Navigating Amazon Fees Changes

Have you ever wondered how the latest changes in Amazon's fee structure could impact your auto parts business?

As one of the world's largest e-commerce platforms, Amazon offers tremendous opportunities for sellers of car accessories and power sport vehicle products. However, its complex and ever-changing fee structure can significantly affect your bottom line.

Understanding these recent changes is crucial for high SKU count sellers to maintain profitability and stay competitive. This article explores the latest updates to Amazon seller fees, focusing on their impact on auto part businesses and similar sellers.

Overview of Amazon Seller Fees

Amazon's fee structure includes two primary types of charges:

1. Subscription Fees: Sellers can opt for the Individual plan, costing $0.99 per item sold, or the Professional plan, priced at $39.99 per month, ideal for high-volume sellers.
2. Selling Fees: Selling fees consist of referral fees, which vary by category and are a percentage of the selling price; for example, the referral fee percentage is 12%, and the minimum referral fee that you can pay is $0.30 under the product categories of automotive and powersports.

If you are using Fulfillment by Amazon (FBA), additional FBA fees cover storage, packing, and shipping.

Recent Changes in Amazon Seller Fees

In the past few years, Amazon has implemented several adjustments to its fee structure. Key adjustments include:

Increase in Referral Fees

In 2024, Amazon reduced the referral fee for items whose prices are below $15 from 17% to 5%. For items priced between $15 and $20, the reduction applied is 17% to 10%.

For auto parts, the referral fee remained stable at around 12%, but changes in other categories could indirectly impact sellers dealing in multiple product types.

Adjustments to FBA Fees

As an auto part business owner often dealing with high SKU counts and varying item sizes, it is crucial to be particularly aware of FBA fee changes:

• Dimensional weight calculation: In February 2024, Amazon updated its dimensional weight calculation method, affecting storage and shipping fees for larger, lightweight items. This change is particularly relevant for bulkier auto parts and accessories.
• Monthly Storage Fees: During peak seasons- January to September, monthly storage fees are reduced by 0.09 per cubic foot, impacting standard-sized items. For bulky or extra-large items, there is no charge for the price set at

Sellers of large auto parts need to account for these higher storage costs.

• Removal and Disposal Fees: The cost for removing or disposing of inventory rose, with removal fees for standard-size items increasing from $0.50 to $0.60 per item. This increase affects auto part sellers with slow-moving inventory.

Aged Inventory Surcharge

To encourage efficient inventory management, Amazon introduced an aged inventory surcharge recently. Items stored for over 365 days incur additional fees, which can significantly impact auto part businesses with slow turnover rates for certain SKUs.

Upcoming Decreases in FBA Fulfillment Fees

In a recent positive change, Amazon announced that starting April 15, 2024, the FBA fulfilment fee rates will be reduced. For standard-sized products, the fee dropped by $0.20 per unit, and for large bulky-sized products, the fee will decrease by $0.61 per unit. Additionally, products priced below $10 will continue to receive an additional $0.77 discount on per-unit fees. This reduction can benefit auto parts sellers dealing with various product sizes and price points.

Inbound Placement Service Fees

Starting March 1, 2024, Amazon introduced an inbound placement service fee to reflect the cost of distributing inventory to fulfilment centres close to customers. These fees average $0.27 per unit for standard-sized products and $1.58 per unit for large bulky-sized products. To avoid these fees, you can opt to send shipments to multiple locations.

Low Inventory Level Fees

Amazon also implemented a low-inventory-level fee for standard-sized products starting in March 2024. This fee applies if you carry consistently low levels of inventory relative to unit sales, which increases fulfilment costs and reduces delivery speed. You can avoid this fee by maintaining more than four weeks of inventory relative to sales.

Strategies for Auto Part Sellers

These fee changes can significantly impact profitability, especially if you have a high number of SKUs. Here are strategies to mitigate the effects:

• Optimize inventory management: Regularly review and adjust inventory levels to avoid long-term storage fees and aged inventory surcharges. Use Amazon’s Inventory Performance Index (IPI) to maintain efficient inventory turnover.
• Evaluate fulfillment options: Consider if FBA remains the most cost-effective option. In some cases, third-party logistics providers (3PL) or in-house fulfillment may reduce costs, especially for oversized or heavy items.
• Adjust pricing strategy: To counter increased fees, revise your pricing strategy carefully. Ensure competitive pricing to retain customers while covering the higher costs.
• Leverage promotions and advertising tools: Use Amazon's promotional tools and advertising options to increase sales velocity, help move inventory quickly, and reduce storage costs.
• Bundle products: Creating bundles of auto parts or accessories can help move slower-selling items and reduce per-unit fees by selling more items per transaction.

For auto part businesses and sellers with high SKU counts, it is essential to stay informed about Amazon's fee structure changes.

By understanding the recent adjustments and implementing effective strategies, you can maintain profitability and continue to leverage Amazon's vast marketplace.

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