Online merchants spared fuel, inflation surcharges for now

E-COMMERCE platforms and logistics firms in Singapore said they are not likely to implement additional fees on online merchants using their services, despite rising fuel costs and inflation on operations.

This comes after Amazon in the United States announced it will be levying a 5 per cent fuel and inflation surcharge from Apr 28 on third-party merchants that use its shipping service, Fulfillment by Amazon, which stores inventory, packs orders and ships products on sellers’ behalf. This is on top of the current fulfilment fee per unit rates, said an Amazon spokesperson.

In Singapore, ride-hailing companies such as Gojek, Grab, Tada and Ryde have also introduced temporary flat fees to help drivers defray rising operating costs. 

Despite this, e-commerce delivery companies that The Business Times spoke to said they are reluctant to pass on costs to customers listed on their platforms and are instead seeking other ways to alleviate costs.

Qxpress, the logistics arm of Qoo10, is adopting a wait-and-see approach towards the situation and has no plans to implement any additional fees to its merchants, its director Sam Too said. The company provides shipping services for e-commerce platform Qoo10 as well as other sellers in Singapore. 

“Increasing our charges will be a zero-sum game, as costs will eventually be passed on to end consumers. We are seeking other ways to mitigate the increased business costs for now,” he added. 

To moderate higher costs from inflationary pressures, Qxpress is trying to optimise its productivity and efficiency. 

For doorstop deliveries, it hopes to increase the number of parcels sent to each location, to maximise each trip.

With a higher volume of deliveries, fuel costs will be “more or less the same” but drivers will earn more with each additional parcel, offsetting the increase in petrol prices, said Too. 

Martin Tan, head of operations at J&T Express Singapore, believes it is too soon for the firms to determine if it has to impose a fee on sellers who engage its services. The firm lists platforms with third-party merchants such as Amazon, Shopee and Lazada among e-commerce partners. 

As it monitors the situation, the company will continue to leverage on and expand its network of designated collection points across the country where customers can pick up their parcels, to cut down on the need for doorstep delivery.

Another courier and delivery logistics service in Singapore, Pickupp, has also decided not to implement a fee for third-party sellers. The company is currently still able to maximise delivery efficiency without adding costs to its merchants, its co-chief operations officer Lee Chee Meng said. 

He noted that the company has a network of warehouses across different areas within Singapore, which reduces the distance travelled for deliveries, lowering fuel costs for delivery agents. 

Pickupp also adopts a hybrid supply model, with both freelance delivery agents and full-time drivers. Its freelance delivery pool, consisting of around 20,000 people, is made up of drivers and walkers, and the latter group is not impacted by fuel costs. 

“With a large and expanding pool of delivery agents as well as our hybrid model with walkers, we are currently still able to balance the costs such that it is not passed on to our customers yet,” Lee added.