What You Need to Know About Amazon Seller Fulfillment Fees Increase

As business start to return to normalcy, Amazon also welcomes the sellers with higher fulfillment fees. This change will take effect this January 17th of 2023. Since more than 90% of sellers rely on FBA fulfillment, a lot of sellers will clearly be affected. This is not a welcome change to Amazon sellers as they still have to deal with inflation and are still recovering from the effects of the pandemic. 

Amazon has done their part during the pandemic to keep most fees at a minimum or eliminate them. However, since the pandemic is ending, these fees are being brought back into place. 

What Are Fulfillment Fees and When Do the Changes Apply?

The Amazon fulfillment fees are calculated based on when the shipment leaves the fulfillment center. Thus, if you ship out your order on January 20th, the new FBA fulfillment fees will apply. You may not see the impact on your next payout yet since Amazon holds funds up to 7 days upon receipt of the item. 

Amazon Fulfillment Fee Changes in 2023

As an Amazon seller, there are a lot of fees that you need to pay to use the marketplace and its services. These fees vary and depends on the category of goods and item prices. Among the fees that you need to pay are:

• Amazon Referral Fee – the referral fee varies per product category and is deducted from the product price. This ranges from 6% to 20%; in general, most have a 15% referral fee. This increases on a yearly basis so make sure to check Amazon’s page for updates. 
• Closing Fee or Variable Closing Fee – This applies to media products and is a flat fee of $1.80. Products such as music, DVDs, books, software, computer/ video games, and consoles are charged the closing fee which is separate from the Amazon Referral Fee mentioned previously. 
• FBA (Fulfillment by Amazon) Storage Fees – Storage fees are separate from the actual FBA fees that Amazon charges sellers to use their fulfillment services. There are also 2 types of fees involved. First, the monthly storage fees that are charged per cubic foot. This monthly charge increases during the fourth quarter (October to December). Sellers are also charged the Long-term storage fees which apply to products that are stored beyond 180 days. The LTSF increases for products stored over 365 days. 
• High Volume Listing Fee – This fee only applies to sellers who have listed over 100,000 ASINS. These large retailers pay a flat rate fee monthly for each eligible product. The high-volume listing fee is processed along with the storage fee and are deducted from the Amazon seller’s account balance. The remaining amount will be deducted from the card on file. 
• FBA Amazon Warehouse Shipping Fee – Since FBA sellers use Amazon’s warehouses to store products, they are charged to ship their products to an Amazon warehouse. The challenge is that some products may be shipped to several warehouses and may lead to additional costs for the seller. Thus, brand sellers should take extra care to have the items shipped out directly to the warehouses instead of relying on a courier service. 
• FBA Label Service Fee – It is important that each of the items have an Amazon approved barcode to keep track of the fulfillment process. The FBA Label Service charges a small fee to put a barcode on all items when they arrive in the warehouse. 
• FBA Return Processing Fee – When a customer returns a product that offers free shipping, Amazon charges a return processing fee. Items that qualify for free return shipping are jewelry, shoes, apparel, handbags, sunglasses, luggage, and watches. 
• Refund Administration Fee – This applies to products in the media category such as books, DVDs, music, or software. This is when a brand issues a full refund on any of the above items. However, if the item is not included in the media category, Amazon keeps 20% of the amount related to the order up to a maximum of $5 per item. 
• Coupon Redemption Fee – Only brands with a Professional seller account and in good standing are eligible to offer coupons. Brands are expected to fund the discounts and costs from the usage of the coupons. Plus, sellers are charged a redemption fee every time a customer redeems the coupon. 
• Amazon Seller Account Fees – There are 2 seller account options: Individual and Professional. Here are the differences:
  • Individual accounts are charged a fee for every product sold. 
  • Individual accounts cannot run promotions and do not have access to the Buy Box. 
  • Professional Accounts are charged a monthly fee but are not charged a fee for every product sold. However, Professional accounts are subject to a referral fee. 

Amazon has already removed the Fuel and Inflation Surchages but this has been applied to the standard FBA fee rates instead. 

Updates on Amazon Seller Fees Increase

Now that you have learned about the different Amazon fees, below are the fees that are expected to increase this January 17, 2023. 

To help you better understand the fee updates for 2023, below is a quick summary which you can also access in Amazon Seller Central.

1. FBA Outbound Fee – the rates will increase by an average of $0.22. However, effective February 16, 2023, apparel products will already use the dimensional weight or greater unit weight when calculating for shipping weight. This applies to large standard-sized products. 
2. New Storage Utilization Surcharge – Effective April 1st, 2023, sellers who will have a high cube of inventory stored in fulfillment centers will be charged this fee. This will impact about 8% of sellers with the highest volume of storage that is relative to sales volume. 
3. New Aged Inventory Surcharges – Starting April 15, 2023, all items that are stored from 271 to 365 days will be charged an aged inventory surcharge. This will affect inventory that are stored from 180 to 270 days except those in product categories of Shoes, Apparel, Bags, Watches, and Jewelry. 

4. Removal and Disposal Fees – These will also increase although there won’t be any changes in liquidation fees. 

Conclusion

As an Amazon seller, your goal is to profit from your sales, so these additional fees will definitely add challenges especially when most sellers are just starting to gain momentum in sales. Understanding the fees and costs will help sellers plan ahead and find strategies that will help shoulder the added burden of increased fees. 

Although sellers can’t do much about the increasing fees, this should serve as a push to optimize your strategy and adjust your inventory and campaigns. 

Make sure that you diligently monitor your dashboard and reports and watch out for any lost inventory or issues that may show up in your seller account. It is best to come up with a daily, weekly, and monthly plan to monitor your account and inventory to avoid incurring additional costs. 

For more tips and strategies in becoming an expert Amazon seller, please don’t hesitate to contact us. 

“Ecommerce isn’t the cherry on the cake, it’s the new cake”

– Jean Paul Ago, CEO L’Oreal