Back to Blog

Are You Calculating Your FBA Costs Correctly?

Image of SA Team
SA Team

When it comes to selling online, especially through Amazon, you already recognize that it’s all about profitability.  With some profit margins being razor thin, you need to be sure you’re up to speed on any changes that will affect those margins.

You also know that during the upcoming holiday season, competition (both by price and by number of competitors) can jump through the roof.  There are a lot of companies who will jump on Amazon during this time while other companies count on a fantastic showing to potentially make their annual sales goals!

On that note, Amazon has just issued a fee change schedule for the upcoming holiday season that we at Store Automator feel would be something important to share…just in case this information has fallen through the cracks.

The main crux of Amazon’s changes has to do with their 2015 inventory levels and how they can better manage that during the 2016 holiday rush.  Their concern is with the inventory they were holding that was “intended” to be sold prior to the end of the year but was still sitting in their warehouses well into the following year.  They’re doing two things: making plans to expand their warehousing and adjusting their pricing policy for November and December to “encourage all sellers to send in and store products in November and December that are likely to sell by the end of 2016.”

We wanted to summarize some of the key changes, but if you’d like to head to the Amazon page, we’ve placed the link at the bottom of this article.

Starting with their Monthly Inventory Storage Fees, Amazon is making some significant changes for the last quarter.  Beginning October 1st, they are actually DROPPING the rates per cubic foot for Standard and Oversize items.  However, for November and December they will be TRIPLING their rate per cubic foot from $.72 pcf for standard to $2.25 pcf and DOUBLING their rate for oversize items from $.57 pcf to $1.15 pcf.

Clearly, they’re trying to give a little break for retailers in October, but they’re making it very clear that inventory capacity is going to be an issue for them this year and their “encouragement” amounts to tripling their rates for a short period of time.

But it’s not all bad news.  Since they are trying to get companies to sell faster, Amazon is attempting to offset some of those increases by providing DISCOUNTED rates for their handing fees.

There are a lot of numbers they include in well-organized charts, but to highlight a few items:

  • A large, standard size, non-media shipment of 1 lb or less is normally $.96, but for November and December it is being reduced to $.82.
  • For 1 to 2 pound standard size, non-media shipments they’re dropping rates from $1.95 to $1.66 for that 2 month period.

Again, they have all the details on the page in chart form, so please be sure to review that to understand how these changes will affect you and how you can offset some of the increased warehousing expenses.

The final chart they have is quite interesting.  It is a Fee-change analysis based on reducing inventory levels by 11%.  This is based off of levels for a large standard size, non-media item which may or may not apply to you…but the message is pretty clear – they need all of their retailers’ help in reducing inventory levels and want to incentivise retailers to get a jump on their planning.

Finally, as an additional effort to streamline things in their warehouses, they are pushing the box content information requirements and adding service fees for those that aren’t doing things properly.  Actually, it’s not a penalty so much as it is a “let Amazon do this for you for a fee.” This is a little farther down in the article, so be sure you take note of that so you don’t receive any surprises once the holidays arrive.  $.10 per item or $.15 per item in additional fees could make the difference between selling at a profit or selling at a loss for some people…so please be sure that you don’t miss this detail!

You can go directly to the Amazon posting here:  https://www.amazon.com/gp/help/customer/display.html?nodeId=201648210&mkt_tok=eyJpIjoiWldRMllqUmpNRGxpWXpaayIsInQiOiJndmxaM2haRmt5S0FEeXU1bTBYbEZoSTNmZU0yTmI3TXhnNmFhN2g1UnFQTFBMR3c1bkNHQVZSWTBIM1QyRTl5YzN6d1NEXC8zWTFaZmwrSFVFVHZaVnlLZFFHT2ppRkh0RVJnYWJYcDJJOFk9In0%3D

Here's wishing you a successful holiday sales season!


Related Posts

Optimizing Your Fulfillment Strategy in 2021

Image of Gary G.
Gary G.

Let's rewind the clock back many years...

Read more

7 Things You Should Know About MAP Compliance

Image of Gary G.
Gary G.

When building or scaling a multichannel business, there are several ways brands can find qualified...

Read more