How Q4 2016 Amazon FBA Fees Will Impact Your Business

Announcing the 2016 Amazon FBA Fees

Last year, Fulfillment by Amazon (FBA) volumes, growth rates, and inventory levels were extremely high. As a result, Amazon’s U.S. fulfillment centers were very full in months of November and December and throughout most of Q4.

According to Amazon, the cause of this “fullness” was because FBA inventory did not sell until well into 2016.

To avoid potential capacity constraints during the 2016 holiday season, Amazon is accelerating the expansion of their fulfillment capacity.

According to the announcement, Amazon is changing their FBA fee structure to encourage all sellers to send in and store products in November and December that are likely to sell by the end of 2016.

Pro-Tip: Changes will go into effect on October 1, 2016.

2016 Amazon FBA Fees: Monthly Inventory Storage

Monthly inventory storage fees for standard-size and oversize items will change for storage in October, November, and December.

According to Amazon, fees for October will be reduced, and fees for November and December will increase.

This change will first be reflected in the November 2016 charges for October 2016 storage (as seen below).

2016 Amazon FBA Fees

2016 Amazon FBA Fees: Reduced weight handling

Effective November 1, 2016, Amazon will reduce weight handling fees for all items shipped in November and December. These reduced fees are designed to offset the increase in monthly storage fees for sellers who reduce or sell through inventory.

Weight handling fees return to the amounts listed in the Prior to November 1, 2016 columns beginning January 1, 2017 (as seen below).

2016 Amazon FBA Fees

 

2016 Amazon FBA Fees

2016 Amazon FBA Fees: The Main Takeaways

  • Amazon is breaking up Q4 monthly storage fees into October fees, and Nov – Dec fees.
  • Monthly Storage Fees are going down in October by 25%
  • Monthly Storage Fees are going up in November & December by 3x for Standard items, and 2x for Oversize items.
  • Weight handling fees are going down in November & December by anywhere from 10% to 25% depending on the size, with larger size tiers seeing a larger percentage decrease.

 

How will the 2016 Amazon FBA Fees Impact Sellers?

jeff-coleman“Amazon wants to make it cheaper to ship items via FBA to incentivize sellers to use FBA for items that sell & increase their FBA catalog as much as possible.”

“However, as we’ve seen in recent years, Amazon is getting increasingly sensitive to their own capacity constraints and wants to penalize sellers who take up valuable warehouse space with items that aren’t selling (hence the dramatic increase in storage fees during November & December).”

“If an item sells quickly, this will make it cheaper to use FBA, if an item doesn’t sell your per-unit FBA cost will increase significantly.”

Jeff Coleman, Director of Account Management at CPC Strategy

nick-sandberg“Wow, more changes, more increases for slow movers (storage fees), and decreases rewarding sales (weight handling) but plenty of time to prepare. Those 3x and 2x fee increases could really add up quickly and eat up a seller’s profits in Q4.”

“This presents challenges to most sellers. Strategies for slow inventory and FBA recommendations for all types will be a very important thing for Q3.”

Nick Sandberg, Marketplace Program Development Manager at CPC Strategy

Amazon FBA Box Content Information Requirements

Additionally, effective November 1, 2016, Amazon will require sellers to provide box content information for each box sent to a fulfillment center. This will ensure that inbound shipments are received quickly and accurately.

In September 2016, Amazon will provide additional tools to make it easier to provide box content information about all shipments.

pat-petrielloPro-Tip: If a seller’s shipping processes do not support providing this information, they can pay a service fee to have Amazon determine their box contents at the fulfillment center. The service fee will be $0.10 per unit from January to October and $0.15 per unit from November to December.

“The operational impact of having to include additional box intent information as of​ November 1st will materially impact the inbound shipment creation workflow for those Sellers who are not already including this information,” Pat Petriello, Amazon Sales Acceleration Program at CPC Strategy said.

“It will also make it more difficult for those Sellers which have their products shipped directly from a manufacturing facility or distribution center where they aren’t controlling the packout process.”

“​In a larger sense, this is further maturation of Amazon as a marketplace and raises the stakes for accurate and data driven inventory planning.”

“Those Sellers which can accurately project inventory allocation have the opportunity to enjoy reduced ​handling fees while those Sellers which continue to inefficiently send inventory into FBA will pay additional storage fees.”

For more on 2016 Amazon FBA Fees, email tara@cpcstrategy.com

About the AuthorTara graduated from the University of New Hampshire with a B.S. in Journalism / Business. Her passion for creative publishing and quality reporting landed her work opportunities at several companies in Massachusetts, New York and California. She is a leading voice behind CPC Strategy’s Blog. See all posts by this author here.