Amazon announced a major change to the way it will charge brands enrolled in Fulfilment by Amazon (FBA). The retail giant is introducing a new fee that incentivizes brands to ship inventory to multiple locations. According to Amazon, the goal is to place more inventory closer to customers, which improves the speed of those orders and drives more sales at a lower transportation cost.
“As we look to 2024, we will implement a set of fee changes that continue to provide you with a great value and allow us to partner together to offer customers amazing service while reducing our collective costs to do so,” said Dharmesh Mehta, Vice President, Worldwide Selling Partner Services in a blog post. “After these changes, we expect that sellers will see an average increase of $0.15 in fees per unit sold (which is significantly less than the increases announced by other logistics providers); however, we also expect that there will be many sellers who will see a decrease in the average fees paid to Amazon per unit sold.”
Below is a summary of the Amazon FBA, U.S. Referral, and Buy with Prime fees slated to take effect in 2024:
- Amazon will introduce an inbound placement service fee for standard and Large Bulky-sized products to reflect its cost of distributing inventory to fulfillment centers close to customers. These fees will average $0.27 per unit for standard-sized products and $1.58 per unit for Large Bulky-sized products. Brands will have the option to pay reduced fees or even no fee based upon whether they send shipments to a single location or multiple locations. These fees will be effective starting March 1, 2024.
- On average, Amazon will decrease FBA fulfillment fee rates for standard-sized products by $0.20 per unit and for Large Bulky-sized products by $0.61 per unit. These fees will apply starting April 15, 2024, the same date that the first inbound placement fees will begin to be charged. Products priced below $10 will continue to have an added $0.77 discount on per-unit fees.
- Amazon will offer a fulfillment fee discount ranging from $0.04 to $1.32, depending on item size and weight, for eligible products in the Ships in Product Packaging (SIPP) program. These discounts will apply starting February 5, 2024.
- Amazon will introduce a low-inventory-level fee for standard-sized products. The fee applies if brands carry consistently low levels of inventory relative to unit sales. Brands can avoid this fee by maintaining more than four weeks of inventory relative to sales. These fees will apply starting April 1, 2024.
- Amazon will reduce the non-peak monthly storage fees for standard-size products by an average of $0.09 per cubic foot, from an average of $0.87 per cubic foot to $0.78 per cubic foot, from January through September. Monthly storage fees for non-standard sizes will remain unchanged. This change will apply starting April 1, 2024.
- Amazon will reduce referral fees for apparel products priced below $20. For items priced under $15, we will decrease referral fees from 17% to 5%. For products priced between $15 and $20, we will decrease referral fees from 17% to 10%. Other referral fees will remain unchanged. These reduced fees will apply starting January 15, 2024.
- Amazon has introduced a new, lower pricing structure for Amazon Vine. This program is designed to help brands get insightful reviews and help customers make informed buying decisions. The new fee tiers apply to products enrolled in the program on or after October 19, 2023.
- Amazon will expand benefits as part of the U.S. FBA New Selection program. Amazon will provide an average 10% rebate on sales of eligible new-to-FBA parent products, newly including these benefits for non-branded selection. In addition, Amazon will offer expanded program eligibility for oversize selection and newly offer Vine benefits for eligible sellers and associated selection. Changes will take place starting March 1, 2024.
- Amazon will introduce updated rates and new benefits for Supply Chain by Amazon, an automated set of supply chain services that provides an end-to-end solution to quickly and reliably move your products from manufacturers to customers around the world. Amazon is updating the fees for Amazon Global Logistics, Partnered Carrier Program, and Amazon Warehousing & Distribution. Amazon will also provide new discounts for products that are auto-replenished by Amazon.
- Amazon will decrease the Buy with Prime service fee minimum from $1.50 to $1 per order. This will improve your profitability on lower-priced orders. These reduced fees will apply starting January 8, 2024.
- Amazon will decrease Buy with Prime fulfillment fees by 0.5% on average. For Small and Large Standard size bands less than 1 lb., fees will remain unchanged or decrease by an average of 3.3%. For size bands greater than 1 lb., fees will increase by an average of 1.6%. These reduced fees will apply starting February 5, 2024.
Channel Key Takeaway:
Every year, Amazon announces changes to the way it charges brands that sell on its marketplace. However, this is the first time Amazon has restructured its FBA fees, rather than simply increasing them. The most important thing to know is that brands will be able to reduce or avoid the new inbound placement fees by sending inventory to multiple locations beginning March 1, 2024. As for the other fee changes, Amazon said they are designed to better serve customers while providing a stronger platform. Channel Key recommends that brands review all upcoming fee changes carefully to better prepare for success on Amazon in 2024.