???
The new fees don’t even apply if you manage things properly, and if your margins are so thin that a 50 cent / item fee is gonna kill you, that sounds like a business model problem.
Also, if they think FBA is expensive, then go FBM, good luck with that.
I think my FBA costs are actually going to go down this year from last year, and my logistics are not even that efficient/that well run and I can avoid the new fees.
What did you implement that is reducing your FBA costs?
Nothing, inflation adjusted, FBA fees declined year over year (and some fees declined in $ amount too)
So I took a look at the guy featured in the article on the first image. This is his storefront:
Basically, all of his products are 3rd party filter replacements for other brands’ refrigerators.
That is an EXTREMELY difficulty business model, because the only reason people will buy your 3rd party part over the official brand’s part is because you’re selling it significantly cheaper. The margins suck in that business.
Next seller featured is Jool Baby:
The problem I see here is their products are big and bulky, and the majority of the product cost is going into logistics. That $30 potty training chair costs about $2 in plastic to make, but shipping it around, and factoring in the costs of Amazon’s higher than average return rate, and that’s one tough business. I see why he’s complaining about the low inventory fee. When your logistics involve importing stuff from china it makes it a lot harder to manage inventory levels. And the big bulky products eat up storage fees if you keep 3 months of stock at FBA.
Also this:
Relatively expensive, big bulky item with a crappy star rating? Good luck on the return costs there.
I know how to work out inventory storage fees, but how does one work out the fee charged for “insufficient” (less than 30 days by their estimate) inventory?
I have to pay one or the other, and I have no idea how to tune this for lowest fee.
I believe there’s 1 fee for 0 - 14 days inventory, and another for 15 - 28, and if you’re over 28 there’s no fee.
the 0 - 14 day fee is obviously the higher one.
Respectfully this is the most “out of touch” comment I have seen in a while. In the last few years do to : inflation, additional competition, increase in Amazon fees and just an overall increase in business costs all around (utilities, payroll, insurance, packing materials… etc) out margins have shrunk significantly.
So yes, if we are netting say $2 on a transaction, paying an additional $.59 inbound fee is very significant.
The overall problem is, that as mentioned above, our margins are down (hey it happens) but instead of Amazon god forbid “making less margin” they continue to find ways to put the burden on sellers, to keep shareholders and people with $300MM yachts happy! Give me a break…
I would agree that if it was a new fee that applied to every unit unconditionally it would be a pretty big hike (but even then, FBA would still be cheaper than FBM for most people), but the new placement fee only applies if you do not split shipments. For the most part I been splitting shipments to 3 locations (or that “box level placement” thing they started). If they ask me to split to 4 or 5 locations it makes no real difference to the workflow.
Likewise, the low inventory fee is mostly avoidable and many sellers already average more than 30 days of stock in FBA (in fact, if you fail to do so you already get penalized in the form of longer delivery times, which Amazon penalizes heavily when it comes to the buy box and visibility)
Asking Amazon to make less margin to make sellers happy is also a highly unrealistic thought. There is only ONE reason Amazon would ever reduce the burden on sellers. If they’re squeezing sellers so hard that enough of them leave (and new ones don’t replace them) that it’s negatively impacting their product selection enough where buyers are also leaving, they would consider reducing fees. Ultimately they serve the shareholders and are only interested in making their stock price go up.
Like you, I also expect business costs to go all around, both on and off Amazon. I try to find ways to pass these costs on to the consumer or cut products where that’s not possible. It’s also not just Amazon that’s squeezing sellers. I’ve cut many products from manufacturers that raised wholesale prices but kept MSRPs the same, because they don’t want to scare off customers by raising prices, so they just try to pass the cost onto resellers.
I have a long list of grievances with Amazon, but the incredibly cheap cost of FBA is not one of them.
I again have to disagree with you, I just made a “test” shipment send 4 boxes of 49lbs. Previously it would cost approx $42 inbound, now with the 3 options it ranges from $68 to $82, that is HUGE, when as described our margins have been so thin.
I would assume by your comments perhaps your margins are down to, and with that assumption it would be “ok” if Amazon’s margin were down also but that never seems to be a possibility…
In all seriousness you can only be squeezed so far that you are absolutely right it reaches a point that it is no longer worth while to continue.
It has been a great (stressful) ride but at some point it no longer makes sense. And ultimately it doesnt serve Amazon if we leave.
