Selling on Amazon FBA comes with numerous benefits. For one, Amazon FBA makes you eligible to sell to over 200 million Prime members who are willing to pay more for faster delivery. You also don’t have to worry about paying for a storage facility or handling any shipping logistics.
Fulfillment by Amazon(FBA) helps you handle order fulfillment and logistics while you focus on how to generate more income for your business.
The numerous benefits do come at a cost. In fact, Amazon has announced an increase in FBA fees in 2022.
So what are these Amazon FBA fee increases? Read on as we give you a breakdown of these fees, so you can effectively create a working budget, sell with fulfillment by Amazon and increase company sales.
Amazon FBA fees will increase across the various fee categories in 2022 - fulfillment fees, storage fees, removal and disposal fees, referral fees and other additional fees.
One of the biggest tasks for any Amazon FBA Seller is handling orders and shipping products to customers. This can be time-consuming especially when there is an increase in Amazon sales and your business begins to expand. This is where the FBA service comes in. Apart from storing your products, Amazon helps you pick and pack up your products in fulfillment centers. They also ship these products to your customers. This means you can have the time to handle other aspects of your business.
However, Amazon charges a fee for handling and shipping your products. These fees are mostly based on the weight of the product.
In 2022, Amazon is increasing fulfillment fees on all products from January 18, 2022. Here are a few changes in fulfillment fees for all items:
The fulfillment fees for the apparel category will be charged based on the size tier in the standard category. Oversized size tiers for apparel will also see a similar increase to that of the core fulfillment fees.
Fulfillment fees for dangerous goods will also experience a similar increase and will be charged based on the size tier of the items.
For Amazon sellers who are utilizing the Small and Light program, it is important to take note of a few new changes.
From January 18, 2022, the FBA Small and Light program will increase the weight limit from 12oz to 3lb and introduce 4 new weight tiers.
For the existing small standard weight tiers, there will be an 8% increase for a weight tier of 6oz or less. For the 6+ to 12oz weight tier, there will be a 0% increase.
For the existing large standard weight tiers, there will be a 7% increase for items with a weight tier of 6oz or less. For items with a 6+ to 12 oz weight tier, there will be a 7% increase.
One of the many benefits of using Amazon FBA is that you don’t have to store your inventory. This is beneficial, especially if you don’t have a space to store a large number of items. What’s more, you don’t need to pay to rent out a large storage facility. All you need to do is send your inventory to Amazon and have them store it for you. You can also have your supplier ship your products to Amazon directly. Of course, to get these benefits, you will need to pay for them.
From February 1, 2022, monthly storage inventory fees will increase. Here’s a breakdown of what these fees will look like:
Amazon will be introducing a new surcharge for inventory stored within 271-365 days starting March 15th, 2022. The surcharges go as follows:
When an item is not sellable, Amazon sends the item back to the seller to dispose of. The cost charged when Amazon sends those items back is called Removal fees.
On the other hand, Disposal fees are the fees charged by Amazon, to destroy items that are unsellable for the seller.
In 2022, removal and disposal fees will see an increase of more than double the previous price.
Here's a breakdown in the table below:
Amazon is one of the largest ecommerce sites in the world. It has a large customer base, giving you access to a huge number of potential customers. When you sell a product on Amazon, they collect a profit. This is Amazon’s commission for letting you sell on their platform. These few varies depending on the product category. The referral fee is based on the total sales price including the price of the item and the price of shipping and gift wrapping.
Amazon has only announced a change in referral fees for snow throwers and lawnmowers. There will be a reduction in referral fees, from 15% to 8%. However, this only applies to items that cost greater than $500.
If you belong to other categories, your referral fees stay the same. Here are a few referral fee charges for various categories on Amazon:
There are a few other additional fees you need to put in mind while creating your budget for 2022:
It is also important to consider the taxes you will pay on your earnings on Amazon.
The Amazon FBA fees increase will significantly affect sellers, lowering their profit margins. While there is no way to bypass these fees, you can reduce their impact on your business. Here are a few ways you can do that:
At the end of the day, your goal is to make a profit selling on Amazon. Knowing the expected costs will help you create a working budget and help you make smart choices.
Hopefully, this article gives you an idea of the changes to come. If you have any questions or you need professional help tracking which products are profitable to increase your profit margins, you can speak to an expert on ePlaybooks right away.