Anyone else expecting a massive FBA fee hike sometime soon?

In 2023, they only modestly hiked FBA fees, but they hiked MCF fees a whopping 25-50% (depending on weight). IMO, the MCF fee hike better represents Amazon’s actual costs, because they may be willing to subsidize a portion of FBA costs because they’re collecting 15% of every order as well as tons of other benefits to Amazon’s business. What they charge for MCF must cover all costs as otherwise there’s little reason for them to offer that service.

There’s also a potential labor problem coming up (and it’s not unions).

See this article from a year and a half ago:

Basically the article says that in certain markets Amazon’s running out of people to hire at it’s warehouses by 2024… There’s not a lot of ways to solve that problem other than…

  • Paying people more (+costs, and this still has it’s limits)
  • Changing the FC workflow, which I think we see in action now, with dedicated receive centers, and dedicated delivery stations (+costs, +FC transfer times)
  • Moving FCs to a labor force “optimized” location (-labor costs, but +delivery times, +fuel costs)

The article is probably sensationalized, but the fact is Amazon does actually turnover it’s warehouse employees incredibly quick, so there’s definitely some validity to it.

Let’s put it this way, a small standard item in FBA costs less than shipping it through USPS ground advantage, and all USPS has to do is pick it up and drop it off. FBA has to receive it, stow it, pick it, pack it (in packaging FBA pays for), and deliver it. I wouldn’t expect a massive 20%+ increase in 1 year, but I do see Amazon wanting to at least break even on their FBA operation at some point by passing the costs off to the seller, likely with large increases for a period of a few years.

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I’m sure you’re aware Amazon jacks up FBA fees in Q4 every year but I just wanted to throw that out there just in case. MCF is one of those things we use only if we get in a pickle on some other platform and have no inventory at our location. In that case it’s acceptable even at the high rates for what we need it for.

-Ana

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They are, but last year’s was a very small increase compared to the massive MCF increase, which I’m seeing as their costs have gone up a lot and they don’t want to eat it for MCF orders. At some point they won’t want to eat it for FBA orders either.

New FBA fees went into effect January 17, 2023.

Q4/holiday peak fees are in effect now, as of October 15, through January 14, 2024.

Click for 2023 Holiday Peak Fulfillment Fee announcement

Are you pondering whether Amazon will again raise the standard (non-peak) fees after the peak fees expire in January 2024, as they did this year? They announced this around Thanksgiving 2022, so that’s probably when they might again.

I personally wouldn’t rely on an article from mid-2022 too much, to predict Q1 2024. The landscape is different, even in just 18 months.

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I don’t think they are eating anything. Most Amazon buyers purchase more than one thing at a time. The FBA fees cover most (but not all) expenses.

Amazon is aware that the costs of FBA are the cost of doing business. It’s plastered all over their quarterly reports.

Something to keep in mind is the fuel surcharge that’s still in the fees. Was supposed to be temporary but now it’s permanent. That basically counts for the next increase.

Another thing to keep in mind is inflation in general. Prices have gone up on pretty much everything, even on Amazon. 10-15% of inflation increases (referral fee) is helping Amazon as well.

Yet another thing to keep in mind is the increases for removal orders and destruction. They went way up.

I can keep going, so I will - Don’t forget about the new long term storage fees that went way up and the time period went way down on what’s considered aged. You know there are hundreds of thousands of sellers paying them bc they don’t want to remove or destroy their inventory. This also helps Amazon.

Here’s some more - Capacity manager (bidding for space). You know there’s money there for Amazon too…

Most of the things I mentioned above have no actual cost to Amazon. They are just monetizing the massively overbuilt network that’s already bought and paid for.

Now I will drift back on topic - MCF.

Amazon was pushing this hard core 18 months ago and had massive expectations for a large MCF program at FBA. It was a major miscalculation by someone in management. Most sellers that would take advantage of that are more than likely FBM and have no interest in handing their inventory over to Amazon. These are the never-FBAers.

So, IMO, there were some expenses Amazon incurred building out that program that’s way underutilized. So they jacked the fees up to try and pay for it and walk quietly away and hold the sellers that are using it.

