As we have seen take place each year for the last several years, Amazon is making changes to their Fulfillment by Amazon fees. These changes will take effect on February 22nd and are being instituted in order to keep up with the increasing costs of fulfilling orders for the e-commerce giant. Below is a quick rundown of those changes from the most recent Seller Central notification:
- Fulfillment Fees: We will adjust our fulfillment fees for most product size tiers and weights. The adjusted fees will apply throughout the year, and we will no longer have a separate rate for October through December. For more information, see FBA Fulfillment Fees below.
- Dimensional Weight Calculation: We are adjusting the way we calculate dimensional weight to align with current industry standards. Currently, dimensional weight is calculated as the unit volume (based on length x width x height in inches) divided by 166. Effective February 22, 2018, we will calculate dimensional weight as the unit volume (based on length x width x height in inches) divided by 139 (instead of 166). The dimensional weight is only applicable for large standard-size items weighing more than 1 lb. and all small, medium, and large oversize items
*Source: Seller Central: Help
What do these changes mean for you as a seller?
The obvious answer is that this will affect your profit margins because the fees have increased. Paying more for the fulfillment service will affect how much money makes it into your pocket but it also gives you access to a few more benefits. Amazon made huge strides in 2017 to increase their reach and speed up delivery of goods to customers. The implementation and/or growth of services like One-Day Shipping, Same Day Delivery and Seller Fulfilled Prime has trained the consumer to expect faster and more efficient fulfillment options.
With the deadline for these changes quickly approaching, we would encourage all sellers to analyze their current fulfillment methods and the associated costs. Amazon has an FBA calculator that can help in determining the new fees and how they affect your bottom line. Evolved Commerce also specializes in helping sellers with profit margin by analyzing their costs and implementing them into a Profit Matrix to show the best fulfillment options and sales price.
One of the nice things about the updates this year are that they will not change during Q4. In years past, Amazon has made changes that took place only during the busy holiday selling season. This was usually meant to keep up with the huge increases in inventory and orders that happen during Q4 so it will be interesting to see why they have decided not to implement the increases this year. We sent an email to Amazon to request information on this but have not yet received any response.
Whether these updates to the FBA fees hurt your bottom line or not, it is important to become familiar with them and prepare for other updates that are sure to come. Amazon will continue to push for growth in their fulfillment network and you can be sure they will always keep the best interest of the customer in mind. Fast, Convenient and more and more expensive for you as a seller…but that’s the game we play in order to have access to the hundreds of millions of shoppers on Amazon.