If you’re an Amazon seller relying on Fulfillment by Amazon (FBA), buckle upโ2024 has brought about significant changes to FBA fees that will impact your bottom line. These new policies include inbound placement fees, low inventory fees, and updates to fulfillment and storage costs. Itโs essential to stay informed and proactive about how these adjustments affect your business.
Major FBA Fee Changes in 2024
In March, Amazon introduced a new inbound placement fee thatโs been a hot topic among sellers. If youโve felt the pinch of these fees, youโre not alone. This workshop addresses all the recent changes, including the new low inventory fee, which will roll out in April.
Amazon’s goal with these changes is clear: to make FBA profitable, as theyโre no longer subsidizing certain seller costs, such as internal distribution. While this might seem overwhelming, you can successfully navigate these changes with strategic planning and optimization.
The โFBA Gameโ: Planning, Optimizing, and Forecasting
Amazon FBA now operates like a complex game, with many moving partsโthink of it like American football. To stay ahead, you must focus on three critical plays: planning, optimizing, and forecasting. Here’s how these strategies translate into real-world actions that will protect your margins and even improve profitability.
- Plan: Master Inbound Placement
Amazonโs inbound placement fees, which started in March, charge sellers for moving inventory across fulfillment centers. These fees are based on factors like your productโs size, existing inventory levels, and customer demand in different regions. Sellers now have to pay for distributing their inventory within Amazon’s network, and the costs can vary depending on how much inventory you have and where it needs to go. Strategy Tip: Use Amazon’s Revenue Calculator
Make sure to use Amazonโs revenue calculator to get a clear picture of how much these fees will cost based on your shipping tiers and regions. - Optimize: Minimize Fulfillment Fees
Fulfillment fees are decreasing on April 15th, and Amazon is also introducing new size tiers that may place some of your products in lower-cost categories. However, dimensional weight still applies, meaning larger or irregularly shaped products might incur higher fees. Strategy Tip: Optimize Packaging
Review the packaging of your products and ensure they fit within the correct size tiers. Even a small reduction in dimensions can save you hundreds or even thousands of dollars annually. - Forecast: Stay Ahead of Inventory Fees
Amazon’s new low inventory level fee will affect sellers who carry less than 28 days of stock. This fee is designed to penalize those who let their inventory levels drop too low, requiring Amazon to scramble to fulfill customer orders. If you fall below 28 days of supply, the fee could escalate depending on how quickly you sell through. Strategy Tip: Keep a Buffer Stock
Maintain at least 75-90 days of supply to avoid the low inventory fees. Plan your inventory replenishments well in advance, factoring in potential delays in inbound shipments.
Key Dates to Remember
- April 1st: Low inventory level fee begins, targeting sellers who let their stock levels drop below 28 days of supply.
- April 15th: Fulfillment fee decreases, and automated removal of inventory older than 365 days starts.
- June: Amazon will begin imposing return processing fees for sellers who exceed their category thresholds.
Winning the FBA Game: Case Studies and Strategies
Real sellers have found ways to navigate these changes and save thousands. One case study showed a seller saving over $90,000 annually by simply resizing their product packaging to fit into a lower fulfillment tier. Another seller avoided significant low inventory fees by forecasting accurately and maintaining sufficient stock levels throughout the year.
Re-measure Inventory and Adjust Packaging
Re-measure any inventory that may have incorrect dimensions. Incorrect measurements can cause you to be charged for a larger product size tier, increasing fulfillment costs. If your packaging has recently changed or if youโre planning to adjust it, submit those changes to Amazon so you can pay the correct (and lower) fees.
Watch Out for Aged Inventory Fees
Amazon will automatically remove inventory that has been sitting in their warehouses for over a year, starting in April. While this helps clear out slow-moving products, itโs up to you to manage the rest. Consider removing or liquidating products that have been stagnant for six months or more to avoid these costly fees.
Leverage Amazon Warehousing and Distribution (AWD)
Amazon’s AWD program offers another solution for optimizing storage costs. Although itโs cheaper than FBA for long-term storage, the downside is that you lose direct control over your inventory. AWD is ideal for sellers who use FBA as a supplement to their own third-party logistics (3PL) systems. AWD can also help you avoid inbound placement fees since Amazon handles the distribution of inventory across their network.
AWD vs. FBA: Weighing the Pros and Cons
While AWD has its benefits, such as lower long-term storage fees (up to 48% lower), it may not be ideal for businesses that need quicker access to their inventory or have smaller quantities to distribute. Still, if you’re managing larger quantities, AWD could help you avoid inbound placement fees and reduce overall storage costs.
Final Thoughts: Stay Proactive, Not Reactive
The key takeaway from this workshop is the importance of staying proactive with your inventory management. Use the tools available, such as Amazonโs revenue calculator and FBA fee estimator, to plan ahead. By optimizing your operationsโwhether it’s through packaging, inventory forecasting, or leveraging AWDโyou can navigate the complexities of the 2024 FBA fee structure and emerge profitable.
To dive deeper into these strategies, watch the full video for a detailed breakdown of all the changes, tips for success, and case studies from sellers just like you. The strategies shared could be the difference between just surviving and thriving in 2024.
