Every year Amazon increases FBA fees, and this year is no surprise. What make this year changes more challenging for brands, and for Amazon itself in some aspects, is managing economic activity with supply chain interruptions, labor costs shortages, and now, inflation.

Most of these changes go in effect on January 18th, 2022. 

If you use 100% merchant (self) fulfillment – there will be no impact to your Amazon P&L. We do recommend understanding what’s changing, as adding FBA model is often the right move to push growth on the platform.

Executive level summary of changes:

  1. FBA fees are increasing on average 6-9% across different categories and size of products.
  2. Introduction of a new storage fee, called aged surplus inventory, for items in FBA longer than 271 days (note, this goes in effect on May 15, 2022)
  3. Fees for aged inventory 365+ days in FBA remain the same
  4. Labelling costs are increasing by .25 per unit.
  5. More than double increase in cost for removal and disposal of inventory
  6. No increases to a category specific referral fee (also known as Amazon commission fee)

 

What do decision makers and CFOs need to do to prepare and minimize fees increase impact to their Amazon profitability

 

  1. Review impact to net payout on a transactional level. 

Transactional fees are made of 2 fees: referral fee, and an FBA fee. There are no changes to the referral fees

Transactional fees are comprised of FBA fee and a referral fee. There are no changes to a referral fee, which means that even though FBA fees increase by 6-9% on average, overall net transactional payout decrease for most brands will be in 1-3% range. It’s important to be clear on that number, based on your products and pricing.

2. Tighten controls around FBA inventory management 

I know, it’s tough anything inventory or supply management now. Amazon got hit by labor shortages as well, so it’s no surprise that labor impacted elements of fulfillment (label, pulling items off the shelf, etc.) are areas with highest % increase of fees.

Amazon is going to charge a lot more for aging (9+ months in FBA) inventory, and removal of unfulifllable inventory. Being more proactive about minimizing that will save you on these operational fees.

3. Review your product offers 

When we work with clients on improving profitability on Amazon creating product offers that are scaleable  AND profitable becomes a must combination. If your entry product is fragile, requires labeling, barely breaking even now – will it become a loss leader after these changes? Can you support that? Increasing average order value by creating right product offers can hep you absorb fees without losing sales volume.

Struggling with profitability on Amazon? We can help 

Here are some examples of changes from our management portfolio (all numbers are per unit):

ItemBefore January 18, 2022After January 18, 2022FBA fee increase (%)FBA fee increase (cents)
Eyeshadow (2 oz)$2.70$2.928.15%$0.22
Sunglasses ( 4 oz)$3.32$3.515.72%$0.19
Sport accessory (12 oz)$4.25$4.526.35%$0.27
Shirt (13 oz)$4.65$5.079.03%$0.42
Household cleaning product 1.9 lbs)$5.68$6.137.92%$0.45
Grocery bulk item (21 lbs – oversize)$16.26$16.541.72%$0.28

 

Newly minted aged surplus inventory fee for items over 271 days in FBA:

Prior to May 15, 2022
Inventory assessment dateItems in fulfillment centers 271 to 365 daysItems in fulfillment centers 365 days or more
Monthly (15th of every month)N/A$6.90 per cubic foot or $0.15 per unit, whichever is greater
May 15, 2022, and after
Inventory assessment dateItems in fulfillment centers 271 to 365 daysItems in fulfillment centers 365 days or more
Monthly (15th of every month)$1.50 per cubic foot$6.90 per cubic foot or $0.15 per unit, whichever is greater

 

Monthly storage fee:

Storage DurationChange
Standard – Monthly Storage Fee (Jan – Sept)Increase by .08 per cubic foot
Oversize – Monthly Storage Fee (Jan – Sept)Increase by .05 per cubic foot
Monthly storage fee (Sept – Dec)no change

 

Link to full list of changes (sign in to Amazon Seller Central required)