Amazon's fee emails are coming again, and sellers are starting to clear out their stock

Amazon's fee emails are coming again, and sellers are starting to clear out their stock

Since the beginning of this year, the cost of doing business with Amazon has risen again. Previously, Amazon notified a number of fee adjustments for Amazon Logistics in 2023, of which five fee changes, including FBA delivery fees, have already taken effect. Amazon has also begun to warm up for other upcoming new charges.

In the past two days, many sellers have received emails from Amazon, stating that the platform will begin to charge a storage utilization surcharge starting in April. Sellers with a storage utilization rate greater than 26 weeks will directly face a doubling of monthly storage fees. After receiving the news, some sellers have already started clearing out their inventory, hoping to optimize their storage before the charging node arrives.

Sellers in the clothing category have received another bad news. Yesterday, Amazon introduced volumetric weight to this category, causing sellers’ delivery fees to skyrocket. Competition has intensified, and platform price increase notices have been issued one after another. Sellers’ operating costs have continued to rise. Surrounded by emerging platforms such as Temu, does Amazon really have no sense of crisis?

Amazon will charge a surcharge on warehouse utilization, and it is safe to store less than 26 weeks

In January this year , four fee changes have come into effect on Amazon's US FBA delivery fee, removal and disposal order fee, small and light commodity program fee, and dangerous goods delivery fee. In February, new storage fees also began to be implemented. In the off-season (January-September), the monthly storage fee for standard-sized goods will increase by $0.04 per cubic foot, and for large goods by $0.03 per cubic foot; in the peak season (October-December), the monthly storage fee for large goods will increase by $0.2 per cubic foot.

In addition to the above fees, Amazon will also start charging a storage utilization surcharge on the monthly storage fee starting April 1. In the past two days, the platform has sent notification emails to sellers, informing them of the current storage utilization rate and reminding them to reduce inventory. After reading this, one seller said that he would start clearing out products in a targeted manner.

Image source : Amazon Wuye

According to current feedback from the industry, the storage utilization rate of accounts with fast inventory turnover can be maintained at 3 weeks, and many sellers have this value of around 10 weeks. For example, the standard size storage utilization rate of the seller in the figure is 8.95 weeks. However, there are also sellers whose utilization rate is close to or exceeds 20 weeks, and reducing storage is urgent . "The current standard size storage utilization rate is 15.17 weeks, and it seems that we need to continue to optimize storage." said a seller.

Now, what is your warehouse utilization rate? (vote single choice)

Less than 10 weeks

10 to 26 weeks

26 to 39 weeks

39 weeks and above

New sellers or personal account sellers do not have this concern

According to platform regulations, 26 weeks is a threshold.

Professional accounts that do not exceed 26 weeks are within the safety line and will not be charged this new surcharge. Sellers who meet certain conditions do not need to pay this fee, including: sellers who use professional accounts and have a storage utilization rate of no more than 26 weeks, new sellers who send the first inventory shipment to Amazon no more than 52 weeks, sellers who use personal accounts, and sellers whose average daily inventory volume is less than 25 cubic feet. These accounts only need to pay the normal storage fee for the month.

However, accounts that are more than 26 weeks old will need to pay fees, and the amount is not small.

According to the charging details, in the off-season, accounts with standard parts storage utilization rates of 26-39 weeks are required to pay a monthly basic storage fee of US$0.87/cubic foot + a surcharge of US$0.69/cubic foot, with the total monthly storage fee reaching US$1.56/cubic foot, an increase of nearly 80% from the previous amount. Accounts with a storage utilization rate of more than 39 weeks face a monthly basic storage fee of US$0.87 + a surcharge of US$0.94, with the total monthly storage fee reaching US$1.81/cubic foot, an increase of nearly 110%, and costs are skyrocketing.

There is no ambiguity about large items either . The surcharge for warehouse utilization rates of 26-39 weeks is $0.46/cubic foot, and for those over 39 weeks, it is $0.63/cubic foot. The fee increase is comparable to that of standard items. This is a big challenge for categories such as home furnishings.

