There are plenty of Amazon sellers who make a LOT of revenue and VERY LITTLE profit.
That’s why you need to know ALL your numbers, including all the fees that Amazon charges you to do business on their platform.
All these small Amazon fees can and do add up. They can seriously erode your margins if you’re not paying attention and pricing your products appropriately. And these fees are always changing, so you need to be vigilant to keep as much profit as possible in YOUR pocket.
Here’s what’s new for Amazon sellers on the Canadian and U.S. marketplaces in 2024:
Amazon seller fee changes — Canada
1. Amazon.ca FBA fees are going up – again!
Amazon FBA fees are increasing by CAD ~$0.20/unit on average as of Feb 5, 2024. Now is the time to review all profitability metrics and increase your prices, where possible, or look for ways to cut costs.
2. Inbound placement fee
If you send large shipments of product to a SINGLE Amazon.ca fulfillment centre, Amazon may charge you an inbound placement fee of ~ CAD $0.27/unit and and CAD $1.58/unit for large bulky products, effective March 1.
Avoid this by sending smaller shipments more often to Amazon’s choice of fulfillment center(s).
And be sure to get quotes for shipping to centres across Canada to keep your costs down.
3. Inventory storage fee
Amazon is increasing its aged inventory surcharges for inventory stored for 271 to 365 days and beyond. These changes take effect for the May 15 aged inventory assessment date. Avoid this by monitoring sell through and accurate forecasting. Remember, Amazon is a fulfillment centre. DON’T use Amazon as a warehouse!
4. Low-inventory fee
A low-inventory-level fee will apply starting April 1 to envelope and standard-sized products if you carry consistently low levels of inventory relative to unit sales. Avoid this fee by maintaining more than four weeks of inventory relative to sales. This fee will vary based on many factors.
Note: The low inventory fee will be added to your FBA fee when shipping that particular product. This fee will NOT apply to:
- New Amazon professional sellers, for the first 365 days after the first inventory-received date.
- New-to-FBA parent products for the first 180 days after the first inventory-received date. Amazon sellers need to be enrolled in FBA New Selection to get this benefit.
5. Low-Price FBA rates
On the plus side, products priced under CAD $11 will automatically receive Low-Price FBA rates with the same delivery speeds as standard FBA, effective Feb. 5. Low-Price FBA rates are CAD $0.55 less than standard FBA rates. .
All Low-Price FBA rates are available with free shipping for Prime customers and standard shipping for non-Prime customers. Note: Selling under $11 CAD on Amazon is extremely difficult. There is very little margin for advertising.
6. SIPP program
Can you ship your product in its own packaging (no Amazon box needed)? In that case, the SIPP (Ships in Product Packaging) program will save you CAD $0.05 to $1.68 per unit. However, you need to ensure your product will survive the trip and customers will be happy.
7. Returns processing fee
A new Returns Processing fee is coming for clothing, accessories and footwear.
These charges will apply according to the volume these products take up rather than their mass.
Amazon seller fee changes — U.S.
Many of the fee changes for Amazon’s U.S. marketplace are the same as those outlined for Canada above, with the following exceptions:
1. U.S. FBA fees are actually going down! But there’s a catch…
Amazon.com sellers will see FBA fees reduced by USD ~$0.20/unit on average for standard size products and $0.61/unit for large, bulky sized products as of April 15, 2024. However, Amazon has adjusted their size tiering system to measure in increments of two ounces and four ounces. With that in mind, we recommend that you:
- Validate that Amazon has accurately measured your product to fit into the right fee structure
- Consider how you can optimize your product to see if you can move one tier down instead of going a tier up.
2. Low-Price FBA rates
Products priced under USD $10 will automatically receive Low-Price FBA rates with the same delivery speeds as standard FBA. Low-Price FBA rates are $0.77 less than standard FBA rates. Again, be careful here as it is tough to make money at these low rates.
3. Apparel referral fee reduction
Referral fees dropped on Jan. 15 for items priced under USD $15 (from 17% to 5%) and for items priced USD $15-$20 (from 17% to 10%).
4. SIPP program
In the U.S., the SIPP (Ships in Product Packaging) program will save you USD $0.04 to $1.32 per unit.
Be sure to account for ALL Amazon seller costs
Your total Cost of Goods Sold on Amazon also includes the full cost of the packaged product, taxes and duty, and any costs to reconfigure your product or add stickers for Amazon, in addition to the fees described above. Your calculations should also include:
Amazon Selling Plan fees
In Canada, an individual seller plan costs CAD $1.49 per unit sold. Amazon’s Professional plan costs CAD $29.99 per month no matter how many units you sell.
In the U.S., the individual plan is USD $0.99 per unit, while the professional plan is USD $39.99 per month.
Amazon charges a referral fee for each item sold of between 8% and 15% (depending on the category) based on the customer sale price.
Amazon FBA fees are charged based on the size and mass of your product. Also note that there is a CAD $29.99 per month account fee to qualify for Prime shipping (USD $39.99 per month for Amazon.com). This fee is well worth the expense!
Amazon advertising costs
We recommend you budget for ~15-20% your cost of good sold for advertising, depending on your category and level of brand awareness.
Careful planning will help you win the buy box and ensure your margins are as healthy as possible.
Need help assessing profitability and pricing for your Amazon business? Book a call with us! We can also help with strategies for product configuration and line extensions for new growth opportunities.