Amazon fees are ever-changing due to constraints including but not limited to macroeconomic effects, sales velocity, and competition. Depending on your product's size and category, the fee changes could impact your business in a variety of ways. In this post, we will cover the new fee changes to Amazon’s FBA program for 2022. It is very important to recalculate profit margin when large fee changes happen in order to make sure your product is priced appropriately. Below we will cover which product sizes were most negatively impacted, which product sizes were barely impacted, and other options for fulfillment moving forward. If you just have questions about calculating amazon fees, see our previous blog post.
The Changes to Amazon’s FBA Fulfillment fees
Amazon’s FBA fulfillment fee changes came into effect on January 18, 2022. A complete overview of these FBA fee changes, along with examples, can be found here. Below is a list of the Core FBA fee changes:
As you can see, all of the size tiers incurred FBA fee changes. These fee increases range from 2% up to roughly 12%. The small standard-size tiers saw an average increase of about 8%. While the large standard-size tiers saw an average increase of around 4%. The new fees may not seem like much, but even slight changes like these can have drastic effects on smaller products with low margins.
In addition to the fee changes, another important change is regarding how Amazon will calculate the shipping weight for all large standard-size products moving forward. The new change states, “the greater of unit weight or dimensional weight will be used to calculate the shipping weight for all large standard-size units, excluding apparel.” Previously, this only pertained to large standard-size units that weighed greater than 12oz. This means Amazon was only using the greater of the unit weight or dimensional weight if the unit was heavier than 12oz.
Impacted Sizes
Products that will be most impacted by these changes are large dimension, lightweight products that are too large to qualify for the small standard-size, will be classified as large standard-size, and will have their shipping weight determined by which is greater between their unit weight or dimensional weight. To qualify for the small standard-size tier, the product must:
Weigh less than 16oz
Have its longest side 15 inches or less
Have its shortest side 0.75 inches or less
Have its median side 12 inches or less
With a requirement of 0.75 inches or less for the shortest side, the small standard-size tier is essentially for flat products. There are a lot of large dimension, lightweight products that don’t meet these dimension requirements and fall under the large standard-size.
Previously, sellers were benefiting from large standard-size products that weighed less than 12oz, as the dimensional weight of these products wasn’t a factor. Amazon’s changes will have serious consequences on these products. As an example, let’s use the dimensions of a lightweight product that falls under the large standard-size requirements and will be negatively impacted by these fee changes. Let's say our product weighs 11oz with a length of 17 inches, a width of 13 inches, and a height of 7 inches. This product has a dimensional weight of 11.13 lbs. In the past, this product’s unit weight of 11oz would have been used as the shipping weight. That would equal a fulfillment fee of $3.77 per unit using the updated 2022 FBA Fees. With the new changes, Amazon will now use the dimensional weight of 11.13 lbs. as the shipping weight. The fulfillment fee per unit in this instance would be $6.13 + $0.30/lb after the first 3 lbs. So the total fulfillment fee would be $8.57. That’s an increase of $4.80 per unit.
Less Impacted Sizes
Even with all size tiers experiencing FBA fee increases, the effects won’t be the same across the board. The lesser affected areas will be the higher retail priced items, as the fee change is a smaller overall percentage. It’ll be easier for these products to implement price increases while still remaining competitive against other retail options. With these changes, the biggest impact will be to large dimension, lightweight products.
Other Fulfillment Options
Besides Fulfillment by Amazon (FBA), there are a few other fulfillment options available to you on Amazon. First, there’s Fulfillment by Merchant (FBM). This option allows sellers to control the entire handling and shipping process. Instead of sending inventory to Amazon for storage, handling, and shipping, the seller is responsible for shipping orders directly to the end customer. FBM eliminates Amazon’s FBA fees, but it does require the seller to take control of the shipping and handling process.
Another fulfillment option is Seller Fulfilled Prime (SFP). This option combines the properties of both FBA and FBM. Similar to FBA, SFP allows sellers to list their products as Prime-eligible. However, they’re still responsible for handling the fulfillment themselves, just like FBM. In order to enroll in SFP, sellers need to satisfy performance requirements to show they can meet customers' service expectations.
Conclusion
All of Amazon’s FBA Fulfillment Fees were increased on January 18, 2022. However, the change in which Amazon will calculate the shipping weight for all large standard-size products moving forward will have a bigger impact on sellers. If the larger dimension, lightweight products are not sold above a certain price point, they may no longer be profitable through FBA fulfillment. With these changes, it’s important that you check how they’ll affect your account. If you’d like to learn more about Amazon’s fulfillment options and discuss which option works best for you, please use the contact us button below to begin a conversation.