News & Updates

Amazon News: Amazon U.S. Fee Changes in February 2019

Amazon is constantly looking for ways to innovate and make their operations even more efficient. Every year, the E-commerce platform reviews their pricing structure in the light of their costs and adjust the fees they are charging sellers.

In our first announcement about Amazon’s new storage fees for 2019 in the EU, we already mentioned changes coming in February this year.

Below you can find a summary of the most important changes and what it means for you as an Amazon seller.

What Fees are Changing?

There are two important dates you need to keep in mind:

  • 15th February: storage fees are updated
  • 19th February: changes to fulfillment and referral fees

Storage Fees

  1. Storage fees for items that have been in a fulfillment center for 181-365 days will be eliminated. The last long-term storage fee for this inventory will be charged January 15th, 2019.
  2. Fees for items stored for longer than 365 days still apply. There are two fee structures (charged per cubic foot vs per unit)– the greater of the two will be applied on the 15th of every month:
    1. Minimum long-term storage fees per item are reduced from $0.50 to $0.15 per unit per month.
    2. The long term storage fee is charged at $6.90 per cubic foot.
  3. Just like fulfillment fees, there will be separate monthly charges for goods that contain flammable or pressurized aerosols, starting to be collected in April 2019 for storage occurring in March 2019.

For the exact changes, check out Amazon’s announcement and examples.

Fulfillment Fees

  1. Fees increase for all sizes above 10 oz in shipping weight.
    The only fees that remain the same are for small standard (below 10 oz), large standard (below 10 oz), and special oversized items that weigh 10oz or less.
  2. Separate fees are charged for packages containing flammables, pressurized aerosol substances or lithium-ion batteries.
  3. If you participate in the Subscribe & Save program you can now choose between giving a flat discount of 5 or 10% per item, starting from September 2019. Amazon gives an additional 5% discount if a customer orders from five or more subscriptions a month to the same address.
  4. Dimensional weight calculations have changed. Amazon introduced a minimum width and height of 2 inches for oversize items.

For the exact changes, check out Amazon’s announcement and examples.

Referral Fees

  1. The applicable per-item, minimum referral fee is reduced to $0.30 across most categories.
  2. The referral fee percentage for a few categories is reduced:
    1. Baby products (excluding Baby Apparel), Beauty, Health and Personal Care (including Personal Care Appliances): reduction from 15 to 8% for products that cost less than $10.00
    2. Grocery and Gourmet Food: reduction from 15 to 8% for products that cost less than $15.00
    3. Furniture & Decor: reduction from 15 to 10% for any portion of the total sales price greater than $200.00 (excluding mattresses)
    4. Jewelry: reduction from 20 to 5% for any portion of the total sales price greater than $250.00

For exact changes, check out Amazon’s announcement and examples.

Analysis: Why is Amazon Changing their Fees?

Amazon is constantly thriving to make their logistics as efficient as possible. This means that (a) supply chain innovations are passed on as fee reductions, and (b) higher processing costs are rolled over to sellers as fee increases.

This is exactly what we see in the first fee change of the year. We can assume that higher shipping costs for heavier items as well as dangerous goods are reflected in the changes of the fulfillment fees. At the same time, fulfillment and referral fees for smaller, lighter items have not changed or even gone down.

An alternative explanation for the reduced referral fees (especially looking at the price limit) could be that Amazon wants to incentivize the sale of products on the opposite sides of the price spectrum (very cheap as well as more expensive). This might be an effort to fill current gaps and strive to offer the most extensive and varied range of products on their platform.

Actions: How does the Change in Fees affect Amazon Sellers?

If the changes in fees are positive or negative for you as a seller depends on the weight, size and type of product you are selling. Sellers of expensive jewelry will welcome the changes with open arms, whilst aerosol merchants might start wringing their hands. Therefore, the first thing you should do is to identify the part of your inventory that is affected by the changes and if it impacts your profitability.

FBA sellers who are facing an increase in fulfillment fees due to the size or weight of their products could try and reduce packaging size or weight where possible.

FBA sellers who save money as a result of the changes – celebrate.

If you are thinking of expanding your Amazon business, looking into cheaper items that were previously unprofitable might be a good idea. A reduction of more than 30% in referral fees (from $1.00/$2.00 to $0.30) could open up additional golden opportunities at this side of the price spectrum.

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