Amazon will increase fees for FBA fulfillment, removal, and disposal in January 2022, and then it will follow up with increases to storage fees in February. Finally, FBA will institute a new long-term storage fee that will apply to inventory quicker than the current 365 days.
Even seemingly small changes can have an outsized impact on Amazon sellers’ profitability thanks to how badly their profitability is already squeezed. In this blog, we’ll make sure you know how much more you’ll have to pay Amazon in 2022 in FBA fees.
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How Will FBA Fees Change in 2022?
Amazon FBA fees in 2022 will increase across most major fee categories. You’ll see rises in fees for fulfillment, storage, and removal and disposal, and a new not-so-long-term storage fee. Let’s review the changes one-by-one.
Changes to Amazon FBA’s Fulfillment Fees
For fulfillment fees, every package size and shipping weight will see some degree of increase. The magnitude of the changes range from 2% at the lowest to as much as 12% at the highest.
Source: Amazon Seller Central
The 8% fee increase in each of the Small Standard categories is particularly noteworthy. In these categories, 8% nets out to a $0.22 to $0.27 increase in fulfillment fee for each item. Sellers with items in this popular category likely already have their calculators out, but we’ll note that smaller items on Amazon are often selling for $10-$20. If your gross margin is currently 20% (or $2 on an item that sells for $10), then a $0.22 increase in fulfillment fee will knock over 10% off of your profitability. With just one seemingly small change, Amazon FBA’s fee increase will put a serious dent in many sellers’ bottom lines.
An Amazon FBA seller on 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.”
Historically, Amazon FBA’s fulfillment fees for small items have beaten those of 3PL networks, while their fees for large items are worse. With these changes, though, a price comparison between Amazon FBA vs FBM makes FBM more and more appealing.
Changes to Amazon FBA’s Storage Fees
Amazon is making two distinct changes to FBA Storage Fees. On February 1st, they’ll raise rates, and then in May they’ll institute a new, more punishing long-term storage fee.
In February, FBA Storage Fees will increase by $0.08 per cubic foot, or 10.6%. Like the fulfillment fee rate increase, this change further shaves off precious margin from Amazon sellers, and will make it more difficult to profit from sales growth.
Amazon isn’t raising their Q4 storage rates, but that’s small consolation – after all, their incredibly high Q4 rates are already more than triple their current Q1 – Q3 rates.
Amazon is also adding to their definition of “long-term storage”. Their brand-new “aged inventory surcharge” will apply to units that have been in Amazon’s fulfillment centers for 271 to 365 days. Before May 2022, that time period was simply standard cost for storage. Now, it will add a huge $1.50 per cubic foot in addition to regular storage fees, nearly tripling storage cost.
Amazon is making these changes because they know that there’s more demand for FBA than they can handle. Thanks to high demand, they make changes to maximize their own returns without too much worry of losing sellers to FBA alternatives. 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.
Changes to Amazon FBA’s Removal and Disposal Fees
Last, Amazon is more than doubling the Removal or Disposal Order Fee for most SKUs. Combined with the new long-term storage fee, these fee increases make taking a risk with new products that much riskier. If your product struggles, 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.
Removal or Disposal Order Fees for each product size except for the smallest will more than double. For example, a SKU between 1-2 lbs will increase from $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. For everything other than the fastest-moving, smallest SKUs, you need an efficient Amazon FBM.
Cahoot’s Alternative to Amazon FBA
If you need an excellent FBA alternative, consider Cahoot as your one-stop-shop for FBA backup, FBM, and SFP. On top of that, Cahoot easily integrates with and ships orders for every eCommerce sales channel, making it a one-stop-shop.
Using their innovative peer-to-peer fulfillment network, multi-channel fulfillment with nationwide 1-day and 2-day delivery is the norm.
Cahoot’s innovative approach empowers merchants with excellent fulfillment capabilities across the country to fulfill orders for other eCommerce sellers. 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.
