On January 18, 2022, Amazon will increase FBA fees for fulfillment, removal, and disposal. It will then follow up on those changes with increases to storage fees on February 1st, along with a brand-new long-term storage fee that will kick in on inventory sooner than the current 365 days.
Many Amazon FBA sellers struggle with the slim margins imposed by fierce competition, so even seemingly small changes have an outsized impact on a business plan. Read on to make sure that you know exactly how much more you’ll have to pay Amazon in 2022 in FBA fees, and decide whether it’s time to come up with an Amazon FBM backup plan.
How are Amazon FBA Fees Changing in 2022?
Unsurprisingly, Amazon FBA fees in 2022 will increase across the board. All of the biggest categories will see increases – fulfillment fees, storage fees, and removal and disposal. So – what are those changes?
Amazon FBA Fulfillment Fee Changes
Amazon will hit every size tier with a fulfillment fee increase, and percentage increases will range from 2% on the low end to as much as 12% on the high end.
Source: Amazon Seller Central
Notably for many sellers, each of the Small Standard categories will see an increase of 8%. For the smallest items, that will result in a $0.22 increase, and for the larger items in that range, the fee will go up by $0.27. It sounds like a small increase, but sellers know how much even ten cents matters for small, low-margin products. This change will cut already-thin margins and likely force some sellers into the unenviable choice of either dropping part of the product line or raising prices and risking a severe drop in sales.
An Amazon FBA seller on r/FulfillmentByAmazon sums up the dilemma well: “If I was assessed the [2022] FBA fees retroactively for the past 4 months it would average out to a cut of 22.5% at the unit level net profit. All you can do is raise prices, but when Amazon is your competitor, that’s not always possible. Great.”
Amazon FBA Storage Fee Changes
Of course, Amazon isn’t stopping at raising fulfillment fees. They will make two separate changes to FBA Storage Fees – 1) they’ll raise rates and 2) they’ll institute a new, more punishing long-term storage fee.
FBA Storage Fees will increase by $0.08 per cubic foot, or 10.6% on February 1st, 2022. Like the fulfillment fee rate increase, this is a seemingly small change, but given that Amazon FBA sellers are already operating in a cutthroat, low-margin environment, the overall effect of a few small changes to fees can be punishing.
On top of that, Amazon is also tightening their definition of long-term storage. On May 15th, 2022, they will introduce a brand-new “aged inventory surcharge” to units that have been in Amazon’s fulfillment centers for 271 to 365 days. While that time period used to accrue zero additional storage fees, it will now add $1.50 per cubic foot on top of regular storage fees, nearly tripling storage cost.
There’s simply more demand for FBA than Amazon can fulfill, so they’re able to make changes like this to squeeze more out of sellers and cut all but the best sellers out of their network. This is the logical extension of changes like their April 2021 adjustment to FBA inventory limits, which are designed to optimize what inventory sellers place with FBA and punish those who don’t adhere to their ever-stricter standards.
Amazon FBA Removal and Disposal Fee Changes
Finally, Amazon is more than doubling the Removal or Disposal Order Fee for most SKUs. Missing on a new product, or getting undercut and outcompeted is about to become a lot more expensive. If you keep trying to sell a struggling product, you’ll face the early kick-in to long-term storage fees as detailed above. If you decide to cut the product, you’ll pay much more per unit.
In fact, every product size except for the smallest will see its Removal or Disposal Order Fee more than double. A SKU between 1-2 lbs, for instance, will increase for $0.35 to $0.75 per unit – a 114% jump.
As mentioned above, this change is aimed squarely at removing all but the fastest-moving SKUs from Amazon FBA. If you’re uncertain about how a new product will perform, or you see existing products getting undercut and pushed out of the Buy Box by cheap competition (or competition from Amazon itself), then you need an efficient Amazon FBM solution to keep selling.
Cahoot's Alternative to Amazon FBA
Cahoot’s excellent FBA alternative can fully replace FBA or serve as an affordable backup. And it’s much more than that – it’s the most flexible solution in the marketplace and easily integrates and ships orders for every eCommerce sales channel. With our innovative peer-to-peer fulfillment network, multi-channel fulfillment with nationwide 1-day and 2-day delivery is the norm.
Unlike other networks that are collections of 3PLs, Cahoot’s innovative approach empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants.
As a result, costs are typically lower than what you get with a traditional 3PL fulfillment company, and service levels are higher. Merchants can use the network solely for outsourced fulfillment – similar to FBA, or they can choose to fulfill orders for other merchants and offset some of their own outsourced fulfillment costs.