If you want to reduce your inventory right now, you can learn how this surcharge is calculated: average daily inventory over the past 13 weeks ÷ average daily delivery, then simplify to the number of weeks; the formula is: (daily inventory over the past 13 weeks / daily delivery over the past 13 weeks) / (7 days a week). Depending on the size segment, sellers may have two different storage utilization values ​​for standard and large items.

Amazon will calculate the storage utilization rate for April on April 30. The storage utilization rate given in the email is on January 31, which is about 13 weeks away from April 30. Sellers can use this time to experiment with optimization operations.

Following closely, the surcharge for overage inventory will also increase.

Like warehouse utilization rate, FBA’s overage inventory surcharge (formerly “long-term storage fee”) is also urging sellers to speed up inventory turnover.

Previously, only inventory that was stored for 271-365 days was subject to an overage inventory surcharge, but starting April 15, Amazon will increase charges for inventory in this age range and will also add this fee to all inventory that is 181-270 days old.

After the adjustment takes effect, the fee for inventory aged 181-210 days will be $0.5/cubic foot, 211-240 days will be $1/cubic foot, and 241-270 days will be $1.5/cubic foot. For inventory aged 271-300 days, 301-330 days, and 331-365 days, the fee will increase from $1.5 to $3.8, $4, and $4.2, respectively, an increase of more than 1.5 times. For inventory stored for more than 365 days, the fee will remain unchanged.

The two additional charges for warehouse utilization and overage inventory provide a clearer indicator for store inventory turnover. Next, in addition to controlling the delivery rhythm from the source, sellers must also increase the sales rate, or clear inventory by applying for clearance, removing orders, or abandoning orders. One seller lamented: "Amazon's requirements for inventory control are getting higher and higher. Stocking must be done with great care. If it doesn't sell, you can only reduce the price to clear the inventory or abandon it directly."

From the platform's logic, Amazon's move is to screen sellers with high turnover and more profit for the platform, which is understandable. But from the seller's perspective, the frequent fee increases are annoying and the operating pressure is increasing.

In the calculation of the above-mentioned overage inventory surcharge, special categories such as clothing, shoes, luggage, etc. are excluded, but they may face pressure in other aspects.

Delivery fees for clothing categories have skyrocketed

Yesterday, many clothing sellers found that the delivery fee skyrocketed, from $4.63 to $6.1, and from $3 to $6. What happened? "After 4 pm on February 16, Amazon began to introduce volume and weight into the clothing category. The delivery fee of many sellers in the clothing category skyrocketed, and it was also difficult to avoid it for light and small categories, with a general increase of about 2 to 4 US dollars." said a seller in the industry.

In fact, this increase was beyond many people's expectations. "The delivery fee for clothes that cost only a dozen or twenty dollars is $6.1, and they don't even give us a box and send it directly to customers in its original packaging?" one seller complained.

Previously, Amazon used the greater of the product weight or volumetric weight to calculate the shipping weight for all large standard-size items, small oversized items, and large oversized items, with the exception of apparel and hazardous goods. For apparel standard-size items weighing no more than 0.75 pounds and special oversized items, Amazon uses product weight for billing.

However , after February 16, clothing products will also be implemented according to the above standards.

"This change has eliminated the privileges for clothing. Now, the standards are unified and they are charged the same as normal products. For example, a down jacket is very large and light. Suppose it weighs less than 0.75 pounds, it was charged by weight according to the previous algorithm, but now it will be charged by volume. In fact, the delivery fee has not increased, but the platform has changed the billing method." An seller analyzed, and she said that she also needed to change her cost calculation table.

Faced with this major adjustment, sellers need to try to optimize product volume or increase prices to cover the additional costs, which is a considerable challenge for sellers.

Data recently released by the statistics agency Marketplace Pulse shows that the proportion of various fees charged by Amazon to sellers' sales has increased year by year, and exceeded the 50% mark for the first time in 2022. By 2023, this cost ratio will probably continue to rise.

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