E-Commerce Trends 2024 Amazon Fee Changes Sellers Must Know

In 2024, the Amazon business environment is undergoing significant changes due to new fee policies and program alterations. This signifies the most comprehensive adjustment to FBA fees in recent years. There are new fees being introduced due to changes in existing fee items. ^[1] These changes impact sellers in various ways, affecting every aspect from profit margins to inventory management strategies. Let's take a look at the key changes in Amazon US product sales and FBA fees for 2024.

Here's a summary of the major changes:
- *Introduction of Inbound Placement Service Fee
- *Introduction of Inbound Defect Fee
- Introduction of Low-Inventory-Level Fee
- Change in FBA Order Processing Fee Rates
- Decrease in Off-Peak Monthly Storage Fee
- Increase in Long-Term Storage Inventory Fee
- Increase in Return Fee for High Return Rate Items
- Decrease in Selling Fee for Apparel Priced Under $20
* Inbound: The term “inbound” in Amazon refers to the products that come into the fulfillment center

These changes are listed below in chronological order of their implementation dates.

Now, let's take a closer look at the major changes and explore what Amazon sellers can do to minimize costs resulting from these changes. New Fee Introduction 1. Introduction of Inbound Placement Service Fees: Changes to Inbound Placement Option Defaults
When sellers create shipping plans on Amazon, by default, their products are set to be shipped to multiple fulfillment centers. However, with the introduction of a new fee structure, sellers will now have the option to ship their products to a single fulfillment center instead of dispersing them to multiple ones.

Starting from March 1, 2024, the Inbound Placement Service Fee will be introduced. When Amazon sellers create shipping plans, products will be set by default to be shipped to a single fulfillment center. Sellers will have the option to choose variations in this, though. If a seller chooses to continue shipping products to multiple fulfillment centers as per the previous method, they may do so at no fee or a discounted fee. ^[2]

FBA Inbound Placement Service Fees
FBA Inbound Placement Service Fee is applied based on factors such as product size, weight, the number of fulfillment centers placed, and the location of the fulfillment centers. ^[2]

• Product Size: Whether the product is small standard, large standard, or large and heavy-weighted.
• Weight: Unit weight for small standard items; for large standard and large and heavy-weighted items, the greater value between dimensional weight and unit weight.
• Number of Locations Grade: Minimum, partial, or Amazon-optimized shipment splits.
• Inbound Location: The fee range varies depending on the inbound location (i.e., the location of the fulfillment center). For example, shipments sent to the western region incur higher fees compared to other regions.

2. Introduction of Inbound Defect Fees
A change related to the fulfillment center, is the introduction of inbound defect fees. From March 1, 2024, if products are not sent to the designated fulfillment center according to the shipping plan or incomplete shipments (deleted or discarded shipments) are sent, fees will be incurred.

Inbound Defect Fees
Inbound defect fees are imposed to handle shipments that have not been properly processed according to the delivery plans. Separate FBA inbound service fees will be incurred based on the actual delivery and inbound location of received products. This means that inbound defect fees will be charged to sellers for redirecting, receiving, and processing shipments at additional costs. Fees are determined based on product size grading and may be higher than the estimated fees at the time of creating the initial shipment. ^[3]

Subjects of Inbound Defect Fees:
• Shipments delivered to the wrong location: When shipments are sent to a different order processing center than the one listed in the shipping plan.
• Deleted and abandoned shipments: If shipments within the United States do not arrive within 45 days after creation of shipping, or if international shipments do not arrive within 75 days after creation, and for multi-destination shipping plans, additional shipments do not arrive within 30 days from the first shipment date.

3. Introduction of Low-Inventory-Level Fees
Starting from April 1, 2024, low-inventory-level fees will be imposed on standard-size products that consistently experience shortages compared to customer demand. These fees target sellers who fail to sufficiently ship products or maintain consistently low FBA inventory levels.

Amazon distinguishes between long-term and short-term supply days for products, which correspond to the past 90 days and the past 30 days, respectively.

Sellers can avoid these fees by maintaining inventory for at least 4 weeks, depending on their sales volume. Low inventory level fees are only applied when both long-term and short-term supply days are less than 28 days (4 weeks). For instance, if the short-term supply days exceed 28 days but the long-term supply days are less than 28 days, low inventory level fees will not be charged.

• Criteria for Imposing Low-Inventory-Level Fees: Low inventory levels are assessed based on product size, shipping weight, and past supply days.
• Amazon Supply Days: Amazon's supply days refer to the average number of days inventory can sustain customer demand, taking into account past sales data.

