Amazon Changes Fulfillment by Amazon Fees
The last major Amazon price change was almost a year ago. Now Amazon has announced a whole package of changes for March 31, 2023.
We have summarized the upcoming adjustments for you.
FBA Shipping Fees Increase by Average of 6.2%
In 2022, there were two price increases, first with about 6% in March and the last one in May 2022 with a fuel and inflation surcharge of 4.3%. This year, the price increase is similar with an average of 6.2% (for local shipping).
The oversize category is particularly affected. Here, prices are increasing disproportionately. Germany gets off relatively cheaply with an average increase of about 2%. Many size ranges here are also not affected by an increase at all. Apart from France (3.2%), the increases in other countries are well over 5%.
Small and Light Now Available for Products Up to 11 Euros
Amazon is changing the price limit for items in the Small and Light program in France, Italy, and Spain from 11 € to 12 €, in Germany from 10 € to 11 €, and in the United Kingdom from £9 to £10. The threshold in the Netherlands is 12 €, 140 skr in Sweden, and 55 zł in Poland.
This is an important step by Amazon to make the particularly affordable shipping program accessible to even more sellers while also accommodating the increased selling prices.
At the same time, Amazon is also adjusting the shipping fees for Small and Light.
Small and Light Shipping Fees Increase by 7.9%
Amazon is also increasing the shipping costs for Small and Light. These increase in Germany by only 1.5% on average, but by 15% in the UK. On average, sellers who use the program for particularly light and inexpensive items face increases of 7.9%.
Increase in Monthly FBA Storage Fees by 10%
Amazon is changing the monthly storage fees for all standard-size products effective March 1, 2023, except for dangerous goods.
Fees for standard-size items (excluding shoes, clothing, and bags) are increased from 27.82 € to 30.60 € (+10%) in January-September and from 38.52 € to 42.37 € (+10%).
This change takes effect for the first time in April 2023. The fee for dangerous goods and oversized products remains unchanged.
Discount Campaign for Clothing and Accessories Categories Continues
Sellers who sell in the clothing and accessories categories continue to benefit from particularly favorable selling fees. Originally, the discount campaign was supposed to end on March 31, 2023, but Amazon is now continuing the program for items sold through Fulfillment by Amazon and Prime by Seller.
Products sold in the clothing and accessories categories receive a 7% discount (previously 15%) for the portion of the total selling price (that exceeds 45 €) on the selling fee. However, the campaign in the shoes and handbags category will end on March 31, 2023.
Reclassification of Sales Categories
Amazon is now sorting some product types into different product categories. In a list, Amazon shows which products will be classified how in the future. This can result in your product being calculated in a different category and thus with a different selling commission.
An overview can be found here.
Effective May 15, 2023, for example, products in the automotive and motorcycle electronics accessories category will be charged the same percentage selling fee as electronics accessories. So the percentage selling fee changes from a flat fee of 12% to 15% for the portion of the total selling price up to 100 € and 8% for the portion of the total selling price over 100 €.
For the bicycle accessories category, the same selling fee will apply as for sports and leisure products, which leads to a change in the percentage selling fee from 10% to 15%.
A detailed overview can be found here.
Introduction of New Sizes and Weight Classes
Amazon is adjusting the weight and size classes again. Here, large and extra-large envelopes may now be significantly heavier at 960 g. The standard envelope receives an additional, new weight class of 460 g.
Special oversized shipping rates are also being introduced. An ASIN is counted as special oversized if it either weighs over 31.5 kg, the longest side is longer than 175 cm, or the circumference exceeds 360 cm.
The minimum selling fee for items classified as heavy and non-sortable is 25 €.
Shipping Weight for Determining Shipping Fee
A year ago, Amazon had introduced volumetric weight. Now there is another adjustment here. Amazon will now use the higher value of either unit weight or volumetric weight to determine the shipping weight for all package size categories. The following table shows which weight applies to which products:
The volumetric weight in kilograms is calculated by length x width x height in cm³ divided by 5,000.
Adjustment of Long-term Storage Fee
Amazon is introducing a new adjustment for items stored between 271 and 330 days as well as 331 and 365 days. The previous long-term storage fee will thus be divided into different age ranges as it was once before.
Effective May 15, 2023, the previously applicable long-term storage fee for goods stored between 331 and 365 days (10-12 months) in logistics centers will be charged across all product categories.
New is now an additional tier for goods stored between 271 and 330 days (9-10 months). There is an exception here for the following categories: clothing, shoes, luggage, backpacks & bags, watches, and jewelry.
The changes will apply for the first time with an inventory check on May 15, 2023. Sellers should definitely check their old inventory before this date. The long-term storage fee from 365 days is not affected and continues to be charged at 320 € per cubic meter per month.
Surcharge for Warehouse Usage
Amazon is introducing a surcharge for warehouse usage by sellers who have stored very large inventory in Amazon logistics centers relative to recent weekly sales (the change is independent of the new capacity limit).
