As an Amazon seller, you’re probably getting used to FBA fee changes. It seems like every year there’s a restructuring of fulfillment and storage fees, and this year is no different. In fact, 2017 FBA fee changes are some of the most drastic we’ve seen yet, and it’s vital for sellers to prepare so they don’t lose out on profits without expecting it.
According to Amazon, “FBA fees in the U.S. in 2017 have been adjusted to reflect the changing costs of storage, fulfillment, transportation, and customer service.”
Here at Informed.co, we’re always on the lookout for potential profit pitfalls so we can warn our readers to ready themselves. That’s why we’ve put together this primer to help you deal with all the new FBA fee changes in 2017.
The 2017 FBA fee changes that already went into effect
On February 22nd, 2017, Amazon’s first 2017 FBA fee changes went into effect. To start, the company consolidated Order Handling, Pick & Pack, and Weight Handling fees into one, per-unit fulfillment fee.
For small and large standard-size items 1 lb. or less, the fulfillment fees decrease slightly or stay the same. But for large standard-size items over 1 lb., the fees increase.
Here’s a chart from Amazon showing the changes:
Another change that went into effect on February 22nd, 2017 was a change in fulfillment fees for oversize items. For sellers who specialize in oversize products, these FBA fee changes are painful.
Small, medium, large, and special oversize items will all see an increase in their base FBA fees. (Thankfully, the per-pound fees above a certain weight remain the same.)
Here’s a look at the breakdown from Amazon:
Yet another change to go into effect on February 22nd was that Amazon raised FBA fees for media products. Now, media products will be treated the same as non-media products, with their fees aligned and their sizes consolidated into a single standard-size tier.
Here’s the before and after fee chart from Amazon:
The last change from February 22nd is that Zero-Fee Fulfillment discount for standard-size items costing over $300 stopped being in effect. Sellers must now pay the same per-unit fulfillment fee as other standard-size items based on the product size tier.
Amazon also updated its inventory storage fees in March
On March 1st, 2017, Amazon announced new changes to FBA inventory storage fees. This is another area where it’s painful for FBA sellers, especially once Q4 hits.
The gist is that from January to September, fees increase from $0.54 to $0.64 per cubic foot. Most importantly, in October the storage fees now skyrocket, just as they typically do in November and December.
Amazon decided to raise October’s storage fees in an effort to discourage FBA sellers from shipping slow-moving products to fulfillment centers.
It’s now vital to reevaluate your Q4 selling strategy with this new fee structure in place before you begin sourcing. If you don’t study your costs and see how the new fees affect your projected bottom line this coming holiday season, your profits may suffer.
Changes to Amazon’s Inventory Placement Service in July
Come July 19th, 2017, “Amazon will increase how often you are asked to send items to multiple destinations when creating your shipping plan.” For sellers who rely on Amazon’s Inventory Placement Service to avoid having to ship to multiple fulfillment centers, this isn’t necessarily bad news.
Prior to July 19th, 2017, sellers had to pay $0.30 plus $0.10/lb. above the first 2 lbs. to use Inventory Placement Service on standard-size items. And for oversize items, they’d pay $1.30 + $0.20/lb. above the first 5 lbs. The service also guaranteed you’d only have to ship to fulfillment center.
After July 19th, 2017, sellers will have more flexibility. Amazon will recommend how many fulfillment centers you should send each shipment to (between one and three). Based on Amazon’s recommendation, you can either agree and not incur any extra fees, or decide to ship to fewer fulfillment centers and pay a per-item fee.
Here’s the breakdown of the changes for standard-size items:
And here’s how oversize items will be affected by the change:
What the 2017 FBA fee changes mean for Amazon sellers
Depending on what you sell, the implications of the 2017 FBA fee changes can range from relatively benign to dire.
Sellers who rely on standard-size items under 1 lb. will benefit from a very slight decrease in per-unit fulfillment fees. This could very well be offset by the increase in FBA inventory storage fees, so it’s nothing to celebrate.
But for sellers who rely on products over 1 lb. or oversize items, the 2017 FBA fee changes pose much greater concern.
Same goes for sellers specializing in media products, as the once low media fulfillment fees have disappeared and are now on par with non-media item fees. These sellers are going to be hit the hardest, especially if Amazon recommends they ship to three fulfillment centers and they opt to use Inventory Placement Service to have their shipment sent to just one.
This could mean that less sellers of media items will use FBA moving forward. It also could mean that sellers who rely on large-ticket items shift back to MFN fulfillment in order to recoup profits lost to higher FBA fees.
And it surely bodes well for Amazon’s Seller Fulfilled Prime program (Amazon SFP), which lets MFN sellers with stellar performance metrics enjoy the same perks as FBA sellers, such as the ability to offer free Prime 2-Day Shipping to customers. The beauty of Amazon SFP is that sellers eliminate the cost of shipping to FBA fulfillment centers while still gaining the benefits of FBA. (That includes enhanced odds of winning the Buy Box.)
October’s increased FBA storage fees
Perhaps the change that affect sellers most dramatically is the massive increase in FBA inventory storage fees in October. Amazon used to only make these massive FBA storage fee increases in November and December, but this year they’ve increased fees for every month of Q4.
Sellers must prepare for Q4 with more analysis on their costs than ever before. If you plan on your Q4 holiday sales fueling your 2017 profits as they may have in previous years, you may have to rebalance your product mix and shift to a more MFN-heavy strategy.
That means keeping less inventory stored in FBA fulfillment centers and more in your own warehouse or storage facility. Because these fee hikes affect virtually every seller on Amazon, expect to see prices increase across the board in Q4.
We hope this helps put Amazon’s 2017 FBA fee changes into perspective.
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