Shipping Fees Increasing March 1

Shipping Fees Increasing March 1

Starting any growing any business can be a daunting task. Selling on Amazon is no different. With that said, it’s worth the journey!

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Amazon Seller Fees Increasing March 1st.

Amazon says the added fulfillment charges will average $0.15 per unit sold once they take effect next year.

Amazon aims to mitigate the cost of placing products near customers while keeping inventories in check under new fees for third-party sellers using its fulfillment services.

The company expects sellers to see an average fee increase of $0.15 per unit sold after the changes take effect next year. The charges come after Amazon completed an overhaul of its fulfillment network earlier this year, shifting to a regional model that has boosted delivery speeds while achieving higher in-stock levels.

“These investments result in higher customer satisfaction and more sales for you,” Amazon said in an announcement to sellers on Tuesday. “As we look to 2024, we will implement a set of fee changes that continue to provide you with a great value and allow us to partner together to offer customers amazing service while reducing our collective costs to do so.”

On March 1, Amazon will implement a fee it says reflects the cost of sending products into fulfillment network facilities closest to shoppers. The “inbound placement service fee,” the result of Amazon separating inbound and outbound fulfillment charges, averages $0.27 per unit for standard-sized products and $1.58 per unit for larger items.

The Amazon facility the item is shipped to will impact the cost, with the company noting that shipments going to the Western U.S. will generally be higher. The fee will be charged 45 days after the product is received.

“Amazon pays more money if the inventory isn’t close to the shopper,” Adam Ginsberg, founder of Internet Mastery, which offers software to Amazon sellers, said about the charges. “They want you to be a part of their optimization.”

Amazon will also add a fee starting April 1 in instances of low seller inventory levels, as insufficient stock makes it harder to place products closer to customers and increases transportation costs, the company said. Sellers can avoid this fee for standard-sized products by maintaining more than 28 days of inventory relative to historical demand.

Despite the new fees, Amazon said it expects some sellers will see a decrease in average fees per unit sold. New price reductions the company is rolling out to sellers include:

• A discount of up to 100% on the inbound placement service fee for inventory sent to multiple inbound locations

• A decrease to Fulfillment by Amazon fulfillment fee rates for standard products by $0.20 per unit and larger items by $0.61 per unit. Those changes will take effect April 15, the same date inbound placement fees will first be charged

• A fulfillment fee reduction for eligible products in its Ships in Product Packaging program. The discounts range from $0.04 to $1.32 depending on item size and weight and will apply starting Feb. 5

• During the “non-peak” period of January through September, monthly storage fees for standard-size products will drop from an average of $0.87 per cubic foot to $0.78 per cubic foot

The Evolution of Fees - Understanding what It all means…

In 2024, Amazon seeks to align fees more closely with underlying costs while offering sellers greater transparency and control over fulfillment expenses. Emphasizing that these adjustments are generally less than those by other fulfillment services, Amazon positions them as a means to encourage efficient use of its network and share cost savings with sellers.

MCF Fee Increases

Sellers may wonder about the reasoning behind MCF (Multi Channel Fulfillment) fee hikes. With the increase, Amazon will be able to make significant investments in enhancing delivery speed, maintaining high service levels, and expanding integrations. Fortunately for sellers, on average, the MCF fee increase is lower than that of other carriers.

Shifting Costs to Sellers?

To the question of whether these changes merely shift costs to sellers, that is not the case. The modifications empower sellers to choose where Amazon handles fulfillment aspects, creating incentives for efficient network utilization and cost-sharing. Unfortunately, innovation can be costly, especially as operating costs increase.

Despite increases in fees, Amazon still offers major benefits in the form of other services. Their programs and tools promote the strengths of logistics and fulfillment services for a more efficient and cost-effective supply chain.

What’s the Cost?

Amazon anticipates an average increase of $0.15 per unit sold, significantly less than increases by other providers. Fulfillment fees will remain substantially cheaper than alternatives offered by major logistics providers.

While that is the overall increase, there will be a reduction in referral fees for the apparel category, positioning it as an incentive to drive greater selection and competitive prices for customers.

