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Selling on Amazon FBA comes with numerous benefits. For one, Amazon FBA makes you eligible to sell to over 200 million Prime members who are willing to pay more for faster delivery. You also don’t have to worry about paying for a storage facility or handling any shipping logistics.
Fulfillment by Amazon(FBA) helps you handle order fulfillment and logistics while you focus on how to generate more income for your business. However, these numerous benefits do come at a cost. In fact, Amazon has unveiled its new set of changes to the Amazon FBA fees in 2024.
So what are these Amazon FBA fee changes? Read on as we give you a breakdown of these fees, so you can effectively create a working budget, sell with fulfillment by Amazon, and increase company sales.
Amazon has made changes to its fee structure for fulfillment by Amazon (FBA). While fees are increasing in certain areas, the goal is to reduce costs and improve fulfillment speed.
One of the biggest tasks for any Amazon FBA Seller is handling orders and shipping products to customers. This can be time-consuming especially when there is an increase in Amazon sales and your business begins to expand. This is where the FBA service comes in. Apart from storing your products, Amazon helps you pick and pack up your products in fulfillment centers. They also ship these products to your customers. This means you can have the time to handle other aspects of your business.
However, Amazon charges a fee for handling and shipping your products. These fees are mostly based on the weight of the product.
In 2024, fulfillment fees will decrease by an average of $0.20 per standard-sized unit and $0.61 per large bulky unit. Amazon is also adding more granular size tiers so fees align more closely with unit dimensions. These fee changes will roll out in two phases. The new size tiers fees will be introduced on February 5th, 2024 and a 4% average fee reduction across tiers will take place on April 15th, 2024. This excludes the Apparel product category.
From the 5th of February 2024, Amazon will introduce large bulky and extra-large size tiers, and starting on the 15th of April 2024, FBA fulfillment fee rates will be reduced for standard-sized and large bulky-sized products.
Fulfillment fees for dangerous goods will also experience a similar change and will be charged based on the size tier of the items starting January 15, 2024.
Starting March 1, 2024, Amazon will introduce an inbound placement service fee for standard and Large Bulk-sized products to cover the cost of distributing inventory to fulfillment centers close to customers.
The inbound placement service fee is structured as follows:
One of the many benefits of using Amazon FBA is that you don’t have to store your inventory. This is beneficial, especially if you don’t have a space to store a large number of items. What’s more, you don’t need to pay to rent out a large storage facility. All you need to do is send your inventory to Amazon and have them store it for you. You can also have your supplier ship your products to Amazon directly. Of course, to get these benefits, you will need to pay for them.
In 2024, Amazon introduced several updates to its storage fees. Starting April 1, 2024, Amazon will reduce off-peak monthly inventory storage fees (January-September) for standard-size products by $0.09 per cubic foot. This change will first be reflected in May 2024 charges for storage occurring in April 2024.
Off-peak monthly inventory storage fees for large bulky or extra-large products, as well as peak monthly inventory storage fees for all product categories, remained unchanged.
Here’s a breakdown of what these fees will look like:
Starting April 1, 2024, Amazon will introduce a new storage utilization surcharge with increased granularity and rates. This surcharge is specifically applied to Professional sellers whose storage utilization ratio exceeds 22 weeks (approximately 5 months).
The storage utilization ratio is calculated by dividing the average daily inventory volume by the average daily shipped volume over the past 13 weeks, based on size tier 15. Inventory aged between 0 and 30 days is excluded from the surcharge. Also, starting June 1, 2024, products that are auto-replenished by Amazon Warehousing and Distribution (AWD) become eligible for a storage utilization surcharge waiver.
Starting February 15, 2024, Amazon introduced an increase in the Aged Inventory Surcharge for inventory stored between 271-365 days. This change was part of Amazon's broader efforts to manage operational costs and incentivize sellers to optimize their inventory management strategies.
Surcharges will remain unchanged for inventory that you store between 181 to 270 days, and inventory stored 365 days or more.
When an item is not sellable, Amazon sends the item back to the seller to dispose of. The cost charged when Amazon sends those items back is called Removal fees.
On the other hand, Disposal fees are the fees charged by Amazon, to destroy items that are unsellable for the seller.
Starting February 5, 2024, Amazon implemented changes to its removal and disposal fees for FBA sellers. Here's a breakdown of the 2024 Amazon FBA removal and disposal fees in the table below:
Amazon is one of the largest ecommerce sites in the world. It has a large customer base, giving you access to a huge number of potential customers. When you sell a product on Amazon, they collect a profit. This is Amazon’s commission for letting you sell on their platform. These few vary depending on the product category. The referral fee is based on the total sales price including the price of the item and the price of shipping and gift wrapping.
Starting January 15, 2024, Amazon introduced changes to its referral fees for apparel products. Specifically, for items under $15, Amazon reduced referral fees to 5% instead of the previous 17%. For items priced between $15 and $20, Amazon decreased referral fees to 10% from the previous 17%. It's important to note that referral fees for other Amazon products remained unchanged.
If you belong to other categories, your referral fees stay the same. Here are a few referral fee charges for various categories on Amazon:
It is also important to consider the taxes you will pay on your earnings on Amazon.
Starting June 1, 2024, Amazon will introduce a new Returns Processing Fee for products with high return rates across all categories, excluding apparel and shoes. This policy was designed to cover the operational costs of returns and encourage waste reduction.
The fee applies to products that have return rates above a threshold specific to each category. The return rate is calculated as the percentage of a product's shipped units in a given month that are returned by customers over that month and the subsequent two calendar months.
Fees are typically charged to your account between the 7th to 15th day of the third subsequent month. For instance, for shipped units returned in June 2024, the charge would be made between the 7th to 15th of September 2024.
The Amazon FBA fee changes may significantly affect sellers either positively or negatively. While there is no way to bypass these fees, you can reduce their impact on your business. Here are a few ways you can do that:
At the end of the day, your goal is to make a profit selling on Amazon. Knowing the expected costs will help you create a working budget and help you make smart choices.
Hopefully, this article gives you an idea of the changes to come. If you have any questions or need professional help tracking which products are profitable to increase your profit margins, you can speak to an expert on ePlaybooks right away.
You’ve probably already considered selling on Amazon but its way easier than you think.
Call Us Now