Amazon Policy Changes

Amazon FBA Fee Changes June 2021

Post by
Andrew Quintrell

Amazon FBA Fee Changes June 2021

Amazon announces an update every year regarding their FBA fees. Unfortunately, 2021 is turning out to be a tumultuous year for sellers on Amazon. Amazon has put in place ASIN limits, storage limits, massive checking-in delays with inventory, and it has created a logistical nightmare. As a result, in December 2020, the company decided to delay their annual fee update until June to provide sellers with some reprieve.

Putting aside their generosity, it’s time to detail what the new FBA fee change update means for sellers on Amazon.

What are Amazon FBA and Referral Fees?

For those that are new to selling on Amazon, they might not be aware of all the charges that Amazon employs. The Amazon referral fee is a fee that Amazon charges on the sale of every product. It’s the cost of doing business on Amazon. Sellers are essentially paying to display their products to millions of potential customers.

Traditionally, the referral fees range between 8% to 15% of the price the customer pays for the product. Therefore, referral fees play a significant role in calculating profitability, and every seller needs to account for these fees.

Not only is Amazon updating their referral fees, but they are also changing the Fulfillment by Amazon (FBA) fees. FBA is a service that Amazon offers sellers, and it allows sellers to automate their order fulfillment and shipping services. The idea is simple; the sellers focus on selling the product, and Amazon will take care of the shipping.

By enrolling in the FBA program, sellers can let Amazon handle all their shipping and fulfillment. This includes any potential returns and refunds, product warehousing, picking, packing, and several other logistical expenses.

All they need to do is send their product to Amazon and pay a per-unit fee on every order they ship through FBA.

Summary of Fee Changes Amazon 2021

  • Average increase of 4.4% for standard size items
  • Minimal to no increase for oversize items due to the elimination of the 1lb packaging weight
  • Large standard size items over 3lbs will incur savings of 4.5% to 7.0%
  • Amazon is eliminating the 4-ounce packaging weight for standard items and the one lb packaging weight for oversize items.
  • There will be no referral fee changes except for full-sized appliances, personal computers, and veterinary diet food
  • There will be no increase in storage fee

Standard Size Items – Amazon 2021 FBA Fee Increases

All standard-size items will undergo an Amazon FBA fee increase of an average of 4.4%. Amazon is eliminating the 4-ounce packaging weight that would previously apply to all items. The result is that all items that fall under the 12 to 16-ounce category are undergoing a significant fee decrease of 47.6%.

The company is also adjusting the base weight of the the large - standard size tier. Large - standard size items weighing between 3 to 20 lbs. Could see a total savings between 4.5% to 7.0%.

Oversize Items – Amazon 2021 Fee Increases

Amazon is eliminating the standard one pound packaging weight for oversize items. That means that many small oversize items could see a potential decrease in 2021.

Storage Fee Update 2021

One of the most interesting updates is that there will be no increase in the storage fees in 2021. This will be received with delight by sellers after Amazon increased the storage fee in 2020 by 8.7%.

Increased Removal and Disposal Fees

The removal fees are going through a significant increase. The average cost will increase by approximately 28% across all categories. Amazon charges removal fees for every item that’s removed or disposed from their fulfillment center. It typically takes 14 business days to fulfill removal orders.

What does this mean for sellers in 2021?

While the changes in the fees are relatively small, that by no means suggests that sellers should treat them casually. On the contrary, if these updated fees aren’t taken into account, they’ll seriously cut into your profitability this year. That’s why it’s important to  consider these fee increases when calculating your profit margins.

Furthermore, Amazon didn’t just announce fee increases. There are certain products that are experiencing a decrease in their standard shipping costs. Sellers with products in the 12 to 16-ounce category will benefit by decreasing prices or leaving them as is and enjoying the increase in profits.

While the 2021 Amazon fee increase may be minimal, it still comes at an unfortunate time. The whole world is currently dealing with logistical and supply chain issues that are raising costs. These additional Amazon fees are reflective of what’s happening in the global economy and it’s critical that you’re aware and your FBA business adapts.

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