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Being familiar with the substantial profit opportunities of trading on the largest global online marketplace, as an Amazon vendor, you probably recognize the importance of comprehending and handling the charges linked to Amazon's FBA service. This can prove to be demanding, even for seasoned sellers. I've prepared an all-encompassing guide to the FBA fee structure, aimed at keeping you ahead of the game and optimizing your profits for the year 2023.
In this blog post, we'll delve into the fulfillment fees concerning hazardous materials (Hazmat), as well as the small and light fulfillment fees. Additionally, we'll explore the fees associated with the removal or disposal of products and the multi-channel fulfillment fees applicable to non-Amazon products. This comprehensive guide will empower you with the essential knowledge to make informed decisions and maximize your success in the dynamic world of e-commerce.
How does Amazon FBA Pricing Function?
Amazon's FBA fee is determined by three main factors:
Product Weight
A calculation to determine the volumetric weight of your Amazon product.
Product Size
The dimensions of the product refer to its size, which encompasses various measurements and physical attributes.
Sales Channels
The channels through which products are sold include Amazon and third-party websites. Opting for Fulfillment by Amazon (FBA) service entails dealing with crucial fees, namely the Amazon Fulfillment Fees and Monthly Storage Fees. These charges play a vital role in the entire selling procedure.
Fulfillment Fee for Hazardous Material
Fulfillment by Amazon FBA imposes varying fulfillment fees for dangerous goods, commonly referred to as hazardous materials or hazmat, due to their unique requirements for handling and storage.
Amazon FBA Fulfillment Fees for Oversized Dangerous Goods
Fulfillment Fees for Small and Light Products on Amazon FBA
Amazon FBA Small & Light program is designed to lower fulfillment expenses for products that meet specific criteria related to weight, dimensions, and price. This initiative enables sellers to offer customers lightweight and compact items at budget-friendly prices. Participating in FBA Small and Light brings various advantages, including reduced fulfillment costs and improved accessibility for customers seeking affordable and conveniently sized products.
- Prime customers enjoy the benefit of receiving free shipping.
- Cost savings on fulfillment.
- Creating a sense of trust with customers right away
FBA Removal or Disposal Fees
When a seller submits a removal or disposal request through Amazon FBA, the relevant fees for these services are immediately calculated. These fees will be imposed according to the mutually agreed-upon rate once the products are ready to be dispatched from the Amazon fulfillment centers. The updated removal and disposal order fees are provided below -
Standard Size
Oversize and Special Handling Items
In this context, special handling items would encompass shoes, watches, clothing, jewelry, and hazardous materials.
Multi-Channel Fulfillment Fees – Non-Amazon Products (Amazon FBA for Shopify Products)
You can employ Amazon FBA for products marketed through online platforms other than Amazon. If you operate a dedicated website for your product, you can leverage Amazon FBA to handle order fulfillment, relieving you of the logistical burden. Amazon labels this service as Multi-Channel Fulfillment (MCF). It's worth noting that the fees associated with Amazon FBA for MCF tend to be on the higher side.
Standard 3-5 Business Days Shipping
The MCF fulfillment fees were modified after January 19, 2023. The following information outlines the updated specifics for your reference.
Oversize Item Shipping Fee
Expedited 2 Business Day Shipping
Oversize Products
Priority 1-day Shipping
Oversize Products
Product Size Tiers
Oversize Products
Amazon FBA Monthly Storage Fees
Amazon charges sellers a monthly fee for storing their products in the company's fulfillment centers. These charges are applied from the 7th to the 15th of the subsequent month and depend on the size of the products, categorized into standard size and oversize tiers.
Amazon's monthly storage fees are determined by the size category of the product and the time of year. These charges are determined using the product's volume measured in cubic feet. The period from October to December, corresponding with the bustling Christmas shopping season, sees an escalation in storage fees as fulfillment centers globally are at their peak operational capacity.
Starting from October 1, 2023, there will be a rise of $0.20 per cubic foot in the highest monthly storage charges for oversized items from October to December. This adjustment will initially appear in the November 2023 billing for storage incurred in October 2023. No alterations to the peak monthly inventory storage fees for regular-sized products exist.
Non-Dangerous Goods
February 1, 2023, and after
Dangerous Goods
Amazon assesses a fee for products stored in their fulfillment centers for more than a year. The calculation for long-term storage fees takes place on the 15th day of each month.
Surcharge for Monthly Storage Fees
Since April 1 Amazon is implementing an additional storage charge based on how much storage you use compared to what you're allotted. This extra charge is determined using the storage utilization ratio, calculated on the final day of each month. For instance, if you store inventory in September 2023, Amazon FBA will compute the storage utilization ratio on September 30th, and any applicable surcharges will be added to your storage fees for October 2023.
Off-peak period (January-September)
Peak Period (October-December)
FBA Aged Inventory Surcharge
From April 15, 2023, and after
Referral Fees
The referral fees charged by Amazon are essentially commissions that sellers need to pay for each product they sell on the Amazon platform. These fees are not fixed and can differ based on the product category, usually spanning from 6% to 45% of the item's selling price. However, regardless of the percentage, a minimum fee of $0.30 is applied to each item sold.
