If you’ve been following the Amazon warehouse saga, you know that the company is concerned about storage space, since their warehouses started filling up with unsaleable items that take up a lot of space. Although the company has made some changes that limit the amount of certain items that can be shipped to the facilities, it’s apparently not been quite enough to deter some sellers from their shipping patterns.
To counteract this around the holiday season this year, Amazon has decided to hit sellers right in the pocketbook. They plan to raise the fees for sellers using the Fulfillment By Amazon (FBA) service, but the higher fees will only start and stay in effect for the last three months of this year.
Amazon states that this change is to urge sellers to think before they send and instead, use the Amazon warehouse wisely. Basically, they want to make sure that items that are sent in for the holidays will actually sell. Interestingly, while the storage fees are going up, the fees will go down for what they call their Weight Handling Fees, or rather, outbound fees.
Adding to a bit of the confusion, they will actually lower storage fees for October to lower than they are now, but then the fees become higher for November and December. Here’s a copy of the email that Amazon sent out to its sellers. You can also read more about it and see the proposed fees by going here.
Hello from Fulfillment by Amazon,
In 2015, FBA volumes, growth rates, and inventory levels were very high. As a result, our U.S. fulfillment centers were very full in November and December. This fullness was driven in part by FBA inventory that did not sell until well into 2016.
To avoid potential capacity constraints during the 2016 holiday season, we are accelerating the expansion of our fulfillment capacity. Additionally, we are changing our FBA fee structure to encourage all sellers to send in and store products in November and December that are likely to sell by the end of 2016. To give you time to plan for these changes, they will begin to take effect on October 1, 2016.
We are introducing the following updates to our fees:
– Adjustment to Monthly Inventory Storage Fees: Effective October 1, 2016, the monthly fee for inventory storage will change for Standard-Size and Oversize units. October storage fees will decrease, and the fees for November and December storage will increase. This change will first be reflected in November 2016 charges for storage that occurs in October 2016. See details (or scroll to the Monthly Inventory Storage Fees information below).
– Reduction of Weight Handling Fees in November and December: To minimize the impact of the increased storage fees in November and December on your business, effective November 1, 2016, we will reduce our Weight Handling Fees for all items shipped in November and December. See details (or scroll to Fulfillment Fee information below). With the reduction in Weight Handling Fees, sellers who reduce the storage space they use in November and December have the opportunity to pay lower total FBA fees. Sellers who hold unproductive inventory through November and December may see an increase in total fees. See examples of how total fees may be reduced.
– Box content information required for shipments to Amazon: To ensure that shipments to Amazon are received quickly and accurately, effective November 1, 2016, you must provide box content information for each box sent to a fulfillment center. Shipments containing more than 55% of FBA units already provide box content information. In September 2016, we will provide additional tools to make it easier to provide box content information on all shipments. If your shipping processes do not support providing this information, we will apply a fee of $0.15 per unit in November and December. The fee will be $0.10 per unit for January through October. If you provide box content information, you will not be charged this fee.
Should this concern sellers?
Well, yes and no. Basically, you will have to pay higher storage fees, but when the item sells it will cost you less in “fulfilled” fees.
If you want to keep costs down, you will really need to take a long hard look at what you plan to keep in inventory this holiday season. You will also want to adjust your prices accordingly to cover the cost of your items sitting in Amazon’s warehouse on a shelf, so that you can recoup the extra amount of the fee. While I wouldn’t panic or completely change my strategy, I would keep it in mind as you begin getting your holiday inventory together and perhaps may even consider listing some of it elsewhere if you believe that the storage costs could present a problem for your unsaleable items.
What do you think of the fee change? Leave a comment below.