Amazon’s FBA and referral fees? The year 2023 was good for some businesses and bad for others but it was significant for Amazon. This claim has its roots in the extraordinary initiatives by the e-commerce giant in the year 2023.
Among them, the effort to put forward the products near to doorstep of the customer, speedy delivering prime deals, and organizing fulfillment.
These initiatives were not possible to execute without taking on board Amazon third-party sellers. Therefore, Amazon has introduced a new change in Amazon FBA Fee and referral fee in the year 2024 to facilitate sellers.
This potential decrease in the Amazon FBA and referral fee was announced on the seller forum.
You can read them here : Update in Amazon FBA fee and referral fee
As of the middle of the year 2023, nearly 18 billion deliveries were executed by the Amazon team. These same and next-day deliveries are fourfold that of the year 2019. All this happened due to continuous technological investment by Amazon on sellers’ capabilities.
Therefore, managing Amazon FBA and referral fees is crucial for Amazon sellers to survive growth, profitability, and competition.
For that reason, in this article, we will discuss the new changes in Amazon FBA and referral fees in detail.
What is Amazon FBA Fee?
A typical Fulfillment by Amazon (FBA ) Seller does not pay for shipping, handling, or packaging to deliver his goods. Instead, Amazon employees do these tasks for the seller.
To finance these tasks, Amazon charges a specific fee which is called as Fulfillment by Amazon (FBA) fee. This fee depends on the size and weight of the product unit.
What is the Amazon Referral Fee?
Each time you sell a product on the platform, Amazon will charge you for that sale. This is known as the Amazon Referral fee. This fee is a percentage of the total sales price. It can vary based on the product.
Decline in the Amazon’s FBA and referral fees
As the year 2024 takes off, Amazon has introduced a potential decrease in its FBA fulfillment fee rates. There would be a decrease in the rates by $0.20 per unit product for standard-sized items. Similarly, the fee rates would be down by $ 0.61 per unit product for large bulky-sized products.
These reduced rates of Amazon FBA fulfillment will be applicable from April 15, 2024. Moreover, there would be an additional discount of $0.77 for every product which have a price below $10.
Likewise, Amazon has proclaimed a decrease in referral fees for the selected items. For instance, the referral fee for apparel products that have a price below $20 will be reduced.
There would be a decrease in referral fee from 17 % to 5 % for the products having a price below $15. For the products with a price tag from $15 to $20, the decline in the fee will be from 17% to 10%. The referral fee for other products will remain the same. This change in the rate will be applicable from January 15, 2024.
Detail of all updated Amazon fee can be seen here : Update to Amazon fees
Implications for the Amazon Sellers
The decreased Fulfillment by Amazon (FBA) and referral fees can have the following implications for the sellers:
High-profit margins
The decreased regulation fees ultimately result in increased profit margins for Amazon sellers. This will directly impact the sales volume on the platform generating more sales revenue for the sellers and Amazon.
Stretchable product pricing
A decline in the fees provides sellers with enhanced flexibility in terms of setting prices for their products. This will result in more competitiveness and an enlarged profit scale for the progressive sellers.
Diversity in inventory
Decreased regulation fees will give increased profit margins which will ultimately allow the sellers to invest frequently on inventory.
This huge inventory investment will ultimately result in enhanced category diversity in the inventory section of Amazon.
High Competition
The Amazon FBA and referral fee play the role of an entry barrier for new sellers into specific product categories.
As these fees are going to embrace a new low, therefore, the decreased entry barrier will increase the potential competition for the sellers.
Enhanced seller satisfaction
The rising profitability due to decreased regulation fees will result in a better relationship between Amazon and sellers. This will also boost the seller retention rate and user experience of the platform.
As we are going to wind up this discussion, it has become evident from the above discussion that Amazon FBA fees and referral charges have a dynamic relationship with profits and the feasibility of online businesses.
These fees can remain the same or change with the next update of Amazon, the sellers need to focus on the basics of the business to thrive in the ever-changing e-commerce horizon.
