Navigating Amazon’s 2024 Fee Changes: What Sellers Need to Know
As an Amazon seller, staying informed about changes to the platform is crucial for maintaining profitability and efficiency. In 2024, Amazon is implementing several changes to its inventory placement and fee structures that will impact sellers. Understanding these changes is essential for navigating the evolving sales landscape on Amazon.
So, what is Inventory Placement?
- Right now, in your Seller Central settings, there is an option that you can enable or disable called Inventory Placement. This setting allows you to ship all your items to 1 location every time you create a shipment.
- From a high level, this is a very expensive option, and it doesn’t make sense for 99% of sellers to use it.
- The current default option, “Distributed Inventory Placement,” is the standard FBA shipping option we’re all used to. It’s free, but when creating shipments, Amazon may (or may not) split your shipments into multiple locations.
What’s new on March 1st?
Amazon operationally adjusted the current inventory placement system, and because of this, shipping to FBA looks to have become much more expensive.
Here’s how it will work…
- Amazon is moving the inventory placement options from where they live now in the settings menu and posting it at the start of every shipment as you create it.
- We expect that on March 1st, every time you make an FBA shipment, you’ll have to select whether you want no splits, some splits, or multiple splits.
- Based on this, expect FBA shipments to be a lot more expensive. If you do not want to spend that much, you always have the option to ship to many locations every time you create a shipment.
- However, that will come with its own costs, such as shipping, inventory placement fees, time splitting these shipments, and keeping track operationally.
Here’s an example breakdown of the fees and options you must choose from when creating an FBA shipment after March 1st.
- Minimal Shipment Splits (1 FC location):
- This one is the most expensive option. Want to ship everything to one location?
- Partial Shipment Splits (2-3 different FC locations):
- It’s a slightly cheaper option, but still expensive. Want to ship to only 2 or 3 locations?
- Amazon “Optimized” Shipment Splits (4+ location splits):
- The cheapest option if you don’t want to pay anything extra.
- Lastly, in addition to selecting one of the 3 options above, you’ll also have your choice of which part of the country you’d like to ship to.
- West Coast, East Coast, and Central Sub-Options
Amazon Calculator
Amazon has released a new calculator that lets you enter an ASIN and play around with the different inbound costs associated with that item.
You can find that HERE.
It’s a per ASIN, per UNIT fee, with larger items costing more than standard-sized items.
Although there is this increase per unit with these options outside of the Amazon Optimized Shipment Splits, there are decreases in some other FBA fees that lessen the blow.
There is, after all, a decrease in FBA fees for standard-sized units of approximately $0.20 per unit.
So, while you have an increase per unit on the inventory placement fee, on the backside, you could save approximately $0.20 – $0.35 on the same unit. Not terrible, right…? Who are we kidding, it is still terrible…lol
BUT…. this does kind of fall in line with the same 15-20% fee increase that Amazon has implemented in some shape or form annually.
This time, it’s just done in a much more convoluted way.
What other fees are on the docket in 2024?
In April, Amazon will initiate the low inventory fee.
- This fee will impact sellers who sell standard-sized products that consistently maintain lower inventory levels relative to customer demand.
- They are basing this customer demand on the historical demand (known as historical days of supply).
- This fee will be charged if your inventory does both of the following.
- Inventory levels are less than the historical demand of 28 days.
- Long-term historical days of supply last 90 days
- Amazon will calculate the historical days of supply metric at the parent product level.
- A more detailed rate card can be found HERE.
- Our best recommendation for this solution is to create SOPs that mitigate these fees to avoid paying them.
- Using a reliable provider like RSL that processes and ships quickly and accurately.
In June, Amazon will be initiating the returned inventory fee.
- This is a big deal based on what it looks like initially.
- From what we have gleaned, Amazon will be charging an increased fee for any inventory that is returned more than average.
- The kicker here is that this fee will not be on a detailed level for the product category; instead, Amazon will use top-level categories for this benchmark.
- For example, if you are selling a preferred item in the home category, it usually has a high return rate. You could be subject to an increased return fee because the average for the top-level home category is less than your return rate for the entire home category.
- We are hopeful this iterative of this fee will be fixed before June.
We hope this helps you understand one of Amazon’s many changes coming this year.
Please reach out if you have questions about the coming Amazon fees or if you would like to discuss how these will affect your business.