Amazon Announces FBA Fee Increases for 2014

amazon_fba

Amazon announced a few slight fee increases related to their Fulfillment by Amazon (FBA) program effective February 18, 2014.  News like this always disappoints merchants entwined with FBA, but these increases reflect the rising costs of storage, fulfillment, transportation, and customer service.  Instead of swallowing these costs, Amazon has passed it onto its third-party merchants.  A seemingly yearly trend, this is unwelcome but not unexpected news.

For a full list of fee changes, visit Amazon's FBA Fee Changes 2014 help page.  I have copied and pasted a bit of the information relevant to my use of FBA below.  As a media seller, I can expect an increase between 4-8% in my overall cost per item.

Fulfillment fees for Standard-Size products

The following rate card shows the current and new FBA fees for Small Standard-Size and Large Standard-Size products sold on Amazon.com. Applies to domestic and international orders.

Fulfillment Fees: Standard-Size Products
Prior to February 18, 2014 Effective February 18, 2014
Media Non-Media Media Non-Media
Order Handlingper order $0.00 $1.00 $0.00 $1.00
Pick & Packper unit $1.00 $1.00 $1.02 $1.02
Weight Handlingbased on the Outbound Shipping Weight
Small Standard-Size1 lb. or less $0.42 $0.42 $0.46 $0.46
Large Standard-Size1 lb. or less $0.46 $0.46 $0.55 $0.55
Large Standard-Size1 - 2 lb. $0.76 $0.99 $0.82 $1.34
Large Standard-SizeOver 2 lb. $0.76+ $0.40/lb. abovethe first 2 lb. $0.99+ $0.38/lb. abovethe first 2 lb. $0.82+ $0.41/lb. abovethe first 2 lb. $1.34+ $0.39/lb. abovethe first 2 lb.

Monthly Storage Fees

The following rate card shows the current and new Monthly Storage Fees effective February 18, 2014.

Monthly Storage Fee
Prior toFebruary 18, 2014   EffectiveFebruary 18, 2014
January - September $0.45 per cubic foot $0.48 per cubic foot
October - December $0.60 per cubic foot $0.64 per cubic foot

ASIN examples

Fulfillment fee change examples

The following examples are presented to illustrate the change in rates for on-Amazon
orders. This does not include fees for monthly storage or other services. Note that
the images below are provided only as examples of the general product type; fees
for the specific products pictured may vary.

Small Standard-Size Media

CD
Dimensions: 5.6" x 4.9" x 0.4"Unit Weight: 0.2 lb.Outbound Shipping Weight: 1 lb.
Fee Prior to 2/18/14 Effective 2/18/14
Order Handling $0.00 $0.00
Pick & Pack $1.00 $1.02
Weight Handling $0.42 $0.46
Total $1.42 $1.48

Large Standard-Size Media

Book
Dimensions: 8.3" x 5.2" x 1.4"Unit Weight: 0.4 lb.Outbound Shipping Weight: 1 lb.
Fee Prior to 2/18/14 Effective 2/18/14
Order Handling $0.00 $0.00
Pick & Pack $1.00 $1.02
Weight Handling $0.46 $0.55
Total $1.46 $1.57

The fees above are solely related to fulfillment, which are an additional cost picked up by the FBA participating seller after the standard commission (15% for media) and closing fee ($0.85-$1.35 per item, depending on the category) are collected on the sale.  This will encourage me to be more selective with my purchases and, unfortunately, some of these costs will pass through to my customers.  Time will reveal what the market can bare.  This may cause casual sellers to drop out of the program entirely.

After last year's fee increases, I stopped selling penny books because there was no money left in the transaction for me.  Once upon a time, a seller could sell a penny book and make anywhere from $0.50 - $1.25 on the book.  Buyers can still find penny books listed for sale on Amazon, but I cannot imagine that any sellers profit from those sales.  I still have a few lingering in my inventory, but I let them go at a loss rather than destroying or requesting the item back from the warehouse.  These fee increases will surely kill the FBA penny book market.

These fulfillment increases go across the board and stretch into all types of items.  If you sell oversize items, expect oversize fee increases!  Check the FBA Fee Change 2014 page for more information.  Not all fee news is bad news; fees for order handling, Zero-Fee Fulfillment, Long-Term Storage, and Multi-Channel Fulfillment are not affected by this change.

If you're a current FBA seller, will this change the way you do business?  If you were thinking about getting into FBA, what do you think now?  For me, I'm sticking with it and minding the bottom line.

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