Written by Dharmesh Mehta, Vice President, Worldwide Selling Partner Services
For many years, we have been constantly improving the tools and services we offer independent sellers to enable their continued growth and success when selling in our store, including significant advances in the Fulfillment by Amazon (FBA) service. These fulfillment innovations save sellers time and money while driving their business growth by delighting customers with fast, reliable delivery. As we have shared, two important areas of focus are to continue to improve speed of delivery and reduce total costs to serve. Faster delivery speeds drive sellers’ business growth and lower costs enable us to have highly competitive fees that provide sellers with a great value, in turn helping us widen selection for customers.
At the same time, we have continued to evolve our fulfillment fee structure to create more discrete fees for specific capabilities. This allows us to more closely align fees for sellers with our underlying costs and also provide sellers with more choices for how they use our services. These fees allow sellers to choose where they want to have Amazon take on different aspects of fulfillment and where they want to do the work themselves. This year we are breaking our fees into fees for sending products into our fulfillment network (“inbound”) and shipping products out of our network (“outbound”). This allows us to create incentives for sellers to use our network more efficiently so we can share the cost savings, including the ability to avoid inbound fees altogether and pay lower overall outbound fees.
We are excited to provide sellers with more transparency and more control over their fulfillment costs. On average, this year’s fee changes are significantly less than those announced by other major fulfillment services, and many sellers will see a decrease in the average fees paid to Amazon per unit sold.
We continue to work closely with our selling partners to give them the information they need to make more informed decisions and take more direct actions to further drive up unit growth and drive down costs, and we look forward to further supporting our selling partner community in 2024.
Below you can read the email we just sent to our selling partners outlining the fee updates we are implementing next year.
As we near the end of 2023, we would like to thank you for your continued partnership in serving customers and together achieving new milestones of success. This year, our partnership delivered the largest selection of products to US Prime members at the fastest speeds ever. As of the end of July, more than 1.8 billion product units were delivered on the same or next day—nearly four times what we delivered at those speeds in 2019—with the majority of these units sold by independent sellers like you. We have continued to focus on providing you with powerful selling capabilities, including investment of billions of dollars in technology, transportation, and infrastructure to reinvent our fulfillment network. By regionalizing our US fulfillment center operations and growing our same-day delivery network, we are able to place more products closer to customers, in order to deliver products faster and at a lower cost. These investments result in higher customer satisfaction and more sales for you.
As we look to 2024, we will implement a set of fee changes that continue to provide you with a great value and allow us to partner together to offer customers amazing service while reducing our collective costs to do so. After these changes, we expect that sellers will see an average increase of $0.15 in fees per unit sold (which is significantly less than the increases announced by other logistics providers); however, we also expect that there will be many sellers who will see a decrease in the average fees paid to Amazon per unit sold. Amazon’s fulfillment fees will continue to remain an average of 70% less expensive than two-day shipping methods offered by other major third-party logistics providers.
In particular, we will focus on how we partner together to inbound and place inventory across our network. Placing inventory close to customers improves the speed of those orders, driving more sales at lower transportation cost. To enable more efficient use of our network, we will begin charging separately for inbound and outbound activities. As a result, we will lower our outbound fees while creating new inbound fees that you can reduce or avoid entirely based on how you inbound products to us:
- We will introduce an inbound placement service fee for standard and Large Bulky-sized products to reflect our cost of distributing inventory to fulfillment centers close to customers. These fees will average $0.27 per unit for standard-sized products and $1.58 per unit for Large Bulky-sized products. We will give you the option to pay reduced fees or even no fee based upon whether you send your shipment to a single location or multiple locations. These fees will be effective starting March 1, 2024, and the fees will be charged 45 days after products are received. Go to the Inbound placement service fee page for more details.
- On average, we will decrease FBA fulfillment fee rates for standard-sized products by $0.20 per unit and for Large Bulky-sized products by $0.61 per unit. These fees will apply starting April 15, 2024, the same date that the first inbound placement fees will begin to be charged. Products priced below $10 will continue to have an additional $0.77 discount on per-unit fees. Go to the FBA fulfillment fee rates page for more details.
