Amazon is making big fee changes in 2024 including adding a low inventory fee. Amazon announced these changes on December 5th of 2023. The addition of a low inventory fee on Amazon will have a substantial impact on sellers of every size. Sellers will be charged if they do not keep the stock levels that Amazon will be setting for them. In this blog post we will cover more specifics about the low inventory fee and six additional fees/programs from Amazon to help sellers plan accordingly.
Storage/ Low Inventory Fee:
- Amazon is introducing a low inventory fee. Starting April 1st of 2024, this fee applied to sellers who carry consistently low levels of inventory. When sellers maintain more than four weeks of inventory relative to their sales history, they will not have to pay this fee.
- Then Amazon will reduce the non-peak monthly storage fees. Starting April 1st of 2024 this fee will be reduced by an average of $0.09 per cubic foot for standard-size products. The non-peak storage months are January through September. The storage fee for large bulky-size items will stay the same.
Inbound/Fulfillment Fees:
- The first new fee is the inbound placement service fee. Starting March 1st of 2024 standard-sized products will be charged an average fee of $0.27 per unit. The average fee for large bulky-sized products will be $1.58 per unit. Amazon will give sellers the option to pay lower fees or no fees depending on if you send your inventory to multiple inbound locations yourself.
- Next, Amazon will decrease FBA fulfillment fee rates by an average of $0.20 per unit for standard-sized products. The average decrease will be $0.61 per unit for large bulky-sized products. Products that have a price lower than $10 will continue to have the additional discount per unit fee of $0.77. This fee will start being put into effect March 15th of 2024 which is the same date that the first inbound placement fees will be charged.
- Additionally, Amazon will offer a fulfillment fee discount for eligible products in the Ships in Product Packaging (SIPP) program. Starting February 5th of 2024 this discount will be from $0.04 to $1.32 based on the item weight and size.
Referral Fee and Vine Structure Changes:
- Starting January 15th of 2024, the referral fee for apparel products will be reduced from products that are priced at less than $20. For products that are priced between $15 and $20 the referral fees will be decreased by 7%. This makes the new referral fee 10%. Next for the products priced at less than $15 the referral fee will be reduced by 12%. This makes the new referral fee 5%. Other referral fees will stay the same.
- Next, Amazon changed the pricing structure of the Amazon Vine program. The Amazon Vine program helps brand gain more reviews. Brand can enter up to 30 units of an SKU for a select group of Amazon customers who are enrolled in the vine program to claim. While Amazon does not 100% guarantee a review from the customers enrolled in the vine program, they closely monitor who is allowed into the program to increase chances and quality of reviews. The old vine structure cost $200 for each enrolled SKU regardless of how many units were enrolled (maximum 30 per SKU). The new lower pricing structure is a $0 fee for 1-2 units, a $75 fee for 3-10 units, and a $200 fee for 11-30 units.
Conclusion:
Although the fees are confusing, these changes are essential for sellers to understand when developing their 2024 Amazon strategies. This announcement from Amazon came with a mix of positive and negative changes. Two of the biggest negative changes are the added inbound service placement and low inventory fees. Adding a low inventory fee adds to the complexity of seller inventory management strategies because sellers can be penalized for both having excess inventory and not keeping enough inventory in stock. This change will have a heavy impact on sellers of all sizes on Amazon.
While technically introduced in 2023 the updated pricing tier structure for the Amazon Vine program is a positive for sellers. The fee will remain unchanged for sellers who want to enter 11-30 units of a SKU in the program. However, the fee for 10 units or less has been reduced by more than half of the previous amount. Another positive is the reduced fees for apparel that is priced at less than $20. Overall, Amazon is making big changes that are complex for sellers to follow.
