
It's hilarious to me that services like Uber and Lyft, who prided themselves on their free market variable pricing, now need to add explicit fuel surcharges because of market conditions. Why isn't your magical free market accounting for it already in the ride price?
I'm not advocating for Uber and Lyft or a free market or whatever, but isn't the "free market accounting for it already in the ride price" exactly because they adjusted their prices?
They adjust their prices by the minute depending on ride demand and how many drivers on the road in the area. There's no reason fuel prices wouldn't already fit into that same calculation. Instead there's a new line item added to the final bill for the surcharge.
Yeah, it's so they have a guaranteed return. If they thought the "pure market" was handling things well then they should realize after a short time supply and demand should stabilize pretty quickly with the new fuel prices. No one is going to drive if the fuel makes it unprofitable.
They're attempting to advertise lower prices than they're charging. If they want to advertise real rates and provide an itemized break down of fees on demand I'd be happy to see the increased transparency. Fees unmentioned until the last moment are designed to leverage people's sunk cost fallacy and say "Well, I'm already so close to booking a ride I might as well."
This is in no way a move to increase transparency and, uh, fuel doesn't have a flat per ride cost anyways. If I book a three thousand dollar uber to take me from LA to NYC it apparently uses just as much fuel as getting an Uber to the bus stop down the road from me.
Fuel was always included in the price. Now it's not, at least not entirely. They're not moving it out of the price out of a desire for transparency; they're trying to raise prices without getting yelled at.
There's not a "driver surcharge" and a "working doors surcharge" and a "seatbelt surcharge", right?
I wouldn’t call this transparency. It’s designed to cause confusion. Throwing too much information and too many fees to confuse the heck out of you and hope that you’d say “whatever” and book it.
If fuel cost zero yesterday and costs exactly $1 per ride (regardless of length) today then it would be transparency. What they are doing now is advertising a low up-front price and tacking on random surcharges to the final bill.
right but it could also be temporary and Amazon may remove it surcharges when the prices pull back and stabilize.
Not that I agree with Amazon here, but it makes sense not to just increase the fee overall and have it itemized if its anticipated to be temporary (even if thats temporary on the scale of say...1 year)
There have been periods of negative inflation [1][2].
Though thats not really the point either. Gas prices DO fluctuate and recently have done so drastically (48% or so YoY). They are a contributor to the overall inflationary trend recently. Though aren't the only cause, or even primary IMHO, they are probably one of the biggest that are noticeable to the common person and one that doesn't scale well.
In 2006 after Katrina i was paying well above $3.00/gallon for gas. That got better over the years and really good in the last year or two. Then its bounced back up.
So again, if Amazon sees this as a temporary trend and cost to their service, it makes sense to itemize it off to allow the option of its removal when it stabilizes and/or reverts, rather than lump it in with their standard bottom line service charge and have to explain not one, but two changes to that down the line (an increase and then decrease).
Many were skeptical and they were right to be skeptical. We're now experiencing inflation the likes of which we've not seen for decades. And it isn't over. It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
> It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
I'd say this is pretty unlikely. This is like saying that because the weatherman was wrong and it's 10 degrees colder today than predicted we should expect a new ice age to hit next week.
There is a limit to the debt-to-GDP ratio before reality takes over. Baked into the assumptions on debt is inherent growth in GDP. It's rare, but there are scenarios where you may see real contraction in GDP and, frankly the present geopolitical and global economic climate is ripe for such events. If that happens, then the US entering some inflationary spiral to service debt isn't totally 100,000 year "ice-age" ridiculous. It's more like ~100 year cold snap.
I agree, but I would be surprised if it is 8% again for the coming year, given job market is still hot, supplies are still short, the war in Ukraine will likely last at least another year, and the government still want to spend a lot of money and is unlikely to raise rates very much more than 0.25% per quarter.
> It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
Hyperinflation is typically defined as at least 50% monthly inflation (about 13000% annualized).
The highest monthly inflation since it has been tracked in US history is a 23.7% annualized rate in June 1920 (not a monthly rate, an annualized rate), the highest estimated annual inflation (obviously, pre-regular-tracki g) is just under 30% for 1778.
So any hyperinflation would be orders of magnitude beyond anything seen in US history, sure.
But I’d like to see your quantification of “not unlikely” and the supporting analysis.
transitory likely refers to the fact that supply chains and production of "stuffs" halted for an extended period of time due to the pandemic.
The Feds made a prediction, where all else being equal, that they expected supply chains to free up "soon", and it isn't a systemic issue. They guessed wrong, as the world wasn't ready to return back to prior productivity levels. This prediction, however, isn't supposed to be used as a basis for decision making for the common person.
Most of the market called out the Fed for using the term "transitory" considering the Government was printing money left and right. Now we have had a huge inflation jump as predicted.
The Fed had access to the same, if not better, data than everyone else. A big part of shortages was a rise in demand.
The gov was giving out money and the fed was "printing" trillions [printer go brrrrt" memes and all] adding to national debt. How in the name of any working economic theory can they think that WILL NOT lead to inflation? Were they in an alternate universe?
Amazon seems to have started to reach even for pennies. I have been a light user of AWS services for the past several years, and my monthly bill was usually below 0.2 USD. They never bothered to take such small amounts from the registered card. Last month's 0.14 USD bill was the first one I had to pay. :)
This is a side note. I've thought about setting up an AWS account just to play around with, what is the likelihood of a senior embedded c/c++ programmer really screwing up and end running up several thousand-dollar bill just because he put an innocuous infinite loop somewhere out of ignorance? :) Is there some trigger you can set such that CPU usage/bandwidth usage won't do something that you will never financially recover from since I won't have any knowledgeable devs to look to.