We analyze every DTC order we get and go with what’s cheaper to do. 50% of the time, MCF is still cheaper and CERTAINLY more convenient than doing it ourselves. Never had a problem with the program. Generally, everything arrives in 2 days which is nice.

It’s too bad that Amazon gave FBA such a bad reputation by screwing up so often. MCF would have been a nice little operation for them because their logistics network is the best there is, period…

Finally… FBA / MCF are pretty good IMO. I’d estimate that 90% of the issues sellers deal with when it comes to FBA are self inflicted / user error.

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I don’t even think they screw up that often based on the volume we put through, the problem is the incompetence in support which I am starting to think is intentional.

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This is true, storage fees have doubled since the covid era, and the other fees you mentioned are more than doubled in many cases. Even still, the fulfillment fees are still super cheap, and even with say a 50% increase spread over 5 years, very few sellers would leave FBA over that. It’s just highly unusual that they would MASSIVELY hike MCF, unless they had some kind of plan to close the gap at some point by raising FBA fees as well. At the end of the day, they’re charging a fee for a fulfillment service. MCF always cost slightly more for obvious reasons, but whether an order comes from Amazon.com or not doesn’t impact the cost of pick pack and ship that much.

In fact, the gap between FBA and MCF is so huge now, that for a $20 item, it actually costs more to MCF it than to have someone just buy from Amazon.com and pay the FBA + referral fee!

It’s not FBA’s error rate that’s maddening, it’s the fact that when they do screw up it’s impossible to get any kind of support regarding the screw up. That’s the part that generates complaints. And it’s not just the sell side, it’s the buy side now too. Amazon buyer customer service sucks too now, it’s mostly run by bots and if you do get put through to an agent they’re generally stupid. 99% of orders go smoothly, but the 1% that doesn’t gets crappy customer support that leads to anger.

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T’is not often that I’m afforded an opportunity to use the Nail-meet-hammer .gif which I ‘stole’ from you* twice in one day, but the moment seems apropos:

2_NailMeetHammerGif102421(VTR)


*

Ok, ok, I do know that I actually also stole two static images bearing on the same theme from you:

Oprah-HammersForEveryoneMeme-112022(VTR)

Just call me Marnie, `cause I’m obviously something of a kleptomaniac… :grin:

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Just to throw it out there, WFS (Walmart Fulfillment System) rates are very, very similar to FBA. Their fees are split out a little differently but the overall cost is very close.

I doubt if Walmart/Amazon are playing chicken in a race to the bottom on fulfillment cost. Maybe they are jockeying a bit over volume but as others have said, they already built out the infrastructure, they want more volume to keep things moving.

Good Luck,

TJB

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I’m not sure how WFS operates, but FBA’s cost structure seems to be higher.

WFS I believe is leveraging their store network for fulfillment. FBA also does a ridiculous amount of FC Transfer which I’m sure drives up costs constantly shifting stuff around.

And as you said, they could very well both be operating at a loss. WFS is the underdog, they CANNOT price WFS higher than FBA otherwise they have no chance at growing.

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Stupid bot or receive center moron. Got this for an Amazon Partnered Carrier shipment.


“Missing tracking information (less than truckload/full truckload shipments)”

Ain’t my F’n job, Amazon.

WFS is actually more expensive than FBA but not the cost of MCF. As far as I can tell, Walmart has no interest in trying to compete with MCF. I could be wrong but I don’t even see an option to create shipments out of WFS. You can do removals or disposals but that’s all that I see.

My take on it is Walmart has their stores/marketplace that need warehouse capacity, why not get more revenue out of that existing system with WFS? I don’t see any movement towards trying to provide 3PL for sales outside of their own stores/marketplace so they really aren’t trying to compete with FBA/MCF.

TJB

WFS isn’t more expensive. They have a simpler fee structure with less brackets so there’s some deviations but it’s overall cheaper.

WFS treats everything under 1 lb the same @ 3.45, FBA ranges from 3.22 - 4.75 depending on weight and size.

