Amazon fined millions? Sellers' shipping costs may rise

Recently, the California government issued a huge fine to Amazon. Amazon and one of its logistics partners were fined $6.4 million! This penalty may also lead to an increase in Amazon's logistics costs in the future!

An investigation by relevant agencies in California found that from 2018 to the end of 2020, an Amazon logistics contractor called Green Messengers Inc. had a large number of delivery drivers' wages in arrears. More than 700 drivers could only get the minimum wage and were forced to work shifts of more than 11 hours, skipping meal and rest times to work, but the contractor was still unwilling to pay the workers the overtime wages they earned.

Logically speaking, this is a problem of the contractor, so why is Amazon involved? It turns out that Amazon has outsourced and delegated the huge transportation work to some regional logistics contractors such as Green Messengers. These complex delegation networks allow Amazon to transport goods at a lower cost , which is much cheaper than hiring drivers by itself.

Does this look familiar to you? Isn’t this the contracting method of the food delivery platform that was criticized in China some time ago? At that time , a food delivery rider had an accident, and the news that the platform was not responsible at all was a hot topic. At this time, everyone realized that the food delivery rider and the platform were not in an employment relationship, but also separated by a regional contractor. In this way, the platform not only does not need to pay social security for the food delivery rider, but also can stay out of the matter when the food delivery rider has an accident, and does not need to take any responsibility at all.

Amazon also fell into the trap of California's new regulations, which require outsourcing parties like Amazon to bear the same legal responsibilities as contractors. Outsourcing services cannot reduce the legal responsibilities of employers to workers. In this case, both Amazon and logistics contractors should be responsible for the wages and overtime pay losses suffered by these workers.

In this judgment, Amazon paid the lion's share of the compensation, with $5.3 million out of the $6.4 million, and the logistics contractor paying the remaining $1.1 million, which is actually equivalent to Amazon paying the money itself. A large portion of Amazon's compensation (US$3.4 million) was penalty money , which also caused Amazon's losses in this incident to be far greater than the cost of hiring more than 700 drivers.

This ruling may disrupt Amazon's plans and ideas in the area of ​​contracting. Originally, Amazon thought it could hire delivery drivers cheaply through contractors, but now it is fined even more. It might as well just hire them on its own.

In addition, the law implemented in California is very popular, and many state governments are discussing similar policies to further implement the responsibilities of outsourcing parties to prevent them from evading their responsibilities through outsourcing. In this way, on a larger scale, Amazon may be forced to assume the responsibilities of outsourced drivers.

In this way, in the short term, Amazon and the contractors will be responsible for the delivery drivers, and may even be fined. In the long run, Amazon will gradually turn to its own driver team and reduce its reliance on contractors. In either case, the increase in logistics costs is inevitable for sellers.

According to the information released by Amazon, this year's FBA fee adjustment period has been postponed to June. Under the influence of various factors, this year's FBA fee adjustment is likely to give us sellers a "surprise", so I suggest that you make a rough estimate of the increase in FBA fees before the fee adjustment, and then plan your product profit margins or reduce operating costs.