Using the FBA fulfillment service, third-party sellers will see significant Increase in Selling Fees in 2023 in the amount of time they can store their products in Amazon’s warehouses beginning in January, the company quietly announced on November 17. This rise will have an effect on numerous businesses because third-party sellers account for nearly 60% of marketplace sales.
An Increase of Storage & Removal Fees
When the new fees take effect on January 17, 2023, all sellers will continue to pay referral fees, which are equal to a percentage of the total price, the cost of shipping, and any charges for gift wrapping.
However, Amazon’s FBA fulfillment service will see some significant growth in the coming year for sellers. This comprises:
On average, FBA outbound fee rates will rise by $0.22.
For its non-sortable network, peak monthly storage fees will increase by $0.20 per cubic foot.
There will be an increase of three to four cents per cubic foot in off-peak storage.
Beginning on April 1, 2023, sellers who store a large cube of inventory in comparison to their most recent weekly sales will be subject to a new storage utilization surcharge.
Starting on April 15, 2023, Amazon will apply surcharges to inventory that has been stored for between 27 and 365 days.
Products that fall outside of the following categories will not be subject to Amazon’s aged inventory surcharges: Jewelry, watches, shoes, apparel, and bags as of April 15, 2023.
Not only will the cost of storing goods increase, but Amazon also announced that the cost of removing goods from its fulfillment centers would nearly double.
For instance, it currently costs $1.14 to remove a standard-sized item weighing two pounds from Amazon’s fulfillment center. The product will be removed or disposed of for $2.20 in January.
The Impact on Third-Party Sellers
We will have to make some changes to our products and business infrastructure as a result of the higher prices. All of our products will be more expensive. Gav Kwok, an e-commerce seller who sells primarily through Fulfillment By Amazon (FBA) wholesale, stated, “It will vary pretty widely depending on the product, but the minimum will likely be about 30-40%.”
The alternative is that we will have to reevaluate which products generate the most revenue and eliminate those that do not. All sellers must maintain approximately the same or slightly higher prices for this solution to be effective. We’ll have to wait and see what happens before coming up with a better plan.
Kwok is of the opinion that because smaller third-party sellers already have slim margins, it will be extremely difficult, if not impossible, for them to compete with larger sellers as a result of Amazon’s fee increases.
Kwok stated, “I believe this will primarily affect the consumer side, even more so than the seller side.” A lot of customers will see a significant price increase on all of their favorite products or all of the things they buy, so they may decide to buy them in a store instead.
Currently, many customers consider Amazon to be the best place to get some of the lowest prices. However, when they discover that these prices have increased as a result of the FBA fees, they might shop in-store to save money. This could result in a significant return to retail stores among families from the lower middle class. In the five to six months following the implementation of this policy, Amazon may also experience opposition or lower traffic.
Although the news of fee increases does not bode well for third-party marketplace sellers, it also indicates that in-store purchases may increase in 2023. Shoppers are increasingly gravitating toward less expensive alternatives as a result of inflation’s ongoing upward pressure on all product prices. Brick-and-mortar stores might have the price and the item they’re looking for.
Amazon to Increase Selling Fees in 2023
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