Amazon recently announced a massive fee increase for those selling in Canada through Amazon.ca. This fee increase is one of the largest ever by Amazon across any of its individual marketplaces.
The fee increases are being applied in two major aspects: storage fees and fulfillment fees. In this article, we'll analyze the full impact of these fee increases and explain in plain English how much it is going to cost you.
Summary of Amazon.ca Seller Fee Increases
Here is a quick summary of the fee changes for Amazon.ca explained in plain English:
- Base storage fees are going up 9.5% to 20.5% depending on the time and the size category. Standard size storage fees during peak season are going up the most (20.5%)
- Amazon is rolling out a complex and confusing storage utilization surcharge in addition to the base fee increases. This can increase your storage fees by up to 127%.
- Fulfillment fees are going up, on average, by 7.8%. Small oversize size tiers are seeing the biggest increase.
- Amazon is eliminating the 5% fuel/inflation surcharge it instituted last year.
Storage Fee Increases
Amazon has instituted massive increases in its storage fees in Canada. Storage fees for standard size and oversize is up 10% and 9.5%, respectively, during non-peak months (January to September) and up 20.5% and 13.3% during peak season.
This storage fee increase in Canada is easily one of the largest storage fee increases ever.
Amazon Introduces Storage Utilization Surcharges to Canada
Amazon also introduced a “storage utilization surcharge” in addition to the base storage fee increases. Increasingly frustrating for Amazon sellers, the storage utilization is a complex equation not easily deciphered by sellers which unfortunately means it is meant to obfuscate further fee increases.
Amazon says “The surcharge will be based on the storage utilization ratio, which is the ratio of your average daily inventory volume stored divided by the average daily shipped volume over the past 13 weeks.” Of course, neither your daily average storage volume nor your average daily shipped volume is easily discernable to sellers.
There are basically three tiers of storage utilization surcharges that impact how much your fees go up.
- Below 26 – no surcharge added
- 26 to 29 – monthly storage fees go up 58% to 100%
- Above 29 – monthly storage fees go up 80% to 127%
Amazon has promised to provide a tool to help sellers estimate their storage utilization surcharge but has not yet introduced this (again, extremely frustratingly to sellers).
Amazon.ca Fulfillment Fee Increases for 2023
Along with the storage fee increases, Amazon is also introducing significant fulfillment fee increases effective June 30, 2023.
Amazon rolled out the fee increases in conjunction with the introduction of many new size tiers. For example, there is currently a 1kg to 1.5 kg category for standard size items but this will now be broken into five separate categories with 100g increments.
Given the new size tiers, we took a variety of sample weights and compared them across size tiers to get a sense of the overall fee increases.
Overall, based on our math, the average overall fulfillment fee increase is 7.8%.
It should be noted that Amazon is getting rid of the fuel and inflation surcharge. However, these FBA fee increases more than outweigh any benefit from that.
If you're selling in Canada, these fee increases will significantly impact your margin, and it probably means a round of price hikes is in order.
Even if you're not selling in Canada, however, sellers should take notice of these fee increases as they may be indicative of what is to come in other marketplaces such as in the U.S.