Amazon FBA in 2019: Insights for Sellers

Amazon FBA in 2019: Insights for Sellers

As the year draws to an end, probably you’re now planning and preparing your 2019 marketplace strategy, taking into consideration the pricing, inventory, advertising, and other operational functions. Here are the few key insights that Amazon US announces for your business strategy fine-tuning.

FBA Fee Changes

Amazon’s initiatives for 2018 was maximizing warehouse space and navigating inventory capacity, as evident in the e-commerce giant’s decision in July to use the Inventory Performance Index to measure sellers’ inventory management abilities and limit storage access to those with an index below 350. According to Amazon, the goal was “to maximize the impact of these adjustments for as many [sellers] as possible, and we expect over 40% of FBA units shipped to experience no change — or even a decrease.” The storage fee changes will take effect on February 15, 2019, and the fulfillment and referral fee changes will take effect February 19, 2019.

  • No changes will be made to fulfillment fees for small standard-size and large standard-size items with a shipping weight of 10 ounces or less.
  • Small increases in fulfillment fees for products in other size buckets will be implemented to reflect fulfillment and transportation cost changes.
  • The dimensional billing weight calculation will be updated for oversize items. Amazon will apply a minimum width and height of two inches when calculating the dim weight for oversize items, to align with packaging costs.

Referral Fees

When it comes to referral fees, the percentage of sales that Amazon takes, Amazon deducts the greater of the applicable referral fee percentage or applicable per-item minimum referral fee.

For sellers in most categories, the minimum per-item referral fee charged to list items will be $0.30, down from $1. For watches and jewelry, the minimum will decrease to $0.30 from $2. This change impacts all product categories that had a minimum previously, while some items like books that never had a minimum will keep that distinction. In the below product categories, referral fees will be decreased:

  • Furniture will see a reduction to 10% from 15% on the portion of sales over $200, but the portion below $200 will stay at 15%.
  • Baby, beauty, and health and personal care items will experience a reduction from 15% to 8% on items that cost less than $10. Items that are more than $10 will stay at 15%.
  • Jewelry will see a reduction in fees to 5% from 20% for any portion of a sale over $250, but it will stay at 20% for the portion $250 and below.

Amazon stated that it hoped lowering the fees would help sellers list and sell more items in these categories, which in turn helps the marketplace increase its product variety and availability. [1]

                                              Amazon Fulfillment Warehouse photo credit: DallasNews

Storage Fees

  • Amazon will introduce a separately monthly inventory storage fees for dangerous items that contain flammable or pressurized aerosol substances. This change will first be reflected in April 2019 charges for storage that occurs in March 2019. Monthly inventory storage fees for other products will not change.
  • Long-term storage fees will be eliminated for units that have been in a fulfillment center for 181 to 365 days. The last long-term storage fee charge for inventory in a fulfillment center for 181 to 365 will be January 15, 2019. Amazon will continue to charge long-term storage fees for units that are stored for over 365 days.
  • For minimum long-term storage, Amazon will reduce the minimum long-term storage fee on units that have been in a fulfillment center for more than 365 days from $0.50 per unit to $0.15 per unit. The last charge at $0.50 per unit will be January 15, 2019.

Subscribe & Save

Amazon will be simplifying their Subscribe & Save. This program allows customers to sign up for recurring deliveries of their most used products and the fee structure will start on September 2019. Sellers will be able to fund a flat discount of 5% or 10% for each new item that they add to the program. The discount percentage option that is chosen will be applied to all subscriptions for that item. In addition, if a customer gets products from five or more subscriptions a month delivered to the same address, Amazon will give an additional 5% discount to the customer to help grow the sellers’ sales. Amazon notified those who operate on its platform of these changes two months in advance, in order to give them ample time to prepare accommodate the changes.

For more information in selling fee changes detail, definitions and examples, visit the pages below

2019 US fulfillment fee changes
2019 US storage fee changes
2019 US referral fee changes
Source [1]: feedvisor

 

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