Why are these FBA costs increasing?
Amazon has attributed the rise to “increased levels of service and more expenditures required for higher fulfillment volumes.” The FBA fee is also increased to reflect changes in anything that might lead to an increase in storage and delivery fee, such as shipping charges, labor costs, etc.
Moreover, Amazon claims that it also handles many financial difficulties on the behalf of the sellers, such as, staffing, fulfillment costs, delivery and warehousing. Therefore, it has said that it is necessary to increase the FBA fee in order to keep it profitable and continue to provide the necessary services.
What are the new changes?
Sellers who use Amazon FBA fulfillment services will face fees adjustments across categories. The categories include Core FBA fulfillment fees (excluding apparel), FBA fulfillment fees for apparel, and FBA fulfillment fees for dangerous goods.
Mentioned below are the significant changes observed in Amazon FBA, ranging from core fulfillment to storage fee.
- FBA Core Fulfillment: FBA core fulfillment fees will increase at an average of 5% with 1.9% to 8.1% increases spanning all size tiers from standard to oversize.
- Small standard – This entire tier observed an increase of 8.1%, irrespective of the weight.
- Large standard – This tier is more variable, starting from 2% for lighter items to 7.9% for the heaviest products.
- FBA Storage Fees:
- During the peak season months (October – December), storage fees are already 3.2x higher than other months and will not see any further increases.
- During the off-peak months (January – September), storage fees will observe an increase of 11% for standard-sized items and a 10% increase for oversized products.
- FBA Aged Inventory Surcharge: Presently, there is no additional storage fee for products in storage for up to 365 days. However, Amazon will now charge a new aged inventory surcharge for units that have been stored in the fulfillment centers for 271 to 365 days. This will take effect from 15 May 2022 and an extra fee will be charged in addition to the existing storage fee.
- FBA Removal & Disposal Fee: Removal and disposal fee will see the largest increase in costs, with an average of 2x fee rise for every item size (except the smallest one).
- Depending on the item weight, standard size fee increase ranges from 63% to 138%.
- Depending on the item weight, oversize products fee increase ranges from 107% to 172%.
- FBA Small & Light Program Fee: Some major changes are in store for the sellers utilizing the small and light program:
- Amazon has increased the weight limit for FBA small & light from 12oz to 3lbs (48oz).
- For all large standard-size units, a greater dimensional/unit weight will be used to determine the shipping weight.
- Unit weight will also be used in small standard-size units.
- FBA Referral Fee/Selling Fee: The overall referral fee will remain the same, except for a decrease for lawn mowers and snow blowers.
How do I prepare my business for 2022 FBA fee changes?
While the fee rise is unavoidable, there are things you can do to minimize the impact on you, here’s a list of suggestions to help you cope with Amazon’s FBA fee hike.
- Accurately record your product dimensions – Listing a product with incorrect dimensions is one of the quickest ways to lose money on Amazon FBA. This is significant now, because the new fee is based on the size and weight of your item. If Amazon believes that your product is heavier or larger than it is, then you will be charged more fee than necessary.
To prevent this, accurately measure your products, as well as correct any inconsistencies in product dimensions on Amazon. This ensures that you haven’t made a mistake and that your products have been placed in the correct category.
- Use borderline product weight qualifications – If you look closely at the Amazon FBA fee tiers, you’ll see that each of the categories has very minute differences. You can take advantage of this by modifying your packaging.
While traditional stores have the option of using larger, more functional bags and boxes, Amazon FBA products do not. You’ll want packing that’s as tiny and light as possible instead. Additionally, if you can get rid of any heavy fillers, stuffers, or cards, do so. These tiny alterations may have an impact on your product’s total size and weight, allowing it to be placed in a lighter category and hence attract cheaper Amazon FBA fees.
- Be prepared in advance – Fulfillment center charges fees for items that are prepared before shipping. To save money on these expenses, pre-package and prepare everything, so it’s ready to leave the facility as soon as it’s ordered.
Just make sure you’ve got the proper labels. Your products may be rejected or improperly sorted if you do not follow these guidelines.
- Manage your inventory – To make the most of its storage space, Amazon encourages its sellers to keep their inventory to a minimum. If you want to save money on Amazon FBA fees, we recommend using the same strategy.
Examine your products to determine if any are taking up too much space or not moving along quickly enough, to ensure you’re not overpaying for storage. This doesn’t imply that you shouldn’t keep a slow-moving product if it contributes significantly to your profit margins.
If you discover a product that has been sitting on your shelves for far too long, it may be time to remove it. If you go this way, don’t rely on Amazon to dispose of your products. Given how stringent Amazon is about inventory management optimization, there is a fee for this service as well.
All in all, the increased Amazon FBA charge in 2022 will have a significant impact on your business. That’s why it’s critical to make wise decisions so that you don’t lose a significant amount of money. The easiest approach to prepare for Amazon costs in 2022 is to proactively spot where your issues may come up and make decisions ahead of time.