As is an annual tradition, Amazon has announced its latest FBA fee updates for 2019.
This latest round of fee increases is one of the lowest we've seen over the past 5 years. Read on to see how these latest “increases” actually have some positive benefits for sellers.
Summary of Changes
- Elimination of Long-Term Storage Fees (LTSF) for items stored under a year
- Marginal FBA fee increases of 1-3% for most size categories
- Low priced items under $10, especially in baby/beauty/grocery, are seeing significant referral fee decreases
- A new 10-16 ounce category for Standard Size Items
This is the first time in over 3 years that Amazon has not significantly increased fees. In fact, most of the fee changes are advantageous to sellers.
The big win for everyone will be the elimination of Long-Term Storage fees under a year (181 to 365 days). This will make inventory planning much easier.
Lower priced items under $10, especially in baby/beauty/grocery, are seeing significant fee decreases which will be discussed below.
Amazon Fee Increases – Standard Size Items
Fees are increasing approximately 1.1%-3.3% for most standard size items. Small and light items remain unchanged.
You will also see Amazon has added two new categories: Small Standard Size (10 to 16 ounces) and Large Standard Size (10 to 16 ounces) although this doesn't drastically affect the fee structure for most items in these size categories.
These category changes and fee changes reflect the trend over the last several years: the lighter the items, the smaller the fee increases.
Much like standard size items, oversize items are getting approximately 1.4%-3.6% fee increases.
Again, the heavier the items, the larger the fee increases (except for very large items over 90 lbs).
Amazon Storage Fee Increases
This is the most significant change announced: Amazon is eliminating Long-Term Storage Fees for items stored under 365 days. This is essentially a reversal back to Amazon's previous policy that changed after it announced monthly inventory cleanups.
Many private labelers order 3-6 months of inventory at a time so Long-Term Storage Fees after 6 months made planning very tricky and almost necessitated the need for a 3PL.
Amazon has increased Long-Term Storage Fees for items stored over a year but at that point, you really should be liquidating that inventory.
There is some suspicion though that the elimination of Long-Term Storage Fees for less-aged items may result in a tightening up of restrictions related to the Inventory Performance Index.
Referral Fee Reductions in Some Categories
Amazon has also reduced referral fees for many lower priced items, specifically $10 and under. In the Baby, Health & Beauty, and Grocery categories, Amazon is reducing referral fees to 8% for items priced under $10.
Amazon is also reducing minimum referral fees to $0.30 from $1 for almost all products. Again, this is to the benefit of items priced under $10 or so (items priced higher than this will not benefit from it at all).
Amazon Historical Increases from 2014-2019
Want to long for the good ole' days? Below is a breakdown of Amazon FBA fee increases since 2014. We can see that the fee increases in 2019 are truly an anomaly in how low they are.
You can also see that historically, heavier items (over 1 lb) are being hit harder by Amazon fee increases and lighter items have been largely unaffected or have seen their fees going down.
What Can You Do?
Fortunately, these latest fee changes will not have a significant impact on sellers. However, there are some things that you can do to either take advantage or minimize the impact on your own business if any:
- Be more liberal on your ordering to reduce stock-outages and take advantage of the minimal risks of Long-Term Storage Fees
- Consider shipping directly into Amazon to minimize the cost and time of 3PLs
- Evaluate prices and consider raising them slightly as referral fees are going up (even if minimally) and to take into account any tariff uncertainty.
Amazon gave many of us an early Christmas gift by not surprising us with any major fee increases for 2019. Will you be making any changes in your pricing going into 2019 to take into account either the minimal Amazon fee increases or tariff uncertainty?