Amazon Fulfillment Price Change – Is it time to switch to FBM (fulfillment by merchant)?

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The multi-channel fulfillment service offered by Amazon has experienced a price hike. European sellers are subject to the newly implemented fees. As per the statement provided by the e-commerce corporation, the price surge can be attributed to the escalation in operational expenses caused by inflation.

Zalando and eBay have also recently increased their seller fees amidst an economic downturn. In addition, Amazon has undergone scrutiny by regulatory bodies for providing advantages to vendors utilizing its logistics solution, Fulfillment by Amazon (FBA).

FBA, Parcel Size, and Oversize Price Skyrocket

Amazon officially announced on its seller platform that prices are changing, but – not to the users’ benefit.

The multi-channel fulfillment service (MCF) the company provides facilitates logistics services for orders not placed on Amazon. The alterations in pricing have an impact on the parcel size and oversize category, whereas the envelope size remains relatively unaffected. Amazon has provided a comprehensive list of fees, which can be found at the following link. The revised pricing came into effect on April 7th.

Retailers expressed their disappointment on a seller forum, citing that they would need to raise their prices due to the circumstances. The platform explained that fees are increased “(…) to reflect rising operational costs brought about by inflationary pressures and to help ensure that we can continue to provide best-in-class fulfillment services for your business.”

However, the users on the forum weren’t happy with the announcement. One forum user commented: “Interesting how you add the adjective “small” to your decrease in prices, yet omit an adjective for your increase in prices. Here are some adjectives you could have used: huge, massive, titanic, whopping, gigantic, colossal, excessive”.

FBA Price Increase Concerns

The pricing for Fulfilment by Amazon (FBA), a logistics service for orders on the platform, has been recently modified. According to Internet World, there has been an average increase of 6.2 percent in seller fees. Typically, FBA pricing undergoes adjustment on an annual or bi-annual basis.

Due to ongoing investigations into Amazon’s alleged preferential treatment of sellers utilizing their proprietary fulfillment service, the issue is highly delicate. Towards the end of the previous year, Amazon reached an agreement with the European Commission to establish an additional Buy Box for competing products.

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What Is FBA? What Is FBM?

FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) are two distinct methods of fulfilling orders for products used by sellers on the Amazon Marketplace.

Here are the main differences between FBA and FBM:

  • Fulfillment Process: Through e-commerce, sellers can take advantage of FBA services to send their products to Amazon’s fulfillment centers. Amazon will then handle the products’ storage, packaging, and shipping to customers. In e-commerce, with FBM, the seller takes charge of storing, packaging, and shipping the products directly to customers.
  • Shipping and Handling: With FBA, Amazon takes care of all aspects of product shipping and handling, including packaging, labeling, and delivery. When using FBM, the seller oversees all facets of handling and shipping, including picking a shipping company, labeling, and packaging.
  • Storage: With FBA, Amazon handles the storage of goods in their warehouses. With FBM, the seller is in charge of product storage—either at their own facility or through third-party warehousing—and inventory level management.
  • Prime Eligibility: Products that Amazon ships using FBA are eligible for Amazon Prime, which entitles them to fast shipping and other perks. Products fulfilled by the seller through FBM may or may not be eligible for Amazon Prime, depending on the seller’s settings and performance.
  • Returns and Customer Service: With FBA, Amazon handles customer returns and provides customer service related to shipping and fulfillment. With FBM, the seller is responsible for handling customer returns and providing customer service related to shipping and order fulfillment.
  • Costs: FBA charges fees for storage, fulfillment, and other services, while FBM allows the seller to have more control over their fulfillment process including shipping costs, storage costs, and other expenses associated with managing their own fulfillment.

Summing It Up:

FBA is a service provided by Amazon that handles product storage, packaging, and shipping. At the same time, FBM is a method where the seller handles their own fulfillment process. FBA offers convenience and access to Amazon Prime but comes with fees, while FBM offers more control but requires the seller to manage their own fulfillment process. Hiring a reliable and experienced 3PL would be a safe and cost-effective option. The choice between FBA and FBM depends on the seller’s preferences, business model, and resources.

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SMS Advice:

At this point, there are limited options available to mitigate the impact of rising FBA fulfillment fees. However, we recommend a few things you can do to enhance your profitability:

Optimize your approach toward the categories, sizes, and performance of the products you offer.

Categorize your listings into high-performing, underperforming, and unprofitable items.

Analyze your listings to determine which ones are high-performing, underperforming, and unprofitable. If you have unprofitable items with an FBA fulfillment fee that is on the rise, it would be advisable to liquidate your stock for that particular item promptly to avoid depleting your resources, incurring substantial fees, and hindering your overall growth potential.

Final Thoughts

It is important to be mindful of hidden fees as an Amazon seller or buyer, as they can accumulate and impact your overall profitability. Having an understanding of the anticipated expenses and payments can help in staying afloat.

If you need help figuring out fees and fulfillment prices, let’s chat! Our company strives to enhance our customers’ processes by offering basic fulfillment and pick and pack services or complete logistics and supply chain solutions. We are dedicated to proactively seeking opportunities to reduce our customers’ costs and introduce new efficiencies.