Fee Changes

Amazon expanded the returns processing fee, which will only apply to specific categories with the highest return rates. This change is designed to address operational costs and reduce waste.

The 2023 peak fulfillment fee concluded on January 14, 2024. However, no information is available about a peak fulfillment fee in 2024.

The Low Price FBA fees for products under $10 will continue, promoting reduced rates compared to standard FBA fees.

Inbound Placement Service Fee

Exploring the newly introduced Inbound Placement Service Fee, Amazon believes placing inventory close to customers improves the speed of those orders, driving more sales at lower transportation costs. To enable more efficient use of their network, Amazon will begin charging separately for inbound and outbound activities.

As a result, Amazon will lower outbound fees while creating new inbound fees that you can reduce or avoid entirely based on how you inbound products. The inbound placement service fee for standard and Large Bulky sized products reflects the cost of distributing inventory to fulfillment centers close to customers. Sellers will have the option to pay reduced fees or even no fee based upon whether you send your shipment to a single location or multiple locations. Amazon’s fulfillment fees will continue to remain an average of 70% less expensive than two-day shipping methods offered by other major third-party logistics providers.

Starting March 1, 2024, when you create a shipping plan, you can select one of two inventory inbound placement options.

• Premium service: You can send your inventory to a single Receive Center or Fulfillment Center, and Amazon will spread inventory across their network on your behalf for a fee. The fee may vary by inbound location, with higher fees for shipments sent to locations on the West Coast versus other parts of the country. 

• Discounted service: Send your inventory to multiple locations yourself for a reduced fee or no fee. The discount will depend on several factors, such as the number of shipments and locations you send your inventory to.

Amazon’s Returns Processing Fee

The expanded returns processing fee will apply starting June 1, 2024 to categories other than apparel and shoes, and it will only apply to products with the highest return rates relative to other products in their category. This fee will address the operational costs of products with very high returns and reduce waste. We will share the specific return rate threshold for each product category ahead of the June 1, 2024 rollout of this fee.

To prepare for these changes, starting May 1, 2024, you can review your return rate on the FBA Customer Returns Dashboard, updated weekly as returns come in, allowing you to monitor your returns and return rates. The minimum thresholds for each category will also be published on May 1, 2024. 

Your return fees summary will appear on the fee tools available to you such as SKU economics and on your monthly payment report after charges are made.

Congratulations!

We are super proud of the Internet Mastery Community - now surpassing more than $172,300.188.48 in sales on Amazon.

Check it out for your self here: https://app.internetmasterycommunity.com

Joke of the Week:

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a marathon in understanding yourself as you build your business and developing patience while building your business. As coaches believe it or not, we are your biggest cheerleaders. We want the best for you and definitely want to see you succeed however, as my heading says master the basics, we have to go back to the basics which are sourcing our product, making sure that it’s being sold on Amazon,

List it on Amazon as long as we are ungated to do so, submit a prep form and then purchase and send your inventory to the prep center. I know many of you think that if you were to start purchasing wholesale that your business would do a whole lot better.

Keep in mind even though you might be purchasing wholesale, you still have to go through the process of becoming ungated to be able to list and sell the item.This is one of the reasons why we suggest to you to continue to do retail arbitrage. Get a hang for it get an understanding for it get a knack for it, so that when you do start sourcing Wholesale, it will become a whole lot more easier for you because now you are able to identify and know exactly what you’re looking for.

During the time while you are sourcing doing retail arbitrage you may find your niche, and that niche can lead you to a wholesaler that might be selling that item in your niche. The resources are available to you to help you to build your business. What resources am I speaking about? The training videos in your e-library. Watch them, then watch them again.

Your coach during your coaching sessions, the live training that happens throughout the week Monday through Friday from each one of our awesome coaches.

If you would give yourself a chance, trust the process, watch the videos implement what is being taught, use and subscribe to the repricer and the IM app, etc, develop a winner attitude, develop a strategy with the help of your coach, your success will be inevitable.

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That’s all we have time for today!

Stay tuned - each week we’ll uncover strategies and updates to help you grow and scale your ecommerce business!

Knowing No Boundaries,

Internet Mastery Newsletter Team!

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