FBA fees increase by 5%, profits may disappear by 20%, and sellers can’t bear it anymore

FBA fees increase by 5%, profits may disappear by 20%, and sellers can’t bear it anymore

Recently, Amazon officially announced that starting April 28, it will charge a 5% fuel and inflation surcharge on top of the current per-piece delivery fee for Amazon Logistics. The announcement says the surcharge will apply to all product types, such as apparel, hazmat, small and light items, and all products shipped from FBA fulfillment centers.

Amazon said the fee will be added to the per-unit delivery cost, not the overall price of the product.

For sellers, it also means that profit margins will be directly affected.

FBA fees rise again

This is the first time Amazon has charged such a surcharge for merchants using its FBA service, which includes loading, packing and shipping products.

According to Amazon explaining the reason for the fee adjustment: “We have experienced significant cost increases and are absorbing them where possible to reduce the impact on our selling partners. Measures have eased and we expect a return to normality, but fuel and inflation pose further challenges."

Some analysts pointed out that since the outbreak of the epidemic, the Federal Reserve has lowered interest rates and issued more money, and prices in the United States have risen. The sharp rise in oil prices since the outbreak of the Russian-Ukrainian conflict has exacerbated the inflation crisis in the United States. According to data released by the U.S. Bureau of Labor Statistics, in March 2022, the U.S. consumer price index (CPI) increased by 8.5% compared with the same period last year, the highest value in 40 years. According to one study, this round of inflation means an increase of $276 in monthly spending per American household.

However, Amazon said in the announcement that the surcharge is not a permanent fee, but a mechanism that is widely used in supply chains and suppliers. As for how long it will be implemented, Amazon has not disclosed.

This is not the first time that Amazon has increased the price of logistics services this year. From June 1 last year to January 18 this year to April 28 this year, Amazon FBA fees changed three times in less than a year. :

In January, FBA logistics increased prices across the board;

Multi-channel delivery fees and disposal fees also increased in March;

On the basis of FBA in April, fuel costs and inflation surcharges will be added.

While Amazon says it has done everything it can to cover itself and that its fulfillment services are still much cheaper than other services, the bottom line for Amazon sellers could take another hit. In this regard, some sellers said that if the price increase is not considered, the cost of FBA will increase by 5%, and the profit may be reduced by 5-20%.

Seller Affects Direct

Costs are rising on all fronts, profits are shrinking, and seller anxiety is mounting.

First, anxiety in global supply chains is rising as cases continue to climb and the effects of lockdowns spread. Some sellers said that the large-scale and continuous blockade caused by the Shanghai epidemic is exacerbating supply chain problems. Under the current situation of tight supply chains, logistics costs are also rising simultaneously.

Coupled with the increase in fees such as FBA, profits will be further compressed.

In addition, the market sentiment is not optimistic. According to analysis by industry insiders, since the second half of last year, overseas purchasing power has declined, and the continuous influx of trade sellers has led to intensified product price competition; the combination of factors such as strengthened overseas supervision and European VAT taxation; The comprehensive cost of product procurement, logistics, customs declaration, etc. has risen; the impact of Amazon's title wave continues, and the cost of PPC advertising has risen...

Although Amazon's move to increase fees has caused dissatisfaction among sellers, there is not much sellers can do to deal with it. Some sellers said that although "wool is on the sheep" and rising costs have prompted some companies to pass on price pressure to consumers to offset the impact of rising costs, sellers are also walking on thin ice.

For sellers, only raising prices can make profits, but in the case of fierce competition, raising prices is also difficult. Many sellers said that every time Amazon raises fees, some people call for price increases to protect profits. However, price increases are also a dilemma for sellers: price increases may lead to reduced sales and loss of share; no increase, meager profits. harder to keep.

When all kinds of accidents have gradually become the norm, sellers who want to cultivate deeply on the platform still need to face the reality. Some sellers said that the fierce competition among Amazon sellers will continue for a long time, and sellers need to improve their operational capabilities under great pressure. Under the premise of compliance, sellers still need to refine their operations. Controlling product selection and cost, controlling product quality, and improving customer experience have always been the kingly way of cultivating the platform. At the same time, branding and operating private domain traffic on multiple platforms are the core issues that sellers need to think about.

Prime Day is approaching, sellers need to extend the stocking period

Under the domestic and foreign difficulties, the much-anticipated Prime Day is coming again.

At present, many sellers are in full swing for Prime Day stocking. Take Amazon USA as an example, submit a promotion before April 29, and deliver the goods to the fulfillment center before June 20.

However, the ongoing epidemic is not a small challenge for Amazon sellers to stock up. Some sellers said that the outbreak of the epidemic will seriously affect sellers’ preparations. Due to the possible closure and control of the epidemic, it is even more uncontrollable factors. It is at least 1-2 months earlier than in previous years. For the sake of safety, if the product is confirmed, the stocking period must be extended.

In addition, sellers must choose a reliable and stable logistics provider for cooperation to avoid accidents.

Shanghai Dingtong International Logistics is a service provider focusing on providing e-commerce supply chain solutions based on transnational logistics. In addition to traditional import and export freight, the company also provides sea, land and air transportation, domestic and foreign customs clearance for domestic and overseas e-commerce enterprises. Business planning, international warehousing, logistics delivery, international parcels, Amazon FBA first journey/forwarding, overseas warehouse return and exchange and after-sales value-added services, etc.

Dingtong also actively deploys overseas warehouses, self-operating or cooperating with overseas warehouses in many countries, such as the United States and Canada. Through its own WMS/TMS and ERP system, real-time monitoring and fast distribution of each warehouse center are carried out, and cross-border e-commerce platforms such as Amazon, eBay, Wish, etc. are supported.

With favorable price, fast timeliness, full online tracking, dual insurance claims and other cost-effective advantages, we ensure that each shipment of goods arrives at the destination safely, quickly and efficiently, and provide customers with high-quality and professional one-stop door-to-door integrated logistics throughout the whole process Serve.

No worries in peak season, Dingtong will escort sellers to the sea with professionalism and dedication.

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