Part 1 of the 2024 Amazon Fee Changes Series

Understanding the Fee Changes
Amazon’s 2024 updates come with a mixed bag of fee adjustments, promising an average increase of just $0.15 per unit sold.  They also are expecting many sellers will see a decrease in the average fees paid. Here’s a summary of the key updates:

• Inbound Placement Service Fee: Starting March 1, 2024, Amazon will charge an average of $0.27 per unit for standard-sized products and $1.58 for Large Bulky-sized items. This fee is for distributing inventory across fulfillment centers closer to customers. Sellers have a golden opportunity to reduce or even avoid these fees based on their shipment strategies. For instance, choosing to ship to just one Amazon fulfillment center will perhaps be more efficient for your business yet result in higher inbound fees from Amazon. You’ll need to run the numbers to see works out best for your business.
• Reduction in FBA Fulfillment Fee Rates: Effective April 15, 2024, Amazon will lower fulfillment fees by $0.20 per unit for standard-sized items and $0.61 for Large Bulky products.
• Ships in Product Packaging (SIPP) Discounts: Eligible products shipped in their original packaging can benefit from fulfillment fee discounts ranging from $0.04 to $1.32, started February 5, 2024.
• Low Inventory Level Fee: (As shared last week) To encourage healthy inventory levels, Amazon introduces a fee for carrying consistently low inventory relative to sales, effective April 1, 2024. This fee can be avoided by maintaining more than four weeks of inventory.

1. Inventory Management: Proactively manage your inventory to avoid the low-inventory-level fee. Aim to maintain at least four weeks of inventory based on sales data to ensure you’re not hit with unnecessary fees.
2. Inbound Shipment Planning: Carefully plan your inbound shipments to take advantage of reduced or waived inbound placement service fees. Consolidating shipments to a single location when possible can lead to significant savings.
3. Leverage SIPP Discounts: Review your product catalog to identify items eligible for the Ships in Product Packaging program. These discounts can offset other fee increases and enhance your margins.
4. Cost-Benefit Analysis: Use Amazon’s Revenue Calculator and FBA Fee Preview Reports to understand how the new fee structure affects your products. This analysis will help you adjust pricing, if necessary, and optimize your shipping strategies.
5. Stay Informed: Regularly visit the dedicated Amazon pages and Toucan Advisors News for each fee type to stay updated on any changes or additional ways to mitigate fees.