New Fees for FBA Merchants Start February 18th
by Colleen Quattlebaum, on February 17, 2016
The Amazon FBA service is increasingly popular among merchants, particularly due to the program’s low fulfilment and storage fees. While these features are certainly a plus, the company has been known to pass along price increases to sellers, specifically in February. That time has come, and it’s starting soon.
New Fees Go Into Effect February 18th
Amazon.com, Inc. recently announced that the rates for the FBA service in the United States will increase due to changing costs in transportation, storage, fulfillment and more. The fees associated with Pick & Pack and Weight Handling will increase February 18th for many products, though the fees will increase more dramatically for many of the larger-size categories.
On March 1, 2016, sellers will see an increase in the monthly fee for inventory storage for both Standard-Size and Oversize units. You can learn more about Amazon’s storage fees here and here. Pick & Pack fees will increase by approximately 2% per unit for regular sized items, but Order Handling Fees for orders won’t change. You will see changes based on size and weight, as we mentioned earlier; so it behooves sellers to dig into the research to see how these fees impact their businesses.
Nothing New for Sellers
Merchants have seen fee increases in the past; so this isn’t surprising for many. Newer sellers may be concerned with fee increases as they work to establish and build their FBA business.
Regardless of how long you’ve been an online merchant, any change in fee structure requires a bit of an adjustment period for your business as you determine how it impacts your bottom line. Will you need to increase your prices slightly to help compensate for the increased fees? How might that impact your sales? Should you continue to stock the same products, especially considering the higher increases for many larger-sized products? Now is a good time to begin considering these questions.
Fee Increase Impact
Fee increases associated with Pick & Pack and Weight Handling will begin to impact sellers on February 18, 2016. You can determine your product’s Fulfillment Fees with the following formula: Order Handling Fee + Pick & Pack Fee + Weight Handling = Fulfillment Fee. To get an idea of how these fees will impact your eCommerce business, take a look at these examples:
- Book, Large Standard-Size Media, dimensions 7.9” x 5.0” x 1.1”, unit weight 0.7 lb., outbound shipping weight 1 lb. = no Order Handling Fee. Pick & Pack Fee increases from $1.04 to $1.06. Weight Handling Fee increases from $0.63 to $0.85. Inventory storage fee = $0.01. Total fee increases from $1.68 to $1.92. That’s a 14.28% increase.
- Plastic Plates, Large Standard-Size Non-Media, dimensions 6.3” x 6.2” x 4.8”, unit weight 3.0 lbs., dimensional weight 1.1 lbs., outbound shipping weight 1 lb. = $1.00. Pick & Pack Fee increases from $1.04 to $1.06. Weight Handling Fee increase from $0.63 to $0.96. Inventory storage fee = $0.01. Total fee increases from $2.68 to $3.03. That’s a 13.0% increase.
- Hammock, Medium Oversize, dimensions 63.0” x 11.6” x 6.3”, girth + length 98.8”, dimensional weight 27.8 lbs., outbound shipping weight 48 lbs. Pick & Pack Fee increases from $5.12 to $5.20. Weight Handling Fee increases from $20.17 to $20.67. Inventory storage fee $1.07, increases to $1.15. Total fee increases from $26.36 to $27.02. That’s a 2.5% increase.
These examples are based on information found in Amazon.com’s Seller Central area. We encourage sellers to thoroughly examine the fee schedule for examples of items that pertain to their business.
A Sign of Things to Come?
It’s always helpful to plan ahead for changes that will affect your business. Are these fee increases a sign that additional increases are on the horizon for this year? It’s hard to say, since many factors influence the fee structure. It’s safest to bet on a fee increase every February, since that’s been the pattern for the last three or four years.
Stay in the Know
Does the FBA platform still make economic sense for your business? Obtaining the Prime badge can often increase sales by 20 percent or even much higher. When answering these questions, be sure to compare the fee increases to other fulfillment options, including other third-party logistic services.