Amazon FBA (Fulfillment by Amazon) fees are the costs sellers incur for leveraging Amazon's vast logistics network, covering storage, packing, shipping, and customer support. But are you fully aware of how these fees impact your profitability? 2024 has brought about several changes— Managing these evolving fees is essential for staying competitive.

This guide breaks down the 2024 changes to Amazon Fulfillment, referral, and storage fees, so you can take control of your business strategy effectively. Ready to optimize your profits? Let’s dive in.

2024 FBA Fee Updates

Amazon regularly updates its fee structures, and the new year brings some significant changes for U.S. sellers. Started in January 2024, sellers had to face new adjustments to both referral fees and fulfillment costs.

Amazon updated its referral fees, a percentage of each product’s total sales price. Effective from January 15, 2024, these changes vary across different product categories. Sellers must reassess pricing strategies to maintain profit margins under the new fee structure.

While the Amazon Fulfillment Fees can vary depending on product category, size, and weight, here's a basic structure of FBA fulfillment fees in India:

NOTE: The above Amazon Fulfillment Fees depend on the product size, weight and whether it is apparel, non-apparel, or falls under dangerous goods category. The prices shown above are indicative of the base fulfillment fee charged by Amazon FBA India.

In addition to referral fees, Amazon has introduced changes to FBA fees. Fulfillment costs, determined by product size, weight, and category, may impact your bottom line more than expected. These changes are not only about hiking the fulfillment fees, they also are designed to improve efficiency.

Understanding the new fee structure is key to adjusting your operations but these FBA Fees may impact your fulfillment costs in ways you hadn’t anticipated. Let’s learn how:

Mandatory Amazon Seller Fees

Both FBA and FBM (Fulfilled by Merchant) sellers face specific costs that are unavoidable. However, sellers utilizing FBA must pay careful attention to the latest fee changes made in 2024.

FBA and FBM Seller Fees

Whether you choose to fulfill products yourself (FBM) or let Amazon handle it (FBA), there are mandatory seller fees to consider. These include referral fees, closing fees, and Amazon Fulfillment Fees. Learning the difference between FBA and FBM fees can help you decide the best fulfillment strategy for your business.

Here’s a detailed comparison between FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) for Amazon sellers based on cost structure, logistics, and control:

Specific 2024 FBA Fee Updates

This year brought some notable updates to FBA fulfillment fees, referral fees, and storage fees. Sellers need to plan their costs in advance to avoid being blindsided by rising fees mid-year.

Amazon introduced a few key updates to FBA fees in 2024 for sellers in India. Here’s a breakdown of the major changes in the Amazon Fulfillment Fees:

1. Referral Fee Changes:

   The referral fees for certain categories, depending on product types, have been adjusted in 2024. New rates apply to categories like apparel, electronics, and home goods.

2. Fulfillment Fee Updates:

   Fees related to packing, shipping, and handling have increased to reflect Amazon's logistics costs. These apply to various size categories including standard, oversized, and heavy-weight items.

3. Storage Fees:

   Monthly and long-term storage fees have increased, especially for items that remain unsold for long periods. FBA sellers need to manage their inventory more efficiently to avoid higher storage charges.

4. Aged Inventory Surcharge:

   The surcharge for aged inventory has been revised, with a higher fee applied to products stored for 365 days or more. This encourages faster stock turnover and better inventory planning.

5. Inbound Pickup Service Fees:

   A new FBA Inbound Pickup Service fee has been introduced for sellers who use Amazon’s logistics to collect and deliver products to fulfillment centers.

Amazon further introduced a few key updates to FBA fees in 2024 for sellers in India. Here’s a breakdown of the major changes:

Changes to Fulfillment, Referral, and Storage Fees

Amazon adjusted its fulfillment fees based on the product’s size, weight, and category. This makes it even more crucial to carefully calculate how each product is affected by these changes.

Aged Inventory Surcharges and New Selection Program

If you have stock sitting too long in Amazon’s warehouses, expect aged inventory surcharges to hit harder this year. However, the New Selection Program incentivizes sellers to bring in fresh products by offering discounts on storage fees for new items.

Removals, Disposals, and Manual Processing Fees

When it comes to removing unsold or excess inventory from Amazon’s fulfillment centers, sellers will see changes in removal and disposal fees. Manual processing fees have also been updated, increasing the importance of careful inventory planning.

