Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue May 17 2016 17:40:43

Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

By: Ina Steiner

Sponsored Link

Hold on to your hats, Amazon is rolling out new fees for sellers who use its Fulfillment By Amazon (FBA) service, but the new fees will be in effect only during the last 3 months of the year, after which normal FBA rates will resume.

The goal of the holiday-season fee changes is to ensure sellers use Amazon storage wisely - we've been writing all year about the capacity issues that caused some Amazon Fulfillment Centers to reject certain shipments or items from sellers.

Amazon spokesperson Tom Cook told us the goal is to make sure the inventory that's in Amazon FCs in the fourth quarter will sell during the holidays. 

Here's the crux of the fee changes - it means an item sitting on the shelf will cost more, but if/when it sells, it will cost less to fulfill:

- Amazon is lowering storage fees for October, and it's raising storage fees for November and December.

- Amazon will lower Weight Handling Fees (outbound fees) in November and December.

As explained in the letter: Sellers who hold unproductive inventory through November and December may see an increase in total fees. 

Interestingly he said the "spring cleaning" Amazon helped sellers do recently by removing FBA removal fees was very effective.

Here's the letter that is going out to sellers today, look for more info in tomorrow's newsletter:

Hello from Fulfillment by Amazon,

In 2015, FBA volumes, growth rates, and inventory levels were very high. As a result, our U.S. fulfillment centers were very full in November and December. This fullness was driven in part by FBA inventory that did not sell until well into 2016.

To avoid potential capacity constraints during the 2016 holiday season, we are accelerating the expansion of our fulfillment capacity. Additionally, we are changing our FBA fee structure to encourage all sellers to send in and store products in November and December that are likely to sell by the end of 2016. To give you time to plan for these changes, they will begin to take effect on October 1, 2016.

We are introducing the following updates to our fees:

-  Adjustment to Monthly Inventory Storage Fees: Effective October 1, 2016, the monthly fee for inventory storage will change for Standard-Size and Oversize units. October storage fees will decrease, and the fees for November and December storage will increase. This change will first be reflected in November 2016 charges for storage that occurs in October 2016. See details (or scroll to the Monthly Inventory Storage Fees information below).

-  Reduction of Weight Handling Fees in November and December: To minimize the impact of the increased storage fees in November and December on your business, effective November 1, 2016, we will reduce our Weight Handling Fees for all items shipped in November and December. See details (or scroll to Fulfillment Fee information below). With the reduction in Weight Handling Fees, sellers who reduce the storage space they use in November and December have the opportunity to pay lower total FBA fees. Sellers who hold unproductive inventory through November and December may see an increase in total fees. See examples of how total fees may be reduced.

-  Box content information required for shipments to Amazon: To ensure that shipments to Amazon are received quickly and accurately, effective November 1, 2016, you must provide box content information for each box sent to a fulfillment center. Shipments containing more than 55% of FBA units already provide box content information. In September 2016, we will provide additional tools to make it easier to provide box content information on all shipments. If your shipping processes do not support providing this information, we will apply a fee of $0.15 per unit in November and December. The fee will be $0.10 per unit for January through October. If you provide box content information, you will not be charged this fee.

For complete details of these changes, visit amazon.com/fba-fee-changes.


Look for Wednesday's EcommerceBytes Newsflash for more information (available now). We'd love to hear your reaction to the announcement.




Comments (15) | Leave Comment | Permalink

Readers Comments

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: Chicago48 This user has validated their user name.

Wed May 18 06:29:34 2016

This is a fair policy.  a 2011 calendar????  No way.  I hope AMZ has a way of informing FBAs that their stuff is not moving or that it's outdated.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: mindelec This user has validated their user name.

Wed May 18 07:10:15 2016

Just another good reason to not use FBA.  How is someone supposed to guess what will sell nov-dec?

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: ignatz This user has validated their user name.

Wed May 18 08:31:28 2016

Always makes me laugh when I see disgruntled ebay sellers saying "That's it, I'm going to the River, that small seller's Nirvana!"

Ha ha. Amazon is a NIGHTMARE for small sellers - a morass of poorly- and un-documented rules and regulations, barely- or non-existent seller support, and vicious bot-driven seller pruning with little chance for an appeal.

Whereas ebay's attitude towards small sellers could be characterized by sometimes-well-intentioned bungling, Amazon's attitude is clearly characterized by ruthless, arrogant, total indifference.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: Bidonmine This user has validated their user name.

Wed May 18 09:37:58 2016

I am a small FBA seller and I have been able to change with Amazons policies.
I think that Amazon is making a mistake because this may cause sellers on FBA to be overly cautious with inventory levels and this may result in out of stock situations during the holidays which would upset Amazon buyers (who may then go to another site to buy).
I still make more on Amazon than Ebay.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: Randy This user has validated their user name.

Wed May 18 11:24:08 2016

This is why if you look on Amazon for a $10 retail item, you will find it for more than twice that much with  "Free Prime Shipping"!  

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: Rexford

Wed May 18 11:52:18 2016

Feed the behemoth!