And one more thing…
Please explain how its legal to raise fees only on FBA vs FBM but then favor FBA in the buybox?
Seems like a total monopoly of the buy box to us!
Want the buy box? Use FBA.
Want to use FBA? pay more fees…
I believe there were some hidden subsidies in previous inbound shipments, even when there wasn’t a rebate given. Seems like they removed those subsidies.
And you’re right, at some point it will no longer be worthwhile to continue. Hopefully I can either find something else to do or retire before that point. It’s like any other job, sometimes it’s just time to move on.
It’s not just FBA that hiked fees… all carriers hike fees every year, and USPS is implementing a new zone surcharge for certain remote locations (which absolutely CRUSHES some businesses that happen to be located in said locations). Amazon also only controls FBA fees, they do not control FBM costs at all (they may offer “buy shipping” but those rates are set by the carriers, not by amazon). And again, FBA is cheaper than FBM. If anyone can point out a 3PL company that picks, packs, and ships things for lower than FBA fees then let us know – it doesn’t exist.
With this new inbound fee, id have to say with “flat rate” shipping we can do FBM ourselves for probably the same or less on 1lb+ - 6lb items (which is bulk of our item) problem is they monopolize the BB to force you into FBA.
But is that accounting for the additional labor for picking and packing? Granted there’s also labor in doing FBA prep, but in MOST cases that takes less work than picking and packing individual items.
There is also the Seller Fulfilled Prime program which puts you more or less on even ground with FBA, but in order to get 1 day or 2 day shipping to most locations you need a large fulfillment network of your own to do so.
Almost all my items are “small standard” which have fees of under $4 + let’s say maximum $1 in other costs associated with it, and I can’t ship anything for 5 bucks not even counting labor or packaging costs.
I can see some large standard stuff being cheaper to FBM, without factoring in labor, packaging costs, or the fact that FBA provides a higher quality of service (avg delivery time) to the customer. As a customer, almost all FBA orders come overnight. FBM or stuff that I order from other websites, even big box stores, almost never come overnight, and rarely come 2nd day. FBA is a huge value add to the customer in terms of delivery time which is why it’s favored in the buy box.
BTW, fwiw, the buy box is favored differently for prime customers and non-prime customers. Which makes sense, because Prime gets free overnight delivery, non-prime does not. Their algorithm does actually factor in how much value add prime is giving to the customer.
If the stars align, under the new structure that will be totally in place starting on April 1st, there’s actually an opportunity to save money over LY. Not LY including the rebates for splitting, but before that.
That IF is a big IF - Amazon must provide you with a split that avoids the placement fee on every shipment. If you are not a volume seller, you won’t get those splits and that’s the problem and an indication that Amazon is not as interested in the small time seller as they used to be because they will be punished by this. Remember, the FBA fee is going down under the new plan to account for some of the placement fees but the rebates are gone. It’s been a bit since I reviewed everything but I believe storage is going down too.
Those rebates for us were routinely 2-3X more than the freight and they are history as far as I can tell.
When all of this was announced in Dec, I dug through all the documentation and carefully went over it with our SAS manager (strategic account services, not sellers ask sellers). It was clear that this wasn’t really that bad and there was an opportunity to be cost neutral or even save a little with how we operate. We ran the new structure through some real-life scenarios.
GGX and I often disagree and butt heads here but I do agree with this 1000%:
Never say never …
?
Nice to know we don’t exist …
ummm ...
We rarely spend over $5
Depends on where you live...
Maybe in a more urban setting or near a urban area …
Not really in rural areas …
We could only dream of such service...
Best Amazon does for us is two days and that is becoming even more rare …
It sure does depend on where you live. We get most of our stuff the same day or at worst overnight. That might be the one advantage of living in a NYC borough. LOL
Not sure it’s worth it.
If you like where you live, then it is worth it.
We like where we live even if we have to wear a hat when the Canadian geese are migrating over head …
That happens here all the time, mostly in the middle of the night. Still makes me laugh with the quacking at 1AM or later with 50 to 100 of them flying by.
Tried setting up a shipment with 1 box!
$27 placement fee (cheapest option) and $12.94 UPS cost.
Please explain this because not sure what we are missing here?
If you now charge me $39.94 to send the same box in that was $11 yesterday then we will STOP SELLING ON AMAZON!
btw we are med/large seller just for perspective purposes