Now that you understand the mandatory Amazon selling fees, let’s understand what referral fees are:

Referral Fees

Amazon’s referral fees are a commission based on the total sales price of a product. This percentage varies across categories, so it’s essential to know exactly how much you’ll pay for each sale.

Effective from January 2024, several product categories saw an increase in referral fees. This may have impacted the profitability of certain products if not accounted for in your pricing strategy.

Also Read: Applying for IEC (Import Export Code): Benefits and How to Get It.

While Referral fees define how much you ought to pay for your products sold, you will have to adjust your approach to accommodate these changing rates. Here's more information:

Fees Exclusive to FBA Sellers

FBA sellers face additional fulfillment fees beyond referral charges, requiring careful financial planning.

1. FBA Fulfillment Fees: 2024 Changes

   FBA fulfillment fees include storing, picking, packing, and shipping products. In 2024, these fees got updated depending on product size and weight, which added complexity to cost control.

2. FBA Storage Fees: Monthly and Long-Term Updates

   Monthly storage fees apply, but long-term fees target unsold items after 365 days. In 2024, both monthly and long-term storage fees increased, especially for slow-moving inventory.

3. Aged Inventory Surcharge: 2024 Updates

   Products stored for over 12 months incur the aged inventory surcharge, which increased in 2024. This change pressurizes sellers to manage inventory more efficiently.

4. Low-Level Inventory Fee: As of 2024

   As of 2024, this fee targeted products with low stock levels, encouraging better inventory management.

5. FBA Inbound Placement Service Fee

   As of 2024, introduction of the Inbound Placement Service Fee started charging Sellers for sending all inventory to one fulfillment center, which is impacting inbound shipment strategies.

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Sellers who handle their own fulfillment face a different set of costs compared to FBA sellers. Let’s learn more about these fees:

Fees Exclusive to FBM Sellers

While FBM sellers save on their Amazon fulfillment fees, they must cover shipping, handling, and storage themselves. These costs can add up quickly, especially for larger or heavier items.

FBM might seem cheaper on the surface, but the time and resources required for self-fulfillment can often outweigh the costs saved. FBA streamlines operations by offering fulfillment, returns, and customer service under one roof.

Let’s consider a specific product—say a mid-sized home appliance. For FBM, you’d pay for warehouse storage, packing materials, and shipping fees, while FBA would charge for Fulfillment and storage fees. It is important to analyze which model results in greater profit.

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The complexity of Amazon’s fee structure makes it essential for sellers to stay on top of their costs. Thankfully, several tools are available to help, as follows:

Managing Amazon Fees: Tools to Strategize Pricing

To handle the complexities of Amazon's FBA fees, leveraging specialized tools is crucial. Amazon's fee calculator offers a basic overview, but third-party tools like Jungle Scout provide a more in-depth analysis. These platforms track how fees, including fulfillment and storage costs, impact your margins. They also help identify opportunities for price adjustments and more efficient inventory management. Effective use of these tools can ensure that your pricing strategy remains profitable even with fluctuating fees.

Jungle Scout Method goes beyond product research, offering features that directly aid fee management. It helps forecast fees tied to product size, weight, and category, allowing sellers to better anticipate costs. This tool also tracks fulfillment, referral, and storage fees, giving a comprehensive view of potential expenses. By analyzing fee trends over time, Jungle Scout Method can help optimize pricing, manage inventory, and improve overall profitability, ensuring that sellers adapt seamlessly to Amazon’s evolving fee structure.

Also Read: Uncovering the Hidden Costs of International Business Transactions

Conclusion

Staying updated on Amazon Fulfillment fees is crucial for maintaining profitability. While Amazon’s logistics network offers substantial convenience, managing these fees strategically is vital. Utilizing tools like Jungle Scout can streamline cost optimization and enhance profit margins. Quickly adapting to Amazon’s updated FBA fee structure ensures your business remains competitive and continues to thrive within the platform’s ecosystem. You can sustain growth in a highly competitive marketplace by staying informed and planning effectively

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References:

Fees and Pricing for Amazon.in sellers

FBA vs FBM: Which is Better for Amazon Sellers?

Amazon FBA - Get the Prime advantage | Fulfillment by Amazon

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