Amazon’s 2024 fee adjustments should have sellers doing a new look at their bottom net. Let’s look at a few examples
Detailed Referral Fee Adjustments
For apparel products priced below $20, Amazon has introduced a significant reduction in referral fees, creating a favorable environment for sellers in this category. Specifically:
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- Items priced under $15: Referral fees have been decreased from 17% to 5%.
- Products priced between $15 and $20: Referral fees have been lowered from 17% to 10%.
Example:
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- Before Adjustment: Selling an apparel item at $14 would have incurred a referral fee of $2.38 (17% of $14).
- After Adjustment: Now, the same item incurs a referral fee of just $0.70 (5% of $14), enhancing your margin by $1.68 per unit sold.
How to Act on It:-
- Revisit Pricing: For an apparel product previously priced at $14.99 to stay under the 17% fee threshold, consider increasing the price to perhaps $19.99 to take advantage of the lower 10% fee rate without crossing the $20 threshold, potentially increasing profit margins.
- OR Product Line Expansion: With the reduced fees, introducing new products in the sub-$20 range becomes more attractive, possibly filling gaps in your product lineup or testing new market segments with lower financial risk.
Logistics Fees Insight: Storage Fees Adjustments
Effective April 1, 2024, Amazon has revised its storage fees, offering a reduction that benefits sellers:
Effective April 1, 2024, Amazon has revised its storage fees, offering a reduction that benefits sellers:
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- Non-peak monthly storage fees for standard-size products have been reduced by an average of $0.09 per cubic foot, dropping from $0.87 to $0.78.
Example:
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- Before Adjustment: Storing 100 cubic feet of standard-size inventory would cost $87 per month.
- After Adjustment: Now, the same space costs $78 per month, saving sellers $9 monthly or $108 annually on storage fees for every 100 cubic feet of inventory.
How to Act on it:
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- Reevaluate Inventory Levels: Consider increasing your standard-size product inventory to take advantage of reduced storage costs.
- Budget Optimization: Update your financial forecasts with the new fee structure to accurately predict your profit margins.
- Strategic Planning: Align your restocking schedules with non-peak periods to benefit from the lowered fees and avoid higher charges during peak times.
Toucan Advisors’ analysis of Amazon’s 2024 fee adjustments equips brands with strategies to enhance profitability by capitalizing on reduced referral and storage fees, emphasizing proactive pricing reviews, and smart inventory management.