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: BuildingMyOwnSite

Wed May 18 12:14:44 2016

I laughed all the way through this article.  Amazon has 40 distribution centers in the US (80 worldwide).  The new Phoenix center is 1.2 million sqf.  If they stack stuff up about 5 feet high, and the aisles take up 1/2 the sqf, that's 3 million useable cubic feet for the Phoenix warehouse:
http://www.bloomberg.com/news/videos/b/78cad5e4-19a9-43f
3-b551-fe41932cc3e8

I've
got 14880 useable cubic feet, (figured at only 5' high), that I'd love to rent for .54 per cubic foot.  Thats over 8M per month rent!   And its going up about 50% for the holiday months!  WOW!  How does any one make any money, unless everything sells instantly?  This is ''Just In Time'' on steroids.

Anyway, riddle me this... If Amazon admits: ''there were items such as 2011 calendars filling up space in Amazon warehouses - items that were unlikely to sell at all''.......  Well just exactly how many of them do they have,  in order to even notice them.  Or to even bother mentioning it?  This “calendar excuse” is similar to the way Ebay & Etsy justify their policies.  Except they usually put it like “Our buyers tell us that they want ........”.

Well, it's a slow day and I decided to try to estimate the size of this calendar problem.  I've got one  right on the wall that's about 12'' x 12'' x 1/4'' thick. (That's 48 per cubic foot).  Now, if a warehouse is a million square feet, then a stack about 10' x 10' x 5' high seems about enough to notice.  That equals 500 cubic feet, times 48 calendars per cubic foot, which equals 24,000 calendars, times 40 warehouses, equals 960,000 calendars.  Whew......  Wait, if you add the 2012, 2013, 2014, 2015, and the 2016's you get 5.76 million calendars total, just in the US!  (Yes, Amazon, the 2016's are dead merchandise also).

Did they trip over these calendars?  Or after 5 years did they discover through the magic of computerized inventory, that there were some slow moving items (calendars) somewhere in the back room.  Does anyone read the reports?   Isn't this supposed to be a state of the art, digital system?   Isn't this the company that wants to fill our skies with drones, in order to make even more money?   According to Huffington, Amazon paid only 3.5% in taxes last year.  (How much did you pay?)
http://www.huffingtonpost.com/2012/04/17/apple-corporate-inco
me-tax-rate_n_1429955.html

These
are the guys that need tax breaks to create all those high paying, living wage jobs.  Oh yeah, and they have over 1.5 Billion in profits stashed offshore.  
http://www.seattletimes.com/seattle-news/microsoft-amazon-ot
hers-excel-at-offshore-tax-dance/

And
don't forget, their holiday workers are just finishing up their summer vacations, and will soon be heading for the campgrounds nearby the fullfillment centers, so they can get a good spot.  Amazon even has a nice web page where you can apply, and become part of what they actually call their “CamperForce”.
http://www.amazondelivers.jobs/about/our-opportu
nities/hourly-fulfillment-jobs/camperforce/

If
they've got 6 million old calendars, who knows what else?    Now I realize why they have to charge so much for warehouse space.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: BuildingMyOwnSite

Wed May 18 12:21:19 2016

Duh,
I just noticed I was looking at the wrong column.  Nov & Dec are going up over 4X the Oct rate.  Sheeeeesh...

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: BuildingMyOwnSite

Wed May 18 13:38:12 2016

Oh, and those calendars are all mixed up with everything else in all the Amazon warehouses.  Imagine the cost of trying to pick 'em all, and toss 'em out.  No wonder their warehouses are filling up, they're full of old stuff.

Good system guys.  Nice disruptive innovation.  Great way to store inventory.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: FEEbay

Wed May 18 17:14:24 2016

Been off of AMazon for 18 months now..... NEVER going back!

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: iheartjacksparrow

Wed May 18 21:11:12 2016

I agree with mindelec. How does one anticipate what's going to be the must have item for Christmas? Can anyone anticipate the next Tickle Me Elmo or Beanie Babies?  

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: Mark4 This user has validated their user name.

Thu May 19 08:18:17 2016

Leaving Amazon, too expensive anymore and there are so many other online marketplaces that cost less than 1/2 as much and have the traffic. Amazon is not the only game in town anymore. besides they treat there sellers worse than their employees, if you want to sell and be abused, join amazon.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: Al G

Thu May 19 08:35:02 2016

I don't quite understand the gripes. Amazon is making a business decision which may affect sellers using the FBA service. Those sellers can make the decision to use or not use FBA. You can still sell on Amazon - n'est-ce pas?

It is quite obvious that Amazon wants to use FBA for the Holiday months when their volume expands, what 100%? You're not going to sell suntan lotion on FBA then unless you are going to the Caribbean. So you need to realise that you have potentially slow moving merchandise.

2017 calendars will sell, however, 5777 calendars will not, since New Year's has passed.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

This user has validated their user name. by: RKTOYS

Thu May 19 13:58:13 2016

Oh look, they made FBA even _more_ of a scam.

Perminate Link for Amazon Adjusts FBA Fees to Optimize Warehouse Capacity   Amazon Adjusts FBA Fees to Optimize Warehouse Capacity

by: mindelec This user has validated their user name.

Fri May 20 03:30:56 2016

I think come nov/Dec amazon will have PLENTY of warehouse space when this plan backfires after everyone pulls out in oct.



Login is required to post comments.
To sign in to leave a comment using your AB Verify User Name, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.