Of all the types of sales channels available to businesses, retails sites like Amazon are potentially the largest and most lucrative.
To maximize profitability on Amazon, it’s important to stay up-to-date and informed about the fees that sellers on the marketplace will have to pay. If you rely on Amazon to fulfill your customers’ orders from their warehouse, you may have heard about the upcoming Amazon FBA fee changes in 2024.
This article outlines the Amazon FBA fee changes you need to be aware of because they could have a significant impact on your profitability.
Why Is Amazon Changing Its Fees in 2024?
Keep in mind that Amazon’s goal is to make shipping so fast that it almost seems like magic. Customers have become accustomed to perks like same-day and next-day shipping. From a logistical standpoint, meeting these quick delivery windows is both complex and expensive.
To help make the dream of instant gratification a reality, Amazon aims to distribute its warehouses’ inventory as close to customers as humanly possible. As a result, some fees will shift to motivate third-party sellers to align with this goal. This means that sellers will see some fees go up, while others will be decreased.
If your inventory and packaging make it easier for Amazon to fulfill orders at the speed of light, you can expect fee decreases in some areas. On the other hand, if you make it more challenging for Amazon to meet speedy delivery requirements, you’re likely to face some fee increases.
Amazon FBA Fee Changes in 2024
The list below contains the Amazon seller fee adjustments that are expected to change throughout 2024.
Fulfillment Costs Decrease for Outbound Units
As you know, Amazon charges per-unit fulfillment fees for everything they ship on your behalf under the FBA program. In 2024, Amazon selling fees will decrease by $0.20 per unit for standard items and $0.61 per unit for large, bulky-sized products.
Note that this decrease only applies to units that are priced at $10 and above. Any items in inventory priced below $10 are still subject to a flat $0.77 fulfillment fee.
Take Advantage of Amazon-Sponsored Packaging Discounts
If your items can be shipped in their existing packaging without Amazon intervention and materials, your fees can be reduced by between $0.04 and $1.32 per unit. This discount is based on the size and weight of the products. Starts on February 5, 2024.
Being able to use your original packaging and having control over that element of fulfillment also gives you the opportunity to reinforce packaging to protect it from breakage (and therefore returns and refunds).
Reduce Your Storage Fees During Non-Peak Months
Storage fees can eat up a lot of profits, which can make sellers hesitant to keep a lot of items in Amazon warehouses. To encourage fast shipping, however, Amazon wants sellers to keep plenty of inventory in stock. The company is willing to incentivize sellers who stock inventory by providing discounts on storage fees in 2024.
This particular discount comes with a caveat because it only applies to storage fees charged to sellers during the non-peak months of January through September. The fees will be reduced from $0.87 per cubic foot to $0.78 per cubic foot. Further, the fee reduction applies to standard-sized products only. Bulky items are not eligible for this fee reduction, unfortunately.
Claim Discounts for Adding New Products
As Amazon strives to maintain its position as one of the world’s largest online marketplaces, it is incentivizing sellers to add new parent products to its FBA program. For every new parent product sellers add, they can get a 10% sales rebate.
In addition to these rebates, new parent products are also eligible for waived storage fees for the first 50 units for 180 days. Some product categories will even be able to enjoy free returns processing.
These latest FBA pricing updates are something that sellers can take advantage of to boost sales and profitability while simultaneously expanding their catalog on Amazon.
Increased Fees for Single Destination Inventory
As we mentioned, Amazon strives to get items into buyers’ hands as quickly as possible. Having redundant inventory in multiple warehouses across the country is critical for Amazon being able to provide this service. Therefore, sellers who insist on shipping inventory to a single warehouse will face fee increases.
Low-Level Inventory Fees
Starting on April 1, 2024, Amazon will begin charging additional fees for sellers who keep low levels of inventory in the warehouses.
Before loading up an Amazon warehouse to save a few cents, it’s a good idea to calculate the other costs of having a lot of stock available. For example, this could require more upfront inventory costs, and your inventory could be inaccessible to other channels. There’s a cost-benefit analysis to consider before committing the bulk of your goods to one sales channel.
The term “low-level inventory” can be subjective, so Amazon has created a threshold of 28 days of your historic supply of an SKU stocked in its fulfillment centers. You will also want to be mindful that you’ll pay a surcharge for having excess inventory, too. Ideally, track your demand and keep between one and five months of inventory across Amazon’s warehouses.
The bottom line about these marketplace changes is that the Amazon e-commerce fees for outbound orders will drop, while fees associated with inbound activities will rise. You can avoid some of the fee increases, or at least not be hit too hard by them, if you align your business practices with Amazon’s operational model of providing lightning-quick delivery.
Maximize Your Amazon FBA Profits With Help From Click Fluency
Staying up to date with Amazon’s fee structures can present unique opportunities for savvy sellers to reduce their costs and maximize profits. Amazon rewards sellers that help them make more money. In turn, that means you can boost your profits, too.
If you need help to calculate FBA fee changes, Click Fluency is here to help. To learn more, contact us to schedule a free consultation.