Amazon Announces Overhauled Fulfillment Fees
January 24, 2024
In late 2023, Amazon announced plans to revamp its popular Fulfillment by Amazon (FBA) system, its storage and distribution infrastructure utilized by millions of Amazon third-party sellers to guarantee two-day delivery to their customers.
For Amazon, the goal of this strategic shift is to improve delivery efficiency, reducing transportation and operational costs as well as the environmental toll. Unfortunately for sellers using FBA, the changes include new and amended fees, predicted to increase average seller shipping costs by $0.15 per unit sold – a rate Amazon defends as 70% less expensive than their competitors.
Starting on March 1, 2024, there will be a new inbound placement fee –when the product is sent to an Amazon fulfillment center – which will average $0.27 per unit for standard-sized items and $1.58 per unit for large bulky-sized items. The fee can be reduced depending on whether sellers send their products to a single fulfillment storage center, rather than multiple.
Additionally, Amazon announced a new “low inventory level fee” for sellers using FBA, which begins on April 1, 2024. The fee only applies to standard-sized products, however, and can be avoided by maintaining more than four weeks of inventory relative to sales for that given product. To help dampen the blow, Amazon also announced that storage fees for standard-sized products during non-holiday months (January through September) will lower by $0.09 per cubic foot.
The good news for sellers is that fulfillment rates – delivering the product to your customers from FBA facilities – will lower. Amazon expects an average drop by $0.20 per unit for standard sized products, and a drop by $0.61 for large and bulky-sized products. The new rates will apply starting April 15, 2024. For products below $10, there will be an additional $0.77 discount on fulfillment fees per-unit.
Additionally, for products that can be shipped in their existing packaging, Amazon offers a discount fulfillment fee, called the Ships in Product Packaging (SIPP) program, with discounts ranging from $0.04 to $1.32, depending on the size and weight.
Efficient and timely customer fulfillment is central to any successful ecommerce business strategy. By understanding the upcoming FBA fee changes and their potential implications, sellers can adapt their strategies and mitigate potential challenges. This proactive approach can help them remain competitive in the Amazon marketplace and leverage FBA effectively in 2024 and beyond.
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