Amazon’s Dharmesh Mehta, vice president, worldwide selling partner services, revealed in a blog post the contents of an email Amazon sent to its third-party selling partners detailing fee updates in the year ahead designed in part to incentivize designated actions.
In the email, Amazon noted:
This year, our partnership delivered the largest selection of products to U.S. Prime members at the fastest speeds ever. As of the end of July, more than 1.8 billion product units were delivered on the same or next day, nearly four times what we delivered at those speeds in 2019, with the majority of these units sold by independent sellers like you. We have continued to focus on providing you with powerful selling capabilities, including investment of billions of dollars in technology, transportation, and infrastructure to reinvent our fulfillment network. By regionalizing our U.S. fulfillment center operations and growing our same-day delivery network, we are able to place more products closer to customers, in order to deliver products faster and at a lower cost. These investments result in higher customer satisfaction and more sales for you.
As we look to 2024, we will implement a set of fee changes that continue to provide you with a great value and allow us to partner together to offer customers amazing service while reducing our collective costs to do so. After these changes, we expect that sellers will see an average increase of 15 cents in fees per unit sold, which is significantly less than the increases announced by other logistics providers; however, we also expect that there will be many sellers who will see a decrease in the average fees paid to Amazon per unit sold. Amazon’s fulfillment fees will continue to remain an average of 70% less expensive than two-day shipping methods offered by other major third-party logistics providers.
In particular, we will focus on how we partner together to inbound and place inventory across our network. Placing inventory close to customers improves the speed of those orders, driving more sales at lower transportation cost. To enable more efficient use of our network, we will begin charging separately for inbound and outbound activities. As a result, we will lower our outbound fees while creating new inbound fees that you can reduce or avoid entirely based on how you inbound products to us:
We will introduce an inbound placement service fee for standard and large bulky-sized products to reflect our cost of distributing inventory to fulfillment centers close to customers. These fees will average 27 cents per unit for standard-sized products and $1.58 per unit for large bulky-sized products. We will give you the option to pay reduced fees or even no fee based upon whether you send your shipment to a single location or multiple locations. These fees will be effective starting March 1, 2024, and the fees will be charged 45 days after products are received. On average, we will decrease FBA fulfillment fee rates for standard-sized products by 20 cents per unit and for large bulky-sized products by 61cents per unit. These fees will apply starting April 15, 2024, the same date that the first inbound placement fees will begin to be charged. Products priced below $10 will continue to have an additional 77 cent discount on per-unit fees.In addition, to reflect the cost savings when products can be shipped in their existing packaging, we will offer a fulfillment fee discount ranging from four cents to $1.32, depending on item size and weight, for eligible products in the Ships in Product Packaging program. These discounts will apply starting February 5, 2024.
In addition to inbounding and placement, maintaining sufficient inventory levels also enables us to place inventory closer to customers across our network, reducing costs to fulfill orders. In cases where you have low inventory levels, this drives transportation costs higher, and we will introduce fees to align with these underlying costs. Where your actions reduce our costs of fulfillment by maintaining healthy inventory levels, you will see lower fees for these items.
Other changes cited in the email include the introduction of a low-inventory-level fee for standard-sized products for companies maintaining consistently low levels of inventory relative to unit sales. To help partners carry sufficient levels of inventory, Amazon will reduce non-peak monthly storage fees for standard-size products by an average of nine cents per cubic foot from January through September, the company maintained, adding that monthly storage fees for non-standard sizes won’t change. Also, Amazon stated it would reduce referral fees for apparel products priced below $20. For items priced under $15, it will decrease referral fees from 17% to 5%, while, for products priced between $15 and $20, the company will decrease referral fees from 17% to 10%.
Beyond that, Amazon pointed out it is introducing a new, lower pricing structure for Amazon Vine, a program designed to help brands get insightful reviews and consumers make informed buying decisions.
Amazon will expand benefits as part of the Fulfillment by Amazon New Selection program in the United States, providing an average 10% rebate on sales of eligible new-to-FBA parent products. In addition, it will provide expanded program eligibility for oversize selection and newly offer Vine benefits for eligible sellers and associated selection. Then, the company will introduce updated rates and new benefits for Supply Chain by Amazon. The company is making annual updates to its Storage Utilization Surcharge, Removal, Disposal, Aged Inventory, Prep, and Inbound Defect fees as well as expanding the processing fee for high return-rate products in all categories, excluding apparel and shoes.