What Sellers Need to Know in 2024

Amazon’s dynamic fee structure continues to evolve, presenting new challenges and opportunities for sellers. The latest change, effective March 1, 2024, introduced the new FBA Inbound Placement Service Fee for FBA shipments, significantly impacting how sellers manage their inventory and shipping strategies.

As Amazon continues to evolve its platform, understanding the nuances of its fee structure becomes crucial for sellers aiming to maintain profitability. The new inbound placement service fee has prompted significant debate among sellers due to its potential impact on logistics and overall costs. Here’s an in-depth look at these fees and how sellers can effectively manage their implications.

Understanding the New FBA Inbound Placement Service Fee

Starting March 1, 2024, Amazon introduced a new FBA inbound placement service fee for both standard and large bulky-sized products. This fee is designed to cover the expenses associated with distributing inventory to fulfillment centers that are nearer to customers.

Traditionally, Amazon FBA shipments are sent to a nearby warehouse. Once received, Amazon redistributes the stock across various fulfillment centers—a process known as FC Transfer. The new 2024 FBA Inbound Placement Service Fee aims to streamline this by placing inventory closer to customers at multiple fulfillment centers across the country, potentially increasing the number of warehouses a seller uses from 1-3 to 4 or more.

These fees are applied to inventory sent to Amazon’s fulfillment centers. The fee is based on the number and location of fulfillment centers to which the inventory is shipped, with the aim of distributing inventory closer to customer demand.

Impact on Sellers

The new fees have been introduced to optimize the logistics of inventory distribution across Amazon’s vast network, which can lead to increased complexity and cost for sellers, particularly small to medium-sized businesses. The fees encourage sellers to ship inventory to multiple locations, which can be logistically challenging and potentially more expensive. This change means that sellers will now face decisions about how many warehouses they will send shipments. 

The Three Split Options for 2024

These new Amazon inbound placement fees that will affect how sellers manage their shipments. Sellers now have more control over these fees based on how they choose to ship their inventory to Amazon’s fulfillment centers.

Minimal Shipment Splits:

Sellers can choose to send their inventory to the minimal number of inbound locations, typically to a single location. While this simplifies logistics, Amazon charges a per-item fee for redistribution by Amazon to other warehouses. The fee varies by location, with certain regions like the West potentially incurring higher fees.

Partial Shipment Splits:

Send inventory to fewer locations and pay a per-item fee. Choosing your inbound region wisely is crucial, as fees for shipments going west are typically higher.

Amazon-Optimized Shipment Splits:

For those looking to avoid or reduce fees, Amazon offers the option to send inventory to multiple inbound locations. If your shipping plan meets the criteria, you can ship to the optimal number of locations recommended by Amazon (usually four or more) and pay no fee.

Factors Influencing Inbound Options:

Mix of item sizes and special handling categories

Uniformity of SKU mixes and quantities in each box

Total quantities and number of boxes per item

Geographical demand and distribution needs

Strategic Benefits for New Sellers

New sellers have incentives to help mitigate the onset of these fees. Amazon is offering a $400 credit towards the FBA inbound placement service fee for those who sent their first shipment within 90 days of listing their first product after March 1, 2024. This provided a substantial buffer for newcomers to adjust to the new fee structure.

Fee Reductions for FBA Fulfillment

In a positive shift, Amazon will lower FBA fulfillment fees for standard-sized products by $0.20 per unit and for large, bulky-sized products by $0.61 per unit, effective from April 15, 2024. Additionally, products priced below $10 will benefit from an ongoing $0.77 discount per unit.

Navigating SellerCentral Settings

Sellers should adjust their preferred shipping method in the Fulfilled by Amazon settings in SellerCentral:

Go to Settings > Fulfillment by Amazon.

Click Edit on the Inbound Settings section.

Choose the best option for your business needs.

For those utilizing third-party software for FBA shipments, ensure these settings are configured correctly as they integrate with Amazon’s API, affecting how shipments are processed.

Tips to Minimize the Inbound Placement Fees

Optimizing Shipment Routes- By strategically planning shipment routes, sellers can minimize the number of shipments and potentially reduce fees.

Consolidating inventory- Separate your shipments by item size and type before creating a shipment plan. This prevents the necessity of sending small and large items together, which can trigger fees even with a minimal shipment option.

Get fee estimates: Be mindful of item size during sourcing. Utilize tools like the Amazon Seller app to estimate fees and profitability on-the-go.

Consider geographical placement: Avoid sending items to the West Coast where possible, as fees are higher.

Analyzing Cost-Benefit: It may be beneficial for some sellers to reassess their use of FBA versus FBM in light of these fees. Performing a detailed cost-benefit analysis can help determine the most cost-effective approach for your business.

How a 3PL Can Help

A 3PL partner like 3PL Center can be instrumental in navigating these new fees and enhancing your fulfillment strategy. Our services include:

Strategic Warehouse Locations: Our nationwide network of warehouses means we can store your inventory closer to multiple Amazon fulfillment centers, reducing the need for multiple shipments.

