Amazon is changing the way it approaches certain FBA fees in 2024. While there is opportunity for brands to save, it requires brands to make more strategic choices to earn cost reductions.
Let’s breakdown the key changes to learn what seller behavior Amazon is incentivizing and what things will require more lift from the seller.
FBA Fulfillment Fee Rates: On average, FBA fulfillment fee rates for standard-sized products will decrease by $0.20 per unit, and for Large Bulky-sized products, they will decrease by $0.61 per unit. These changes will be effective from April 15, 2024.
Monthly Storage Fee Reduction: Non-peak monthly storage fees for standard-size products will be reduced by an average of $0.09 per cubic foot, from $0.87 to $0.78 per cubic foot, effective from April 1, 2024.
Referral Fee Reduction for Apparel Products: Referral fees for apparel products priced below $20 will be reduced. For items under $15, the fee decreases from 17% to 5%, and for products priced between $15 and $20, it decreases from 17% to 10%, starting January 15, 2024.
Ships in Product Packaging (SIPP) Program: Amazon will offer fulfillment fee discounts ranging from $0.04 to $1.32 for eligible products in the SIPP program, starting from February 5, 2024.
US FBA New Selection Program: Benefits for the program will include an average 10% rebate on sales of eligible new-to-FBA parent products, expanded program eligibility, and Vine benefits for eligible sellers, effective from March 1, 2024.
Without the proper time and management, the fee reductions above will be offset by the fee additions below.
Inbound Placement Service Fee: Amazon will introduce fees for standard and large bulky-sized products to distribute inventory to fulfillment centers close to customers. The fees will average $0.27 per unit for standard-sized products and $1.58 per unit for Large Bulky-sized products, effective from March 1, 2024.
Challenge for sellers: Amazon is continuing to set the pace for delivery speed and expects sellers using FBA to ‘chip in’ to improve network efficiency. In order to avoid this fee, brands will be required to put in more time and effort to ensuring proper distribution of their own inventory.
Low-Inventory-Level Fee: A fee will be introduced for standard-sized products if sellers maintain consistently low inventory levels relative to unit sales. Sellers can avoid this fee by maintaining more than four weeks of inventory relative to sales, and it will be effective from April 1, 2024.
Challenge for sellers: The time of supply chain disruption excuses are over. Amazon wants sellers that are consistently and reliably in-stock. Brands must pay close attention to their inventory levels to avoid this fee.
Returns Processing Fee Expansion: The returns processing fee will be expanded to apply to high return-rate products in all categories (excluding apparel and shoes), starting June 1, 2024.
Challenge for sellers: Brands must improve their product/listing quality across the board to avoid a high-return rate fee on their products.
- If a brand is not shipping inventory to Amazon weekly, or at least monthly, they will not enjoy a decrease in costs.
- If a brand is not helping distribute their inventory, they will experience an increased cost.
- If a brand is not shipping in their own containers, they will not see improved costs.
- If you don’t have the proper resources, experience, or time to optimize, you will not reap the benefits of these changes. But if you, do these changes will be a positive.
Now more than ever, brands must be on top of every element of their logistics process. Where a hands-off FBA approach may have worked in the past, it is crucial to lock in with a partner who will take the lead on managing these different levers so you can avoid unnecessary fees that will ultimately hurt your bottom line.