In addition to the monthly storage fee, the surcharge is based on warehouse utilization. Amazon checks here the ratio of your average daily inventory volume in cubic meters and divides by the average daily shipping volume in cubic meters over the last 13 weeks.
The warehouse utilization is to be calculated on the last day of each month. Example: For inventory stored in April 2023, the warehouse utilization will be calculated on April 30. The surcharges on storage fees will then be applied for May 2023.
Amazon says about this:
We charge a single warehouse usage surcharge for inventory stored in Germany, France, Spain, and Italy, as well as a separate warehouse usage surcharge for the United Kingdom. If you sell in the United Kingdom and other European countries, you will be charged a maximum of two different warehouse usage surcharges.
The surcharge only applies with a warehouse utilization of over 26 weeks and for products that do not fall into the clothing, shoes, or bags categories. If you meet the criteria for the warehouse usage surcharge, the surcharge will be added to your monthly base storage fee and applied to the average daily volume of space your inventory occupies in the logistics center. This results in an overall higher monthly storage fee.
Here is an example of the new utilization calculation:
More information here
New Disposal and Remission Fees Increase Significantly
Amazon is adjusting the disposal and remission fees. The remission fees, i.e., the fees to have an item returned from the Amazon warehouse, increase by about 20%.
The disposal fees (i.e., the fee if you have Amazon destroy an item) increase by about 25%.
Discounts for UK and New FBA Items
Discounts for selling items on the UK marketplace continue to apply. For an action period of one year, Amazon offers a discount on European shipping fees from the EU (Germany, France, Italy, and Spain) to the United Kingdom and vice versa. ASINs that are newly added to Fulfillment by Amazon receive an average discount of 10% (previously 5%).
Change in VAT Calculation Service
The VAT calculation service is a tool used by many sellers to have Amazon create customer invoices and to be able to display net prices for Amazon Business. Amazon is changing here effective June 30, 2023, the way percentage selling fees are calculated.
Previously, Amazon calculated the selling fee based on the gross price. Now only the actually paid selling price will be used as the basis for the selling fee.
However, this change does not apply to promotional activities such as lightning deals, vouchers or coupons, free products and discounted products, Amazon-financed discounts, and exclusive Prime discounts. For promotional activities, Amazon will continue to calculate percentage selling fees on the total selling price paid by the buyer.
Amazon provides some examples:
Example 1: Cross-border Business-to-Business Transaction without Promotion
Suppose you use the VAT calculation service with German and Austrian VAT identification numbers. You offer the item for 11.90 € on Amazon.de, ship the item from Germany, and sell the item to an Austrian, VAT-liable business-to-business customer based in Austria. The VAT rate is 0% due to the intra-community supply of goods.
The current percentage selling fees are calculated on 10.00 €, the price without VAT, which is calculated as follows:
11.90 € / (1 + 0.19) = 10.00 €
Effective June 30, percentage selling fees will be charged on 11.90 €.
Example 2: Cross-border Business-to-Business Transaction with Promotion
You use Amazon's VAT calculation service with German and Austrian VAT identification numbers. You offer an item for 11.90 € on Amazon.de and activate a lightning deal with a 10% discount. The item is shipped from Germany and sold to a VAT-liable business-to-business customer in Austria. The VAT rate is 0% due to the intra-community supply of goods.
The current percentage selling fees are calculated on 9.00 €, the price without VAT after deducting the promotional discount, which is calculated as follows:
(11.90 € x 0.9) / (1 + 0.19 €) = 9.00 €
Effective June 30, percentage selling fees will continue to be charged on 9.00 €.
Example 3: Cross-border Business-to-Consumer Transaction without Promotion:
You use Amazon's VAT calculation service with German and Austrian VAT identification numbers. You offer the item for 11.90 € on Amazon.de, ship the item from Germany, and sell the item to a private customer in Austria. The VAT rate is 20%, as the VAT calculation service applies the tax rate of the destination country.
The current percentage selling fees are calculated on 12.00 €, the price with VAT, which is calculated as follows:
(11.90 € / (1 + 0.19)) x (1 + 0.2) = 12 €
Effective June 30, percentage selling fees will be charged on 11.90 €.
Conclusion
It was already expected that there would be a comprehensive adjustment after the absence of a price adjustment in fall 2022, since Amazon usually increases prices once or twice a year. Overall, the price increase is as expected and is in the usual range. Many sellers have now adjusted to this and plan these increases early.
Nevertheless, the price increase comes at a tense time. Amazon is trying to optimize warehouse space utilization. Certainly a logical decision in times of overcrowded warehouses. Last year was rather weak in sales for many sellers. Even the Christmas business could not compensate for the missing sales. The Ukraine war and the associated inflation is depressing the buying mood. Since Amazon is increasing prices in several places, a significant price jump on Amazon is likely to be recorded in the coming months.
Sellers now have to get out the calculator again and calculate exactly. The various FBA shipping models, but also the possibility of self-fulfillment should be weighed against each other. Often it's worth taking a closer look, as it shows unused potential or reveals hidden costs.
We're happy to help determine the right selling prices and the right shipping model. Contact us.
An overview of the changes can be found here
