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Amazon this week announced significant FBA fee increases for Canadian sellers as well as raised fees for its NARF program, and US-based sellers are bracing themselves for how these fee hikes will affect their business.
Canada FBA Fees Are Up 8-30%
As reflected in the Amazon.ca FBA fees page, beginning June 30, 2022:
- Amazon.ca sellers will incur a higher base fulfillment fee for most product size tiers, plus
- A a 5% fuel and inflation surcharge across the board
As an example, the fulfillment fee for standard sized items for the first 250g before the changes take effect (before June 30, 2022) is CAD $5.50. After June 30, the base will become CAD $5.64 and, with the 5% surcharge to boot, the total fulfillment fee per unit will be CAD $5.92—that’s about an 8% increase that could definitely add up.
Based on the summary above, the fee hikes seem to get more significant for higher size tiers. For instance:
- 14% increase for small oversize for the first 500g,
- 31% for medium oversized for the first 500g, and
- 27% for large oversized for the first 500g.
In the announcement, Amazon says there is no definite timeline for how long the fuel and inflation surcharge will remain in effect, but it claims that fulfilling orders with FBA is still roughly 40% more competitive on average than if sellers go the Fulfilled By Merchant route. That being said, diversifying out of Amazon and finding a reliable 3PL does not seem to be the worst of ideas for the coming months.
About a month ago, Amazon announced a similar 5% surcharge affecting US-based marketplace sellers. Although we did not observe any drastic increase in base FBA fulfillment fees, many sellers fear (or expect) the same fee hikes to be announced for US-based Amazon sellers sooner or later.
NARF Costs Also Raised
In a separate but related announcement, Amazon will also raise the fees for its North America Remote Fulfillment Program or NARF, also to take effect June 30, 2022.
According to Amazon, the NARF fees increase which are broken down here, reflects changing fulfillment, transportation, and customer services costs across North America. It justified the changes by pointing out how it has “doubled fulfillment capacity and added over 750,000 full- and part-time roles,” and also that it increased its average hourly wage in the US from $15 to $18.
The North America Remote Fulfillment Program (NARF) allows sellers to offer their products stored in Amazon warehouses within the United States to neighboring North American countries, namely Canada and Mexico.
The fee hike means that US sellers will have to pay more to use Amazon’s fulfillment services to sell to shoppers in CA and MX without having to actually store inventory in those countries. Otherwise stated, rising NARF fees could make it hard for US sellers to compete with Canada- and Mexico-based sellers offering the same products and maintaining actual inventories in those respective countries.
Shortly after the announcement, some sellers also received prompts saying that Amazon will enroll them automatically between July 1 to September 15, 2022, which probably means you have to manually opt out if you don’t wish to enroll to NARF.
Sign of What’s to Come
With fuel costs and inflation still plaguing the retail industry, and consequently the ecommerce industry, US-based Amazon sellers could be looking at FBA fee hikes down the road, potentially spelling trouble for sellers whose businesses are deeply tied to Amazon.