Existing Fee Changes 1. Reduction in Selling Fees for Apparel Priced Below $20
Amazon is reducing the selling fees for apparel priced below $20. For items priced below $15, the selling fee will decrease from 17% to 5%, and for items priced between $15 and $20, the fee will decrease from 17% to 10%. These reduced fees will be effective from January 15, 2024. ^[1]

2. Increase in Long-Term Storage and Old Inventory Fees
Amazon will increase the additional fees for old inventory stored between 271 and 365 days, effective from February 15, 2024.
For items stored for 271 to 300 days, the additional fee per cubic foot will increase from the current $3.80 to $5.45, resulting in a $1.65 increase. ^[6]

3. Decrease in Off-Season Monthly Storage Fees
Starting from April 1, 2024, the monthly storage fees for standard-size products during the off-season (January to September) will be reduced. The average per cubic foot fee will decrease from $0.87 to $0.78, resulting in a decrease of $0.09 on average per cubic foot. However, off-season monthly storage fees for non-standard sizes will remain unchanged. ^[6]

Additionally, starting from April 1, 2024, there will be a further breakdown in storage utilization rates, along with increased fees. This will apply to professional sellers whose storage utilization exceeds 22 weeks. ^[6]

4. Changes in FBA Order Processing Fees
Starting from April 15, 2024, the FBA order processing fees will decrease by $0.20 per item for standard-sized products and by $0.61 per item for large and heavy items.

Furthermore, Amazon will introduce a more detailed rate table for standard-size products effective February 5, 2024, and will introduce new size tiers for large and heavy as well as mega-size items. As a result, the changes in FBA order processing fees will be applied differently for each respective period. ^[5]

5. Increase in Return Fees for Products with High Return Rates
Effective from June 1, 2024, return processing fees will be expanded to apply to products with high return rates.
This will apply to products with high return rates in all categories except for apparel and shoes. The return processing fees will only be applied to products exceeding the category-specific threshold for return rates, while the existing return processing fees for apparel and shoes will remain unchanged.

• For apparel and shoes, return fees will be charged per returned item starting from February 5, 2024.
• For all products except apparel and shoes, return fees will only be charged for returned items exceeding the category-specific threshold for return rates, starting from June 1, 2024.

The return request period for Amazon FBA is 3 months, totaling 90 days. The return rate is the ratio of items returned during this 90-day period.
For example, for items shipped in June 2024, the return rate is the ratio of items returned in June, July, and August 2024. For items shipped in the same month, return processing fees are charged for each returned item that exceeds the return rate threshold for the product category. For items shipped in June 2024 where return fees were charged, the return fees are billed between September 7th and 15th, 2024. If fewer than 25 items are shipped in a month, returns for items shipped that month are exempt, and these fees only apply to items actually returned. ^[7]

Due to the adjustments in sales and FBA fees by Amazon USA in 2024, the business environment for Amazon sellers is becoming increasingly complex. Fee reductions are limited, with existing fees being raised and new fee structures being introduced, leading to increased cost burdens for sellers.

The operational and management burdens resulting from fee structure changes are also expected to increase, and the impact on sales revenue due to cost increases may not be insignificant. While the impact of this fee adjustment will vary for each seller, it may necessitate a thorough analysis of overall profitability and strategic adjustments to business operations. Therefore, sellers should carefully review and analyze their inventory assets to devise strategies to address fee changes effectively.

If you are a seller shipping products to a single fulfillment center, you may want to check the logistics situation to see if it is possible to distribute products to multiple fulfillment centers to reduce inbound placement fees. Additionally, conduct an economic analysis of the new fee structure to assess the cost-effectiveness of shipping to a single fulfillment center.

Adjust replenishment periods and shipment quantities to maintain appropriate inventory levels for each product, thereby avoiding low inventory level fees.

To reduce return-related fees, analyze the return rates and reasons for each product, and explore ways to lower the return rate and implement them. For example, if returns occur due to "differences in product description," you may need to modify the product description, which can be done relatively quickly. If returns are frequent due to "packaging damage," consider changing the product packaging.

Accurate understanding of the changing environment and proactive response are essential elements in resolving challenges and growing the business. Adopting a flexible strategy is also crucial. The ability to respond quickly to change and adjust timely plays a decisive role in maintaining and developing competitiveness. I sincerely hope this information serves as helpful reference material. # References [1] 2024 US referral and FBA fee changes summary, Amazon
https://sellercentral.amazon.com/help/hub/reference/G201411300
[2] 2024 FBA inbound placement service fee, Amazon
https://sellercentral.amazon.com/help/hub/reference/external/GC3Q44PBK8BXQW3Z
[3] Inbound defect fees, Amazon
https://sellercentral.amazon.com/help/hub/reference/external/GL5XA3MNXAJKJE8E
[4] Low-inventory-level fee, Amazon
https://sellercentral.amazon.com/help/hub/reference/external/GV43F6S76Y9DHYRH
[5] 2024 US FBA fulfillment fee changes Changes to size tiers and fees, Amazon
https://sellercentral.amazon.com/help/hub/reference/external/GABBX6GZPA8MSZGW
[6] 2024 FBA monthly inventory storage fee and aged inventory surcharge changes
https://sellercentral.amazon.com/help/hub/reference/external/GJ9NNG7RK4TU6E3Z
[7] 2024 returns processing fee changes, Amazon
https://sellercentral.amazon.com/help/hub/reference/external/GZGEQLTM3RZXUV6T

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