Customized logistical support: Tailoring solutions to meet specific needs, from handling oversized items to managing special categories like Hazmat, fragile or discreet shipping.

Expertise in Diverse Product Handling: Our facilities are equipped to handle a variety of product types, from supplements to cosmetics, ensuring your inventory is managed professionally.

Competitive Delivery Speeds: We match Amazon’s fulfillment speeds, ensuring your customers receive their orders promptly.

Comprehensive FBM Support: For sellers considering a switch from FBA to FBM due to rising costs, we offer full-service FBM solutions, including storage, packing, and shipping, allowing you to bypass some of the new fees while maintaining control over your fulfillment process.

3PL Center For Amazon FBA and FBM

At 3PL Center, our 3PL services provide valuable support for both Amazon FBA and FBM models, offering sellers flexibility in how they manage shipping and fulfillment costs. With strategically located warehouses across the country, we help reduce or even eliminate shipping costs by minimizing the distance to your customers, which is essential for both FBA and FBM logistics.

While we support your FBA needs, the new Amazon inbound fees for 2024 might make the FBM model more attractive for some sellers. If you find the updated FBA fees too steep, we can seamlessly transition you to FBM, where we handle storage, picking, packing, and shipping directly. This allows you to maintain greater control over your inventory and customer interactions, ensuring your brand’s standards are met without the overhead of FBA fees. Our flexible 3PL solutions ensure that you can choose the best fulfillment strategy that suits your business needs, adapting as those needs change.

Adapting to Amazon’s 2024 Fee Changes for Strategic Success

As Amazon’s fee structures evolve, staying informed and strategically planning your shipping and ecommerce fulfillment processes are more important than ever. The introduction of Amazon’s inbound placement fees represents a significant shift in how sellers manage their logistics. By understanding the detailed impacts of these changes and considering the integration of a 3PL into your logistics strategy, you can better navigate the complexities of selling on Amazon in 2024.

FBA FAQs

What is FBA?

FBA, which stands for Fulfillment by Amazon, is a service provided by Amazon that allows sellers to store their products in Amazon’s fulfillment centers. Here, Amazon takes care of all the storage, packing, shipping, customer service, and returns for these products. When a customer places an order, Amazon employees pick, pack, and ship the product on behalf of the seller. This service not only helps sellers manage logistics more efficiently but also enables them to offer Amazon Prime benefits, like free two-day shipping, to their customers. FBA can be a significant advantage for sellers looking to scale their operations without having to directly manage all aspects of fulfillment and customer service.

What is FBA Prep?

FBA prep refers to the process of preparing and packaging products according to Amazon’s specific requirements before sending them to an Amazon fulfillment center for storage and distribution under the Fulfillment by Amazon (FBA) program. The prep process is crucial because Amazon has strict guidelines on how items should be prepared, packaged, and labeled to ensure they are ready for immediate shipment upon order.

Here are some key aspects of FBA prep:

Packaging: Products must be packaged properly to prevent damage during shipping and handling. This might involve using bubble wrap, poly bags, or other protective materials.

Labeling: Each item needs a specific label that includes a scannable barcode, usually an Amazon Standard Identification Number (ASIN) or a Fulfillment Network Stock Keeping Unit (FNSKU).

Sorting: Products may need to be sorted into specific groupings based on type, size, or other criteria before being sent to Amazon.

Documentation: Some items might require additional documentation, such as safety information or expiration dates.

Quality Checks: Ensuring products are new, undamaged, and free from defects before they are shipped to Amazon’s fulfillment centers.

Sellers can choose to handle FBA prep themselves or outsource it to third-party logistics providers who specialize in FBA preparation services. Amazon also offers a service called “FBA Prep Service,” where they will prepare the items for a per-item fee, allowing sellers to send inventory directly to Amazon without worrying about the prep requirements.

What is FBM?

FBM stands for “Fulfillment by Merchant,” which is a fulfillment method available to sellers on Amazon. In this model, the seller is responsible for storing their inventory, packing, shipping their products directly to customers, and managing customer service and returns, rather than relying on Amazon’s Fulfillment Centers as in the Fulfillment by Amazon (FBA) program.

Here are some key points about FBM:

Control: Sellers have more direct control over their inventory and shipping processes, which can be advantageous for managing costs, especially for items that are bulky or have slower turnover rates.

Responsibilities: Since the seller handles all aspects of fulfillment, they must ensure that shipping meets Amazon’s customer service standards, which includes providing timely shipping and professional customer service.

Costs: While FBM saves on FBA fees, sellers need to consider other costs such as storage, packaging, and potentially higher shipping rates, especially if they cannot match the economies of scale that Amazon’s own logistics network offers.

Prime Eligibility: FBM sellers can still qualify for Amazon Prime through Amazon’s Seller Fulfilled Prime program, although this has strict performance requirements, including the ability to offer two-day shipping at no extra charge to Prime customers.

FBM can be a strategic choice for sellers who want greater control over their logistics, have lower sales volumes, sell products that are difficult or inefficient to ship through FBA, or operate in a niche where personal handling of products is essential.