Placement Fee and FBA Fee

Fulfillment by Amazon
1

Part of the FBA “Fulfillment Fee” has always in fact been the receipt, and placement within Amazons DC and FCs.

Yet, we tend to think (or I did) as a Pick-Pack Fee.

What Amazon has simply done here is to carve it out and make it a stand-alone expense.

On the face of it. Our FBA fees April 15 will ALL be LOWER - Great… but remember this new Placement Fee comes alive 45 days prior, on March 1 with a HIGHER COST.

Put them together and you get the OLD FBA with a cost and I am sure Inflation adjusted, price increase from 5 to 15% on each FBA product sold.

I think that is on the higher side of annual increases. With the exception of the double increase in 2022?

Now to the Placement Fee. OH WHAT A FUN BLACK BOX this is for Amazon to Control.

With a little AI, they can now have us ship to locations that maximizes their logistics, to far locations (with an S - in LOCATIONS) having us bear the cost of splitting to 2, 3, 5 or more? or bear that PLACEMENT FEE (Which is also a variable in itself).

I suppose there are some winners to this change now, but really for how long?

If you have been splitting your shipments prior, and received rebates. Well those rebates are gone. And now, it is still pay the placement fee or continue to split. But again with AI, I’ll bet your splits will multiply. Why not? Have you ship to more places, to farther distances, or bear that cost.

This is a money grab.

The Placement fee has a range? What is this? A Summer range, and Christmas slaughter range? Or is it the cost of freight the truckers ara charging now, range?

and the ICING ON THE CAKE are the DISCOUNTS given on the placement fee.
What are these discounts anyway? 50% off the placement by sending 5 locations. 100% off by shipping your 20 pallets to 20 DCs instead of one? 20% off if you buy PRIME? What?

OH - THE MANIPULATION THAT CAN BE HAD.

What is also unsaid are the details

I guess we wait for April 1, when that BRAND NEW screen shows when we go to make a shipment that presents us with an immediate monetary decision to proceed. To Choose the follow ( I guess ).

  1. Placement Fee Costs and Shipment Cost to one location.
  2. A possible option to split. No Guarantee it seems
  3. A discount of 0% to 100% depending on the Amazon gods at that moment
  4. A number of locations to ship and a calculated shipping fee for the multiple destinations shipment you are agreeing to?

Enlighten me folks. Is it as bad as that?

Finally, I do not think any one is immune to these coming charges. Warranted or not. Because some product will benefit for sure, but at this point no one really knows, and again I think that might not even matter if Amazon deems it.

As to the added costs in this CHANGE or any Annual Amazon Change. It is a given. Nothing really new from that perspective. Sellers either add to their price, take the margin hit, or do not sell it any more. and life goes on.

2

I remember you saying that a majority of your portfolio was impulse items and/or S&L - also guessing that one of the reasons your portfolio is made up of 500 SKUs is that you have a stave ppc strategy - how have you fared with all the increase costs? The biggest hit was the tier changes for me back in Jan 2022

My assessment is established products can survive but any new products launching will have to carry higher margins to make it on amazon - just piling on this post since it’s about costs.

T_T

3

My product comes from a decades long story, culminating in a factory fire in 2013. I resurrected the 25 year wholesale business in 2017 on Amazon with just a handful of products that have a now faded brand, not being sold on the wholesale level of old, but also with a wide breath in colors, styles, etc. That is where the under $10 line of my products mostly, reside.

I do no advertising, it is all generic find for a product I “invented” 30 years back that is now everywhere. So yes, maybe I now should advertise.

The small and light program was an f ing ride. The constant drastic changes, almost yearly. and now the new changes. very challenging price wise. I do not know if the market can bear it.

But I am about to retire in 2-5 years , so I have other competing issues to ponder …

4

I figure I’ll operate BAU for about 3 months with it and then figure the math and it’s actual impacts on my income, and then adjust my prices to absorb it, or drop some products.

5

Okay, say I told Amazon I have 5 boxes. They give me the choice of 3 tiers. I decide I want to ship to 3 places. Do I get five labels to put on 5 boxes that will go to 3 locations?

6

Yes. We have been doing this for awhile with the rebates that are now gone.

It creates 5 shipping plans within the shipping plan. You have to print each label separately. It’s wonky but intuitive.

ETA - I sort of misread what you wrote there. It would create 3 plans within the plan. One or more plan will have 2 or more labels depending on the split. You’ll see what I mean once you do it. It’s not complicated at all. Just annoying like everything else on Amazon.