WFS for 2 lbs is 4.95, FBA is 5.40 for 1 - 1.5 lbs

WFS’s storage fee is 0.75 with a higher charge during peak season ONLY IF STORED > 30 days, FBA is 0.87 with a higher charge during peak season for ALL units.

WFS also does not have a peak fulfillment fee

The only thing WFS has that might be more expensive for some sellers is this:

Basically they’re telling low priced item sellers to piss off (which means they DON’T want a ton of fulfillment volume), because this upcharge is a massive dealbreaker for people selling $5 items. This also indicates that WFS is being subsidized by their 15% marketplace cut, because otherwise why charge more for cheap items? If anything cheap items overall cost less to fulfill because of lower liability for damaged/lost items.

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Amazon just doubled down with another bot…
" Amazon

09:43 AM

10/24/2023

Thank you for reaching out. We have confirmed that tracking information was not provided at the time of receiving. If you now have tracking information, we are unable to remove the problem from your account.

If you were unable to provide tracking information due to the shipping method (less than truckload instead of small parcel or vice versa), please note we are unable to remove this problem. In the future, please ensure you select the correct shipping method. This aids our fulfillment centers in understanding how products will be received and can help improve receive times.

If you still believe this problem was surfaced in error, please provide the following information in order to have the problem researched:

  • The name of your carrier for this shipment
  • Tracking information, if available
  • If tracking information is not available, the reason you did not have tracking information at the time of receiving or a description of the error that occurred
  • If no tracking information is available, please provide a receipt, BOL, or other document that confirms shipment with a carrier that did not provide tracking information"

I kind of hope the FTC would treat them like they treat us.

Great, but I don’t sell 1 LB items. When I signed up a few years ago, they didn’t give any discount for <30 days, you paid storage fees from the day it was received to the day it was shipped. Maybe that’s changed, Then there are the inbound charges which are higher than what I pay with FBA.

I have no desire to argue about it but it is overall more expensive for me to use WFS than FBA. That said, WFS is significantly lower cost than MCF.

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I would just acknowledge this and move on, you can acknowledge quite a few problems with no penalty (and the hit to the metrics only stays for 120 days), but if you have a few unacknowledged problems they may suspend your inbound creation privileges until you acknowledge the problems.

As for WFS fees, for anything over 1 lb it’s all universally cheaper on the fulfillment fee for WFS. That’s of course not taking into account other costs, though I’d imagine overall it comes out to a similar amount or lower for most sellers. If you’re taking advantage of FBA promotions that obviously changes the math. I was unaware that FBA didn’t charge you for storage fees for a month though. I’m almost certain that we get charged storage fees from the day they receive it, though our storage fees are small so I don’t really look into it.

Just dispute them all without accepting. I would rather see “dispute rejected” than “Acknowledged”. They don’t admit guilt when they screw up so we don’t either.

On their “inbound coaching call”, when the woman refused to hear our side of the issues, we simply told her to “finish her script then” and took her off speakerphone and left a warehouse employee to sit there and go “uh huh” and “no questions” while the owners/management went back to work.

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I used to dispute everything, they rejected every dispute, then eventually one time we had enough inbound issues piled up where they basically forced me to acknowledge (and do some training course, mine was online though) the issue in order to create a new inbound shipment. This was during a period of time where their stupid system was issuing a problem for a lot of shipments because the count was +/- 1 (which of course is FBA’s fault, we shipped whole cases so a discrepancy of 1 is impossible).

Going forward I acknowledged everything and never had an issue again. I don’t like it, but it keeps the bots happy so I just do it. Basically Amazon wants the seller to acknowledge it so it releases them from any potential future liability involving that shipment.

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We’re 50/50 on disputes and we dispute everything WITH evidence and case #'s for the same issue being found in our favor in the past.

Acknowledging is admitting guilt. If you don’t dispute and FBA decides to tag an entire large shipment, it could send you over your APR and then you’re SOL if you want to use FBA.

Then when you talk to your lawyer because you were just put out of business, they will discover that you pleaded guilty in the past to the same “crime”.

Nope, would never say we did something we didn’t. Can’t do it…

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