Unlike Seller Fulfilled Prime, Fulfillment by Amazon (FBA) allows sellers to send their products to Amazon, where the company will handle storage, packing, and shipping.
Starting in 2023, FBA will implement a standard set of rates to be applied consistently throughout the year. The adjustments to Amazon FBA fees have had a varying impact on sellers. While for some it has only been a minor hassle, others have found it to be quite burdensome. These adjustments have been particularly difficult for sellers already bearing the brunt of rising costs.
The question remains: How are sellers dealing with the changes? 🔍
What Are Amazon FBA Fees?
FBA is a business solution provided by Amazon to its sellers. It allows them to streamline their businesses by taking advantage of Amazon’s storing, packing, and shipping services.
By choosing the FBA solution, sellers effectively delegate these tasks to Amazon, allowing them to scale faster and giving their products increased visibility in search results (as FBA products get ranked higher on Amazon).
There are many benefits to Amazon’s FBA solution. However, with the gradual hike in fees over the last two years, prices have become prohibitively high for some sellers.
FBA Fee Increases
As a result of several incremental price increases that have stacked up since 2020, Amazon’s fulfillment costs have risen by more than 30%. Unfortunately, Amazon is shifting its rising expenses onto its third-party vendors.
What are my FBA fees? Sellers should review their offerings and download a “Fee Preview” report in Seller Central under Reports > Fulfillment > Payments. This report allows sellers to check the assignments of their products and understand what they are being charged.
FBA Storage Fees
The first major change is to the storage fees. For non-peak fulfillment periods (January – September), the standard size storage fee will increase from $0.83 per cubic foot to $0.87 per cubic foot. The oversize storage fee will increase from $0.53 per cubic foot to $0.56 per cubic foot.
Long Term Storage Fees
The second major change is to the long term storage fees. Previously, inventory started incurring LTSFs at 271 days old. In 2023, inventory will start incurring LTSFs at 181 days old. This means that sellers will have to pay LTSFs on their inventory three months earlier than they did in the past.
The third major change is to the removal fees. The removal fee for standard size inventory will increase from $0.10 per cubic foot to $0.11 per cubic foot. The removal fee for oversize inventory will increase from $0.15 per cubic foot to $0.16 per cubic foot.
Other FBA Fee Changes
In addition to the changes to storage, LTSFs, and removal fees, Amazon is also making a number of other changes to its FBA fees. These changes include:
- An increase in the weight-based dimensional divisor from 139 to 140. This means that sellers will now have to pay more for items that are heavier than they are large.
- A new fee for oversized items that are shipped in non-oversized boxes.
- A new fee for items that are returned to sender.
FBA Storage Fees Also Suffered Spikes
Fulfillment center storage costs have also risen. As such, products kept in the Amazon fulfillment center for a more extended period before being sold face additional fees from the company.
In recent years, logistics companies like UPS/FedEx/USPS have also increased their fees due to inflation and gas prices.
Effect on Amazon FBA Sellers
These price hikes have caught many sellers off guard. Amazon justifies the fee increases by stating that they have to cover the expenses associated with its rapid expansion. Their remarkable growth over the past few years has presented new problems that demand substantial staffing, technology, and physical facilities investments.
As a result of Amazon’s FBA fee increases, sellers have sought to cut costs wherever possible, including sourcing from new vendors and streamlining their processes. The problem can’t be solved by reducing spending alone, and some businesses have been forced to raise prices.
Given that the vast majority of Amazon merchants use FBA, the price hikes are felt by everyone and ultimately passed on to consumers. The rising costs stemming from FBA fee hikes, ad budget increases, and overseas freight costs lead to higher prices.
The Bottom Line
Changes like the recent increase in Amazon FBA fees may harm a company’s bottom line. Adjusting to the new pricing structure can be challenging if funds are limited. Inflation may be here to stay, is it time for a change in pricing strategy? Cost cutting? Short answer…all options must be on the table.
FAQs: Amazon FBA Fee Changes for 2023
When does the US FBA Fulfillment Fee Take Effect?
The 2023 US FBA fulfillment fees (excluding apparel) will take effect on January 17, 2023
What Amazon FBA Fee Types are Changing?
The Amazon FBA Fee Types that are changing include FBA Fee, Storage Fee, Long Term Storage Fee, and Inventory Removal Order Fee.
When do Long Term Storage Fee Changes Take Effect?
Long Term Storage Fees will go into effect on April 15, 2023
How can I prepare for the Amazon FBA fee changes for 2023?
There are a number of things that you can do to prepare for the Amazon FBA fee changes for 2023. These include:
- Review your inventory and make sure that you are not storing any items that are not selling. This will help you to avoid paying LTSFs.
- Negotiate a better rate with Amazon. If you sell a large volume of products, you may be able to negotiate a lower rate with Amazon.
- Plan for the 2023 FBA fee changes now. The sooner you start planning, the more time you will have to make changes to your business.
- Use Amazon’s FBA Small and Light program. If you sell small, lightweight items, you can save money on FBA fees by using Amazon’s FBA Small and Light program.
- Stay up-to-date on Amazon’s fee changes. Amazon’s FBA fees are subject to change, so it’s important to stay up-to-date so you can make sure you’re not being overcharged.
Where can I find more information about the Amazon FBA fee changes for 2023?
You can find more information about the Amazon FBA fee changes for 2023 on the Amazon Seller Central website.
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