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Amazon Announces 2020 FBA Fee Changes
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2019 was a groundbreaking year for Amazon, particularly for the fact that it launched one-day delivery on more than 10 million products — an attractive selling point for many high-value Prime customers.
The company announced that it “invested more than $15 billion in infrastructure, programs, people, and 150 new tools and services to help our sellers grow their brands and businesses,” and confirmed that one-day delivery was the most significant single-year investment it has ever made in FBA.
The 2020 fulfillment fee changes, which Amazon describes as “only moderate,” will help the company face the higher costs — including the 46% increase in shipping costs in Q3 alone — that come with large-scale programs such as one-day delivery.
The updates are outlined below for your reference. All changes will take effect on Feb. 18, 2020. It is important to note that FBA fulfillment fees are calculated and charged based on when shipments leave Amazon fulfillment centers, so even if an item is ordered before Feb. 18, 2020 but is shipped on or after that date, the new fees will apply.
2020 U.S. Fulfillment Fee Updates
To begin, there will be FBA fee changes on core FBA products, excluding clothes. Sellers and brands participating in FBA should reference the updated fulfillment fee per unit grid in Seller Central for a full overview, but most notably, small standard, large standard, and medium oversized products are receiving an increase.
For clothing and accessories, the $0.40 per-unit surcharge will be eliminated and per-unit fulfillment fees will increase on both small and large standard products. Oversized clothing tiers will be charged the core FBA fulfillment fees outlined above.
Lastly, products in Amazon’s dangerous goods program, also known as hazardous materials or hazmat products, will face per-unit fulfillment fee increases on both small and large standard products.
2020 U.S. Referral Fee Updates
Referral fees are a portion of the product sale that sellers pay on each product sold. Amazon mentions it ensures the fees “reflect changing industry dynamics and costs” as well as the feedback it receives from sellers. Below are the updates to 2020 referral fees:
- Activewear will be charged the Clothing & Accessories category referral fee of 17% as opposed to the Sports & Outdoors category referral fee of 15%.
- The referral fee percentage for shoes, handbags, and sunglasses will be reduced to 15% from 18% on products with a total sales price above $75.
- Outdoor furniture products will be consolidated into the Furniture category, lowering its referral fee percentage to 10% from 15% on any portion of the total sales price above $200.
- Personal care appliances will be consolidated into the Health & Personal Care category, which will lower the referral fee to 8% from 15% for items with a total sales price of $10 or less. Items above $10 will maintain the 15% referral fee.
- Ring accessories will be consolidated into the Amazon Device Accessories category, which has a 45% referral fee.
- The tiered fee structure for Amazon Business will be discontinued and one referral fee rate will be charged per category. Products above $1,000 will be charged the same referral fee rate that currently applies to products $1,000 or less in each category.
Monthly Service, Label Storage, and Removal Order Updates
Monthly inventory storage fees for January to September will increase by $0.06 per cubic foot for standard-size products and will first be reflected in April 2020 charges for storage that occurs in March. The current monthly storage fee schedule for standard-size products during the Q4 months and oversize items will remain as is.
Next, the fee for the optional FBA Label Service will increase to $0.30 per unit from $0.20 per unit and for FBA Small and Light, the per-unit fee will be $0.10. For removal and disposal orders, Amazon will charge per-unit removal order fees by weight band. For standard-size products, these removal order fees are going down, while for oversized and special handling items they are either staying the same or increasing. For all size tiers, disposal order fees are increasing.
FBA Small and Light Updates
Amazon is introducing several updates to FBA Small and Light — the program that helps reduce the cost of fulfilling orders for small and lightweight products priced under $7. The updates will take effect on Feb. 18, 2020 and are outlined below:
- Order handling, picking and packing, and weight handling fees will be rolled up into a single per-unit fulfillment fee by weight.
- Small and Light items in the optional FBA Label Service will be charged $0.10 per unit.
- Long-term storage fees for Small and Light products that have been in a fulfillment center for 181 to 365 days will be eliminated. A fee will still apply for products in a fulfillment center for more than 365 days.
- Small and Light-specific long-term storage fee rates will be discontinued. All standard FBA storage fees will now apply to these products, reducing the per unit fee to $0.15 from $0.50.
- Removal and disposal order fees will be streamlined to the same changes being made to standard FBA.
FBA New Selection Program
Amazon is launching a program known as the FBA New Selection program where sellers can qualify to get free monthly storage, free removals, and free returns processing on eligible ASINs that are new to FBA. They can also qualify to receive a $100 discount on Amazon Partnered Carrier shipping.
Sellers must opt in to the program and Amazon will determine if you qualify. To even be eligible to opt-in, you must have an Inventory Performance Index (IPI) score of 400 or higher and have no storage limits. The program will begin in April 2020.
With 2020 on the horizon, familiarize yourself with these new modifications to your FBA fee schedule in order to make any adjustments to your profit calculations for the first half of the year and continue running a smooth FBA operation.