The referral fee exists to offset Amazon's operational expenses, encompassing services like maintaining a platform for sellers to showcase their products, managing payment transactions and order fulfillment, and delivering customer support and returns processing. This fee is subtracted from the seller's profits before disbursal.
Amazon has declared that it will maintain its current referral fees, considering them crucial in granting sellers access to a wide customer pool, reliable payment processing, and other advantageous amenities. Given these circumstances, certain fee classifications like Collectible Coins, Entertainment Collectibles, Sports Collectibles, and Collectible Cards will be removed. Consequently, items falling under these categories will be moved to the most suitable alternative category, potentially leading to altered referral fees – either decreased or increased – for these newly categorized products.
Additional Costs for Amazon Sellers to Consider
It's important to be mindful of the following charges in conjunction with the previously mentioned ones when opting for Fulfillment by Amazon (FBA). Being vigilant about these fees is crucial, as neglecting them could potentially impact your earnings negatively.
Excess Charges for Surplus FBA Inventory Storage
If the amount of inventory you have stored in Amazon's fulfillment centers goes beyond the designated capacity limit, you will incur extra charges for exceeding inventory storage, along with the regular monthly storage fees. If relevant, you might also face an additional fee for keeping inventory that has been stored for an extended period of time.
The charge is determined by how long your inventory surpasses the capacity limit, and it applies even if your inventory is subsequently decreased below the limit. The fee for exceeding the capacity is computed as $10 per cubic foot, using the average daily volume in cubic feet that your inventory occupies beyond the limit, across any storage space within the fulfillment center.
FBA Prep Service Fees
If a vendor aims to guarantee that their items are appropriately packed and ready for shipment, they can utilize the FBA Prep service. By utilizing the right packaging and preparation assistance, you can minimize delays in the time it takes to receive your items, ensure the safety of your products, and enhance the level of customer service. Opting for this service will lead to Amazon handling the preparation of your qualifying items, subject to a fee per unit. Amazon will furnish you with an approximate preparation fee depending on the anticipated service required for the chosen product.
FBA Label Service Fees
When utilizing the FBA label service to mark and receive a unit, a charge of $0.55 is applied per unit. You have the flexibility to adjust your default setting to the FBA label service at your convenience.
Unplanned Service Fees
In case products lacking the necessary label or preparation are shipped to Amazon's fulfillment center, there is a possibility of incurring unplanned service fees from FBA. These fees are applied on a per-unit basis.
Inventory Placement Service
Instead of having Amazon divide your shipment and send it to different centers, you have the option to enroll in the FBA Inventory Placement Service. This allows you to send all your eligible inventory to just one fulfillment center. However, there is a charge for utilizing this service.
Returns Processing Fees
Amazon provides free return shipping for products sold in specific categories. If you're returning items from the clothing and shoe categories, there will be a return processing fee applied per item. However, there are no return processing fees for products in categories like watches, jewelry, luggage, handbags, and sunglasses.
Amazon FBA Export Fees
If this exporting service is provided in your country, utilizing FBA allows you to send your products to numerous other countries. Consequently, depending on the sales platform you employ, there might be an applicable export charge for your merchandise.
Summing It Up
The Amazon FBA Fees Guide for 2023 offers essential insights to sellers regarding the expenses linked with utilizing Amazon's fulfillment services. The guide details diverse charges, including storage, fulfillment, and referral fees, elucidating the methods of fee computation. Sellers must consider these costs while determining product prices, ensuring their sales generate profits. Proficiency in comprehending the fulfillment by Amazon (FBA) fees guide is fundamental for sellers seeking to optimize their use of Amazon's fulfillment services.
FAQ’S
Q1) Why should you use Amazon FBA for your business?
Amazon FBA streamlines order fulfillment, storage, and customer service, allowing businesses to focus on growth. With Amazon handling shipping, returns, and Prime eligibility, sellers gain wider reach and trust, while offloading logistical burdens.
Additionally, Amazon MCF is a fulfillment service that allows sellers to use Amazon's fulfillment network to fulfill orders placed on any sales channel, including their own website, eBay, and social media. This can help sellers save time and money on fulfillment, and it can also help them improve customer service by offering fast and reliable shipping.
Q2) Why should you choose Amazon FBA over other third-party logistics (3PL)?
Amazon FBA offers seamless integration with the Amazon marketplace, providing access to Prime benefits, a vast customer base, and efficient order fulfillment. This unique synergy enhances product visibility and customer trust, making it a compelling choice compared to traditional 3PL services.
Q3) Is Amazon FBA a good idea in 2023?
Yes, Amazon FBA can still be a good idea in 2023, but it is important to do your research and plan carefully. The market is competitive, but there are still opportunities for sellers who can offer unique products, provide excellent customer service, and effectively market their products.
Q4) Are Amazon FBA fees negotiable?
No, Amazon FBA fees are not negotiable. However, there are ways to lower your FBA fees by optimizing your product listings, shipping methods, and inventory levels. You can also claim back any fees that Amazon charges incorrectly.
