The Amazon FBA fee landscape is undergoing another set of Amazon FBA fee changes this 2024. Expect new FBA fees starting April 1st, wherein changes will take effect in May. Among the changes are the reduced FBA referral fees and fulfillment fee rates for standard-sized and large bulky-sized products. Good news, right?
But, what’s the catch?
Along with the reduced fees, Amazon introduced more granular fee tiers to the storage utilization surcharges. In addition, Amazon will also implement a low-level inventory fee and FBA inbound placement fee effective April 1st of 2024.
As an Amazon seller, these fee changes will definitely impact how you forecast your shipment, storage, and distribute your products to other fulfillment centers.
In this article, we will learn more about these fees, the impact on sellers, and how to make necessary adjustments.
Amazon New FBA Fees Update 2024
- Amazon Referral Fees Changes – Effective January 15, 2024, Amazon’s FBA referral fees will be reduced for apparel products priced below $20. Items under $15 will also have reduced fees from 17% to 5%. Products priced between $15 to $20 will also have reduced referral fees from 17% to 10%.
- FBA Fulfillment Fees Changes – Effective February 5, 2024 will apply more granular rates for standard-sized products. In addition, there will be new size tiers for the large bulky and extra-large size tiers. Since there will be new size tiers, the fulfillment fees will be adjusted accordingly. You will notice a reduction of fees for standard-sized and large bulky-sized products. The exception to these fulfillment fees are apparel. Based on the new FBA fulfillment fees summary, the fees for apparel have been reduced for all size tiers.
- Monthly Inventory Storage Fee changes – Starting April 1st, off peak monthly inventory storage fees will be reduced by $0.09 per cubic foot for standard-sized products while there will be no change to off-peak monthly inventory storage fees for large bulky or extra-large products. These changes will reflect in May 2024.
- Aged Inventory Surcharge Changes (Long-term Storage Fees) – The good news is that surcharges for inventory stored between 181 to 270 days and 365 days or more remain unchanged. However, inventory stored between 271 to 365 days will have increased surcharges. These changes will take effect on February 15, 2024.
- Storage Utilization Surcharge Changes – In addition to the aged inventory surcharges, there will also be changes to the storage utilization charges. More granular fee tiers will be applied for professional sellers with a storage utilization ratio beyond 22 weeks or 154 days. Inventory stored between 0 to 30 days will be excluded from the changes. These changes will reflect in May for storage that occurs in April 2024. For complete details, you can refer to the article 2024 FBA Monthly Inventory Storage Fee and Aged Inventory Changes in Amazon.
To show you an example of the changes, here is a comparison of the off-peak tiers:
- Low-level Inventory Fee (New) – This is one of the new fees that Amazon has implemented and will be effective on April 1, 2024. Amazon applied this new low-level inventory fees to standard-sized products for sellers that have consistently low inventory relative to customer demand. Amazon’s reason is that, “consistently low inventory affects the ability to distribute products across the marketplace, which degrades delivery speed and increases shipping costs.” Thus, Amazon requires sellers to have more than 28 days worth of inventory relative to historical demand.
- FBA Inbound Placement Service Fee (New)- Starting March 1, 2024, Amazon will apply an FBA inbound placement fee for standard-sized and large bulky-sized products. This fee will compensate for the cost of distributing inventory to different fulfillment centers that are closer to the customers. Amazon will charge the sellers $0.27 per unit for standard-sized products and $1.58 for large bulky products. These fees will be effective on March 1 and will be charged 45 days after receiving them. The exception to this fee are clothing and apparel to compensate for the increase in Chinese shopping platforms selling apparel.
Impact on Sellers
Based on the above, the reduction of the FBA referral fees and monthly inventory storage fees will not lessen the costs shouldered by sellers. In fact, there may be additional costs involved especially since the increase in monthly inventory storage fees affect those who have products stored 26 weeks and beyond. Having 28 days worth of inventory can also pose a challenge since inventory levels are also determined by suppliers based on how fast they can send the inventory to fulfillment centers.
Majority of sellers will also be affected by the increase in the aged inventory surcharge as most store their inventory within 271 to 365 days. On a positive note, this will also encourage sellers to regularly revisit their stored inventory and come up with a more streamlined forecast. This will also prevent products from being damaged due to extreme weather conditions and possible pest infestation.
Perhaps the fee that will have the greatest impact is the FBA inbound placement service fee. Sellers will now have to decide if they would like to have their inventory shipped to just one or multiple fulfillment centers. Shipping to just one fulfillment center will have a negative impact on shipping costs and customer experience.
Amazon’s solution is to come up with a program to provide an answer to the seller’s woes. Supply Chain by Amazon offers an end-to-end solution that keeps products in stock, offers discounts to reduce inbound placement fees, and provides faster and more reliable shipping.
Now that you have read about the new fulfillment fees, do you think that the reduction in fees will help your business? Amazon continues to live up to its claim of being the largest and most reliable global eCommerce platform. While Amazon aims to satisfy customers through its customer-centric policies, more and more Amazon sellers are hurting their pockets due to the increasing fees.
In this situation, the reduction of fees will have little to no effect on the costs as additional costs have come up. As a result, the money that sellers will shell out will either stay the same or increase.
Did you find this article helpful? If yes, don’t forget to share this with other Amazon sellers to keep them informed. Give us a call, too, if you need help in improving your Amazon sales.
“Declining productivity and quality means your unit production costs stay high but you don’t have as much to sell. Your workers don’t want to be paid less, so to maintain profits, you increase your prices. That’s inflation.“— W. Edwards Deming