Anything can happen. AWS gives you tools to manage costs, and bill shock stories are usually told by people that didn’t know about those tools. AWS unofficially gives their customers a once-off bill amnesty (within certain not publicly defined parameters) on the proviso that you set up cost alerting properly. I had to play this card at my current employer when I forgot to scale down an RDS instance. They’re very nice about it.
seems like amazon is trying to have their cake and eat it too. Fuel surcharges only make sense if you own a fleet, but amazon drivers are independent contractors. Similarly, an "inflation" surcharge doesnt make a lot of sense when every other industry just raises prices. Do Amazon sellers see any of this 5% when they have already likely raised their prices in response to inflation? i suspect not. inflation has been unbearable for nearly a year now, so why 5% now?
It might be a tentative connection, but i think this has to do more with the unionization of an Amazon warehouse. Jeff knows tides are turning, and 5% would help to bolster quarterly earnings reports if and when healthcare, retirement, and a living wage is offered to union warehouse workers during contract negotiation. It would also help weather the storm if workers did choose to strike. This parlour trick only pans out if organized labor remains restricted to a single warehouse; its not scalable or repeatable. If the union boss is to be believed, then Amazon is looking at massive unionization across its warehouses and a potential precipitous decline in revenue in the coming years.
The arrangement described there is convoluted, but it's misleading to say they own the fleet. They (or an affiliate) do own the vehicles, but lease them to "independent contractors" who happen to exclusively work with Amazon and drive Amazon branded vehicles, but are responsible for things like paying for gas. Of course, Amazon won't let them maintain any sort of margins, so they certainly don't have much room to absorb additional costs.
This “service fee” style confusing pricing seems to be something that the US uniquely has a tolerance for. Outside of airlines and maybe hotels, it’s very uncommon in Australia. When US multinationals started doing it here (Uber is notorious for it), it came across as fairly uniquely slimy. It fools absolutely nobody to the point where I can’t possibly imagine why you’d even try it in this market unless you’re extremely tone deaf.
At least it's less than inflation is currently running year on year.
In the UK mobile phone / broadband companies have taken to adding a CPI (customer price index, a measure of inflation) + 3.9% year on year increase in to contracts. It's complete bullshit, if for no other reason than 3.9% is nearly twice the target inflation target without loading that further.
The only thing stopping them from meeting the monopoly definition and being required to break up, is the low prices to consumers. That's it, that's the only thing protecting them and this has been being questioned in the last few years.
Maybe they are a “monopoly” because of the cheap and good services they provide. The only bad monopolies are the ones using violence to hold on to it. Examples include mafia, terrorists, talibans, governments etc.
Has there ever been a company or industry that absorbs material costs, rather than passing it down to the consumer? This is the ONLY trickle-down that is actually a thing.
Ah. I've read a number of articles. Words like, "adding 5% to the fees" wasnt clear to me... I tbought they were charging a blanket 5% of the purchase price!!
Amazon is so gigantic at this point that the surcharge is like a tax. Amazon's market cap has fluctuated between the GDP of canada and south korea. Might as well view it as a country.
I use Scamazon as a replacement plan to replace (for free) broken goods that I have bought previously. And since I can return broken crap to Kohls, makes doing this easy.
This is hardly unexpected. If you are old enough to have been an adult during the Carter years, you would have expected this. Many of the charges are enumerated separately because US government regulations require their enumeration, e.g., your phone bill. Regardless, this is caused by the election of Biden and the resurrection of demonstrably failed policies of the past. Feel free to downvote me but facts are facts.
First, regarding inflation surcharge, well that's the norm in business contracts. I can't recall ever reading a business contract that didn't have an indexation clause.
Regarding other surcharges e.g. fuel, I would say, to be fair to Amazon, that they are coming late to a game that has been going for a while now.
Once in a while, I get a phone call from $well_known_international_shipping_company trying to lure my business away from their competitors.
Shipping salesdroid sends me a nice Excel spreadsheet showing the breakdown of all the nice cheap shipping rates for various weights and destinations. All designed to make you think "that looks awesome, where do I sign".
But for the last few years or so, the spreasheet has changed to include some small-print at the bottom "A fuel surcharge will apply to the Rates, calculated in accordance with the methodology at $url unless otherwise specified in the Rates, $shippingCo may from time to time elect to revise its fuel surcharge table".
It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract.
No way does the vendor want to assume the risk of fuel prices going through the roof and being forced to eat into their margin. At most they should share that risk with the customer—it isn’t like the vendor or the customer has much control over fuel prices.
> It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract.
Totally agree. Interestingly as a consumer, the only time I've seen this is on my garbage collection when I moved to a new city.
I've seen contracts arranged as "Market index price per pound of $commodity plus _x_ per pound for processing". If you're worried about costs varying significantly, you can go hedge the commodity.
I've also heard of "transportation costs paid by supplier up to _x_, with all costs in excess split 50/50 with the customer" as a way of keeping incentives aligned but sharing risk.
I wish journalists would stop simply reprinting intentionally misleading company spin like this without any attempt to refute it. Fuel costs are one of the least sticky price increases imaginable and are already decreasing after they peaked last once. Plus no one knows what inflation will be like in a year. There is nothing close to permanent about these cost increases.
The most charitable interpretation of these comments is that past increases were only because of permanent issues and this new surcharge represents a change in that policy. However if that is the case, this comment should more clearly denote that change and explain why this temporary increase is different and requires a change in policy.