Millions of third-party sellers are tapping into Amazon’s Fulfillment By Amazon (FBA) program, leveraging its ease, speed, and dependability for fulfilling orders. It’s a no-brainer for ensuring quick deliveries to customers. But, let’s not forget the nitty-gritty: those FBA fees need to be on your radar for keeping your margins in check.
Sure, the FBA program is a game-changer for sellers, but it’s not a free ride. With Amazon FBA fees shifting more often than seasons, having a slick inventory management strategy is crucial.
Amazon FBA Fee Changes For 2024 Infographic
We know you’re busy making those sales and crushing your targets. So, to make your life a bit easier, we’ve whipped up an ultra-handy infographic that breaks down the 2024 Amazon FBA fee changes. This isn’t just any infographic – it’s your quick-reference guide, your strategy enhancer, and your key to staying ahead in the FBA game. No more sifting through pages of info; just a clear, concise, and visually appealing snapshot of what’s in store for 2024.
What are Amazon FBA Fees?
Amazon’s got a dynamic approach to FBA inventory storage fees, adjusting them based on the season, your product’s estimated volume, and size. To nail these calculations, your item needs to be Amazon-approved, all set for shipping in line with FBA standards. Only after you’ve ticked these boxes does Amazon measure up your item’s length, width, and height.
Heads up: if your packaging doesn’t meet FBA’s guidelines, brace yourself for extra fees. Getting these fee calculations right is a bit of a balancing act, involving a whole array of factors. Slip up even a little, and it could mean shelling out significantly more as an FBA seller.
Are Fulfillment Centers Storage Facilities?
No, fulfillment centers are not storage facilities.
Amazon’s been on a meteoric rise for the past quarter-century, with its marketplace becoming a bustling hub for third-party sellers. In a nod to their importance, Jeff Bezos once highlighted in his Letter to Shareholders that a whopping 58% of Amazon’s sales come from these sellers, a figure that’s stayed pretty consistent despite Amazon’s evolving landscape.
So, what’s the big deal for you? Well, as Amazon FBA has ballooned with the surge in third-party sellers, space in their fulfillment centers has become as precious as gold dust. Opting for FBA is a savvy move for many sellers. It not only makes your products Prime-ready but also hands off the heavy lifting of pick-pack-ship and customer service to Amazon.
But here’s the catch: with the expansion of the program, FBA fees have also crept up. Fulfillment centers aren’t just storage units for your slow-moving stock. They’re prime real estate where every square inch counts, and housing inventory that’s just sitting there costs big bucks. Amazon’s Inventory Performance Index and the uptick in FBA fees are nudging sellers to keep their inventory flowing smoothly.
And get this: in April 2021, Amazon rolled out FBA restock limits by storage type. These caps are calculated at the account level and cover a variety of storage types like standard-size, oversize, apparel, and more. Fast forward to 2023, and Amazon’s launched a new FBA capacity management system, but don’t let your guard down – those storage type limits are still in play.
Mandatory FBA Fees for All Amazon Sellers
Jumping into the Amazon selling game, whether you’re in the FBA or FBM league, means getting familiar with certain non-negotiable fees. Here’s the lowdown on what you need to pay to get the ball rolling.
Amazon Referral Fees
Think of the referral fee as your tip to Amazon for every sale you make on their turf. Usually, this fee hovers around 15% or less – a small price for the vast audience Amazon brings to your virtual doorstep.
The cool part? These fees don’t pinch your wallet upfront. Amazon smartly deducts them from your account after your product finds a new home.
2024 Referral Fee Update
Mark your calendars for January 15, 2024, folks! Amazon’s playing Santa for apparel sellers with products under $20.
If your apparel item is tagged below $15, Amazon’s slicing the referral fee from 17% down to just 5%. And for those priced between $15 and $20, it’s dropping from 17% to 10%.
Pro Tip: Want to get a handle on your upcoming fees? Amazon’s Fee Preview Report is your go-to tool.
Individual Per-Item Fees And Subscription Fees
Amazon offers two types of seller accounts: individual and professional.
Depending on the type of seller account you have, you will have to pay either the individual per-item fee Amazon charges you each time you make a sale transaction, or you will have to pay a monthly subscription fee.
Individual Seller Per-Item Fee
Individual sellers are charged $0.99 per sale transaction, instead of a monthly subscription fee.
This fee is deducted from your Amazon account balance after a sale is made, so no upfront payment is required.
Professional Seller Subscription Fee
Professional sellers pay a monthly subscription fee of $39.99, rather than a per-item fee.
This fee is also deducted from your Amazon account balance. If your balance is insufficient, it will be charged to your credit card.
Refund Administration Fees
When one of your customers asks for a refund on a product you’ve already sold, Amazon handles it but also charges you a fee for the service.
This fee will be either $5.00 or 20% of the refund amount, whichever is less.
This fee is automatically deducted from your Amazon account balance. If your balance doesn’t cover it, it’ll be charged to your credit card.
Mandatory Fees For FBA Sellers Only
Being an FBA seller, you get a pass on paying for shipping, handling, or packaging. Amazon’s team handles all that – they pick, pack, and ship your products. In exchange, you’re charged seller fees, which depend on your product’s size and weight.
In the dynamic world of Amazon PPC, not all agencies play fair. It’s crucial to be aware of some underhanded tactics that could harm your business. Here’s a rundown of five shady practices to watch out for and strategies to safeguard your interests:
Amazon FBA Fee Changes for 2024
Due to COVID-19, Amazon paused their usual annual fee updates in 2021. In 2022, we saw higher fees and a new way to calculate shipping weight for various product sizes. Also, rising fuel costs and inflation in 2022 led to additional fees, including a fuel and inflation surcharge and a holiday peak fulfillment fee.
