Amazon has made incredible strides in staying committed to its customer-centric motto and served well in the whirlwind of the 2023 holiday season. Shoppers saved more than 70% more on festive deals as compared to previous years. The retail giant facilitated effective fulfillment services for customers. And provided profitability plus record-breaking sales to its sellers. Amazon sold more than one billion items during the 11-day shopping peak period from November 17th to 27th. Marking the biggest-ever holiday shopping event in its history! The Amazon ecosystem indeed provided a fulfilling experience for both shoppers and sellers during the 2023 festive season.
However, the recent announcements of Amazon fee changes have garnered a lot of criticism and tension from different sources. Amazon’s referral fee changes have garnered a lot of attention from the eCommerce industry critics and enthusiasts. And everyone is speculating on Amazon marketplace’s rivalry with Shein in the US. The spotlight is also on the major FBA fee changes announced by Amazon. With such developments, the Amazon ecosystem is changing but what does it mean for sellers like you?
CedCommerce is a multichannel enabling partner of Amazon, Shein, and other leading players in the eCommerce industry. And thus, stands at the forefront of these FBA fee updates with invaluable insights for sellers to help them strategize their Amazon stores for profits and set their sails toward success in 2024. Read this blog post to learn about the major fee changes announced by Amazon and how sellers can navigate their way better with CedCommerce.
Amazon Fee Updates That Every Seller Should Know About!
Amazon holds to its aspiration of becoming the “World’s most customer-centric company”. And thus, serves as a platform where everyone can discover and buy the products they need. Taking another step in the same direction, Amazon announced new fee updates for 2024 for sellers. This is done to focus on improving the fulfillment speed and reducing transportation expenses. Amazon plans to do so by strategically locating inventory near customers throughout its network.
“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.” – Amazon
Here’s a breakdown of the summary of the Amazon fee changes for sellers:
- Inbound Placement Fee: Amazon will introduce inbound placement fees for standard and Large Bulk-sized products. Averaging $0.27 and $1.58 per unit, respectively. Sellers can reduce or waive fees based on shipment preferences to single or multiple locations.
- Decreased FBA Fulfillment Fees: On average, Amazon will decrease FBA fulfillment fee rates for standard-sized products by $0.20 per unit. And for large Bulky-sized products by $0.61 per unit. Products priced below $10 will continue to have an additional $0.77 discount on per-unit fees.
- Reduced Referral Fees: Amazon will reduce referral fees for apparel products priced below $20. For items priced under $15, they will decrease referral fees from 17% to 5%. For products priced between $15 and $20, they will decrease referral fees from 17% to 10%.
- Ships In Product Packaging Program: Amazon will offer fulfillment fee discounts, ranging from $0.04 to $1.32. This is for eligible products in the Ships in Product Packaging (SIPP) program, reflecting cost savings from using existing packaging.
- Increased Return-rate Fees: Amazon will extend the returns processing fee for high return-rate products across all categories, except apparel and shoes. This fee aims to cover operational expenses related to returns and contribute to waste reduction efforts.
- Low Inventory Level Fee: A low-inventory-level fee for standard-sized products is incurred when sellers consistently maintain insufficient inventory compared to unit sales. Which limits their capacity to distribute products across the network. This reduces delivery speeds and leads to increased shipping costs. Sellers can avoid this fee by maintaining more than four weeks of inventory relative to sales.
These updates in FBA fees aim to prompt sellers to improve inventory management and optimize the use of Amazon’s fulfillment network. While certain fees are introduced and others reduced, numerous programs accrue benefits. The overall effect on sellers hinges on their distinctive inventory practices and business strategies.
Is Amazon In A Pricing War With Shein?
Shein, the epitome of fast-fashion retail, is growing at a monstrous rate in the US. With an increase of 40% in revenue, it is likely to surpass Western brands like Zara and H&M. And with access to cheaper product offers and incredible marketing strategies like pop-up stores with immersive experiences, this Chinese marketplace is booming in the fashion category!
Amazon’s referral fee reduction for clothing and apparel is becoming a buzz for all the eCommerce enthusiasts out there. Research shows Shein’s GMV is comparatively lesser than that of Amazon but it still holds to its strength in the apparel category. Is Amazon trying to gain a competitive advantage over Shein by reducing its fee? Only speculation has been made on this move by Amazon but sellers must understand the fee changes and strategize their inventory placement for the upcoming months to ensure a smooth transition along with these changes.
Final Thoughts
With all the spicy buzz in the eCommerce news about this pricing war, it is crucial for sellers to not lose sight of the main thing – preparing their Amazon stores for a successful tide in 2024!
To help sellers like you optimize your store’s functions and step up in the retail world, CedCommerce is constantly providing solutions catered toward excellence. To learn more about managing operations between Amazon marketplace and your online store in one click, check out our integration solution for Amazon.
Stay tuned for further updates and insights regarding Amazon fee changes from the leading experts in the eCommerce industry.