- In addition, to reflect the cost savings when products can be shipped in their existing packaging, we will offer a fulfillment fee discount ranging from $0.04 to $1.32, depending on item size and weight, for eligible products in the Ships in Product Packaging (SIPP) program. These discounts will apply starting February 5, 2024. Go to the Ships in Product Packaging (SIPP) program page for more details.
In addition to inbounding and placement, maintaining sufficient inventory levels also enables us to place inventory closer to customers across our network, reducing costs to fulfill orders. In cases where you have low inventory levels, this drives transportation costs higher, and we will introduce fees to align with these underlying costs. Where your actions reduce our costs of fulfillment by maintaining healthy inventory levels, you will see lower fees for these items. Accordingly, we will make the following changes:
- We will introduce a low-inventory-level fee for standard-sized products. The fee applies if you carry consistently low levels of inventory relative to unit sales, as this inhibits our ability to distribute products across our network, degrading delivery speeds and increasing our shipping costs. Sellers can avoid this fee by maintaining more than four weeks of inventory relative to sales. These fees will apply starting April 1, 2024. Go to the Low-inventory-level fee page for more details.
- To help enable you to carry sufficient levels of inventory, we will reduce the non-peak monthly storage fees for standard-size products by an average of $0.09 per cubic foot, from an average of $0.87 per cubic foot to $0.78 per cubic foot, from January through September. Monthly storage fees for non-standard-sizes will remain unchanged. This change will apply starting April 1, 2024. Go to the monthly storage fees page for more details.
We will also provide the following new or expanded services and benefits:
- We will reduce referral fees for apparel products priced below $20. For items priced under $15, we will decrease referral fees from 17% to 5%. For products priced between $15 and $20, we will decrease referral fees from 17% to 10%. Other referral fees will remain unchanged. These reduced fees will apply starting January 15, 2024.
- We introduced a new, lower pricing structure for Amazon Vine. This program is designed to help brands get insightful reviews and help customers make informed buying decisions. The new fee tiers apply to products enrolled in the program on or after October 19, 2023. Go to the Amazon Vine page for more details.
- We will expand benefits as part of the US FBA New Selection program. We will provide an average 10% rebate on sales of eligible new-to-FBA parent products, newly including these benefits for non-branded selection. In addition, we will provide expanded program eligibility for oversize selection and newly offer Vine benefits for eligible sellers and associated selection. Changes will take place starting March 1, 2024. Go to the FBA New Selection page for more details.
- We will introduce updated rates and new benefits for Supply Chain by Amazon, an automated set of supply chain services that provides an end-to-end solution to quickly and reliably move your products from manufacturers to customers around the world. We are updating the fees for Amazon Global Logistics, Partnered Carrier Program, and Amazon Warehousing & Distribution. We will also provide new discounts for products that are auto-replenished by Amazon. Go to the Supply Chain by Amazon page for more details.
We are also making annual updates to Storage Utilization Surcharge, Removal, Disposal, Aged Inventory, Prep, and Inbound Defect fees. For outbound fees, we will also make our rate card more granular for standard-sized products and revise the structure and eligibility criteria for non-standard-size products by introducing Large Bulky and Extra-Large size tiers.
Finally, we will expand the returns processing fee to apply to high return-rate products in all categories, excluding apparel and shoes. This fee will address the operational costs of returns and reduce waste. The returns processing fee will only apply to products that have the highest return rates relative to other products in their category and will apply starting June 1, 2024. Existing returns processing fees for apparel and shoes will remain unchanged on average. Go to the Returns processing fee page for more details.
We appreciate your taking the time to understand these new fees, how they continue to provide you with a great value, and how they help us continue to partner together to offer customers amazing service while reducing our collective costs to do so.
We wish you a healthy and prosperous holiday season, and we thank you for your continued partnership.
Amazon Selling Partner Services team