Most sellers know that every February 22 is a day that ushers in new Amazon fulfillment fees. In 2018, FBA sellers are facing a double whammy of rising fulfillment fees and outbound shipping weights. So, how will this affect your bottom line?
Amazon currently charges FBA sellers different fulfillment rates based on the weight of the products they sell and the time of year. According to a recent announcement, these rates will change in Q1 2018 for most merchant orders fulfilled by Amazon. As of February 22, 2018, fulfillment fees will be adjusted as follows:
- The new rates will be applied year-round, with no variation from one month to the next.
- Dimensional weight will be calculated as the unit volume divided by 139 rather than 166.
- Changes to current FBA storage fees are due to be announced in early 2018.
So, what does this mean?
- Dimensional Weight Will Rise
Amazon uses three standardized weights to calculate outbound shipping weight. The formula includes packaging weight and either unit weight or dimensional weight (generally the larger of the two). For large or oversized items, for instance, Amazon uses dimensional weight instead of unit weight, because it’s greater.
Table 1. Outbound shipping weight formula based on size of product
Dimensional weight or volumetric weight is an estimate that applies to oversize items and large standard-size items over 1 lb. It’s a commercial freight pricing technique used to calculate fees for FBA, Multi-Channel Fulfillment and Inventory Placement Service (where shipments are rerouted to receive centers). The formula is based on the volume of the product (L x W x H in inches), which used to be divided by 166.
Starting February 22, dimensional weight will rise in line with current industry standards. The unit volume will be divided by 139. So, the dimensional weight Amazon will record for your product when it reaches a fulfillment center will be 19.42% higher (that’s 166 divided by 139) than it currently is.
Fig. 1. Change in dimensional weight calculation
What this means is that:
- Dimensional weight will now apply to items Amazon previously measured in terms of unit weight, because it will be the greater of the two (Table 1)
- Dimensional weight will rise and some products will be bumped up to a heavier and more expensive weight category (Table 2)
For example, a large standard-size product that weighed 0.82 lb (371g) will now be logged by fulfillment centers as weighing 1 lb (453g), and your fees will rise accordingly. Likewise, a product that weighed 1.64 lb will now weigh exactly 2 lb, costing you more to sell via FBA because it falls into a different weight bracket.
2. Fulfillment Fees Will Generally Rise
Fulfillment fees will rise for most products, even if they don’t depend on dimensional weight. Large Oversize and Special Oversize products are the only exceptions. Even then, sellers stand to gain only if the items weigh less than 75.36 lb. (approx. 40.8 kg). For example, Amazon charged $75.06 in fulfillment fees in March 2017 for a Large Oversize product weighing 70 lb., such as a TV. However, in March 2018, the same product will cost only $73.18, as seen in the table below.
Also, the discount Amazon granted sellers from October to December will no longer apply, and fulfillment fees will be the same year-round. They range from $2.41 to $4.71 for Standard-Size products weighing less than 2 lb (formerly 1.64 lb) in dimensional weight. Medium Oversize fulfillment rates will also rise by at least $0.21. That’s $9.44 + $0.38 – ($9.20 + $0.39).
Table 2. Fulfillment fees effective February 22, 2018
Merchants selling Small Oversize items will see a sharp rise of at least $1.27 per product. That’s because the standard rate will rise by $1.28 (from $6.85 to $8.13), and the variable rate will decrease by￠1 (from $0.39 to $0.38 per lb). However, because every pound that goes over the first 2lb (or currently every 0.82 lb over the first 1.64 lb in dimensional weight) will attract an extra $0.38 charge, in real terms, sellers will see their fulfillment rates rise substantially.
3. FBA Storage Fees Are Also Bound to Rise
We expect FBA storage fees to be readjusted as well on the next fee assessment date, February 22, 2018. It’s very likely that Amazon will not waive any stocking fees (as was once the case with expensive products). Also, there probably won’t be any free removal order offers before the next assessment. Please follow our blog for an analysis of the new storage fees, as soon as it’s available.
We hope this post will help you reevaluate your options before the fee changes take effect. In the meantime, here are a few tips on how to minimize your storage fees, courtesy of our very own Sellery Expert, Kate. For a breakdown of last year’s fulfillment costs, and a more in-depth explanation of FBA weights and profit estimates, please read our Amazon Selling Fees post.
Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments and keeps Amazon sellers up to speed.