New Rate Cards Starting February 5, 2024
Amazon’s introducing more detailed rate cards for standard-sized products, along with new categories for large bulky and extra-large items.
Fee Breakdown
- Small Standard (2 oz to 16 oz): Fees range from $3.22 to $3.82, dropping to $3.06-$3.65 in April.
- Large Standard (4 oz to 20 lb): Fees start at $3.86, going up to $7.25 plus an additional $0.08 per half-pound over the first three pounds. In April, this changes to $3.68-$6.92 + $0.08 per half-pound over the first three pounds.
- Large Bulky (up to 50 lbs): Currently at $9.73 + $0.42/lb over the first pound, dropping to $9.61 + $0.38/lb in April.
- Extra-Large (up to 50 lbs): Stays at $26.33 + $0.38/lb over the first pound even in April.
- Extra-Large (50+ to 70 lbs): Priced at $40.12 + $0.75/lb over 51 pounds, with no change in April.
- Extra-Large (70+ to 150 lbs): Costs $54.81 + $0.75/lb over 71 pounds.
- Extra-Large (150+ lbs): A hefty $194.95 + $0.19/lb over 151 pounds.
Special Categories
Apparel and Dangerous Goods: These have unique fee structures. Note that Amazon will reduce referral fees for apparel under $20 from January 15, 2024.
Ships in Product Packaging (SIPP): Products shipped in their original packaging get lower fulfillment fees.
For a detailed breakdown and examples, check out Seller Central. Stay informed and adjust your strategies accordingly!
Fee Reductions Starting April 15, 2024: Good news! Fees for standard-sized and large bulky products are getting trimmed.
Check out the upcoming rate changes and size tiers effective from February 5, 2024, and further reductions kicking in from April 15, 2024.
Good News: Fulfillment Fees Drop on April 15, 2024
From April 15, 2024, the fulfillment fees for standard and large bulky items will decrease. Expect an average reduction of $0.20 per unit for standard items and $0.61 for large items.
Keep an eye out for the detailed fee structure for early 2024 and the new rates in April.
Understanding Amazon's Monthly Inventory Storage Fees
Amazon’s inventory storage fees vary by month, and they’re typically higher during Q4 due to the busy selling season.
From October 15, 2023, to January 14, 2024, Amazon introduces the Holiday Peak Fulfillment Fee. This fee is to handle the extra load of fulfillment and transportation during this peak time. It’s applicable to:
- US FBA
- Canada FBA
- Remote Fulfillment with FBA
- Multi-Channel Fulfillment items
However, this fee doesn’t apply to US FBA items priced below $10.
2023 Peak Holiday Fulfillment Fees
- Period: October 15, 2023, through January 14, 2024.
- Criteria: This fee applies to FBA products priced over $10.
- Exclusion: Items priced under $10 are not subject to this fee and instead fall under the Low-Price FBA Rates.
FBA fulfillment fee changes (excluding apparel):
New in 2024: Low-Inventory-Level Fee
Amazon is introducing a new low-inventory-level fee effective April 1, 2024. This is what you need to watch out for:
- Applies To: Standard-sized products with consistently low inventory relative to customer demand.
- Criteria for the Fee: It kicks in if your product’s inventory levels are below 28 days, both in the long-term (past 90 days) and short-term (past 30 days).
- Calculation Basis: The fee is calculated at the parent-product level.
Note for Sellers:
- This fee won’t apply if you’re automatically replenishing inventory with Amazon Warehouse Deals (AWD).
- Sellers offering seasonal items might face challenges. Consider using Amazon Seller Fulfilled Prime (SFP) or Fulfillment by Merchant (FBM) to sidestep this fee for such items.
FBA Aged Inventory Surcharge (previously called long-term storage fees)
- Effective Date: Starting February 15, 2024, the surcharge for inventory stored between 271 to 365 days will increase.
- Unchanged Rates: Surcharges for inventory stored between 181 to 270 days and over 365 days remain the same.
How It Works:
- Amazon does monthly inventory clean-ups on the 15th. They’ll note any products in fulfillment centers for 181 days or more.
- Sellers will be charged an aged inventory surcharge based on how long the items have been stored.
- Like monthly storage fees, the aged inventory surcharge is deducted monthly from your Amazon seller account balance or the credit card on file.
Note: During Amazon’s peak seasons, these fees may increase to encourage sellers to clear out slow-moving inventory.
Conclusion
And there you have it, folks!
From the new low-inventory-level fee kicking off in April to the adjusted rates for standard and oversized items, we’ve covered a lot of ground. Remember, these changes aren’t just numbers; they’re the signposts for your strategic planning and decision-making in the coming year.
- Stay Informed: Keep these updates at your fingertips. Being proactive about fee changes can help you steer clear of surprises and optimize your margins.
- Strategize Smartly: Use this information to fine-tune your inventory management. Whether it’s deciding between FBA and FBM for seasonal items or adjusting pricing strategies, every decision counts.
- Be Agile: The world of Amazon selling is dynamic. Embrace flexibility in your approach, and be ready to pivot as new changes roll out.
Got questions, insights, or strategies you’d like to share? Drop us a comment below or shoot us an email. Let’s keep the conversation going and make 2024 a year of incredible growth and success on Amazon!
Happy selling! 🚀💼📈
