Amazon says it will change the way it charges sellers who use its fulfillment services, introducing a new fee designed to give sellers a financial incentive to ship products to multiple locations in its fulfillment network.
The idea, Amazon says, is to get products closer to customers more efficiently and cost-effectively, in line with its latest strategy of putting comprehensive sets of inventory at each of its regional fulfillment hubs.
Under the new fee structure, announced Tuesday morning, sellers will be able to reduce or avoid the new “inbound placement fees,” the company says, if they opt to send their products to multiple locations, rather than a single Amazon destination, after the new fees begin in March 2024.
At the same time, Amazon plans to reduce its existing outbound fulfillment fees, in addition to offering sellers discounts when their products can be shipped in existing packaging, improving efficiency and reducing waste.
“After these changes, we expect that sellers will see an average enhance of $0.15 in fees per unit sold (which is significantly less than the increases announced by other logistics providers); however, we also expect that there will be many sellers who will see a decrease in the average fees paid to Amazon per unit sold,” wrote Dharmesh Mehta, Amazon’s vice president of Worldwide Selling Partner Services, in a post announcing the changes.
It’s part of a broader restructuring of Amazon’s seller fees. These fees are a major focus of the FTC’s antitrust lawsuit against the e-commerce giant, filed in September in U.S. District Court in Seattle.
The lawsuit says Amazon has significantly increased the fees it charges sellers who use its fulfillment services over time, citing reports that Amazon now takes nearly half of every dollar from the typical seller using its fulfillment service. The FTC alleges that fee hikes have made it increasingly difficult for sellers to profit on Amazon, illustrating what it describes as the company’s monopoly power.
Amazon has categorically denied the allegations in the suit.
Here’s a rundown of the major changes announced Tuesday.
- Amazon will unveil a new inbound placement service fee, averaging 27 cents per unit for standard items and $1.58 per unit for large bulky items, with the option to reduce or eradicate fees by sending items to multiple locations.
- Fulfillment By Amazon (FBA) fulfillment fees will decrease on average by 20 cents per unit for standard items and 61 cents per unit for large bulky items.
- Referral fees for apparel priced under $15 will decrease from 17% to 5%, and fees for apparel priced $15-20 will decrease from 17% to 10%, starting in January.
- Fulfillment fee discounts of 4 cents to $1.32 per item will be offered for eligible items shipped in their own packaging through Amazon’s Ships in Product Packaging program, starting in February.
- A low-inventory-level fee will be introduced for standard items if selller inventory levels are consistently low relative to unit sales, “as this inhibits our ability to distribute products across our network, degrading delivery speeds and increasing our shipping costs,” Amazon says in an email to sellers.
- Non-peak monthly storage fees will be reduced by an average of 9 cents per cubic foot for standard items, from an average of 87 cents per cubic foot to 78 cents per cubic foot.
- Amazon is making updates to rates and adding new benefits for the Supply Chain by Amazon program.
- A returns processing fee will be expanded to apply to high return-rate products in all categories excluding apparel/shoes, starting in June, in an effort to “address the operational costs of returns and reduce waste.” The company says the fee “will only apply to products that have the highest return rates relative to other products in their category.”
