2024 Amazon Fees – Impact to Booksellers

I’m sure we’re all rabidly discussing the impact of Amazon’s new fee changes.

There are two main ones in my opinion:

  • Inbound Placement fee/discount
  • Low-Level Inventory Fee
  • Assorted Fee Adjustments

The High Level View:

Amazon is still pushing 1-2 day shipping as their main differentiator from other competition (eg Walmart, Target, and the like). The key terms here are “regionalizing.”

Let’s do a quick history lesson of fulfillment warehouses. Back in the mists of time (say, the Aughts), if you had a fulfillment warehouse, you plunked that sucker in the middle of the country and called it a day. From Ohio, or Tennessee, or even Texas, everything was pretty much three days away. This sort of centralization made inventory management a breeze, and since no one was doing anything differently, no one much minded that it took 3-5 days to get your widget.

Then Amazon started their logistics domination campaign and started building more FCs. And MORE FCs. And still MORE FCs. They were able to do this because a)capital was basically free, and b)they had tremendous rafts of sales data that allowed them to project demand and pre-emptively move stock into place.

So now, if you’re in the mid-Atlantic (like we are), your stock is likely to stay in the mid-Atlantic. If you’re in the Northwest, it will probably stay in the Northwest. If you had a Private Label item, of course they would work to spread it out. And if you’re selling a book on Southwestern Native Arts maybe they would move the book out to Texas. Overall, though, Amazon is looking to optimize (that is, minimize) the movement of goods, both internally and externally, because it is a MASSIVE, massive cost center.

And if a customer wants to buy a widget from you, and that widget is a thousand miles away from them, Amazon isn’t happy about that. They want it to go 150 miles, tops. (To my knowledge no one has done a deep dive on this, but I’m positive Amazon actively hides listings that are not close to the buyer).

As you look at the fees through this lens, you can see what’s getting cheaper for Amazon, and what’s getting more expensive.

>Amazon’s fulfillment fees will continue to remain an average of 70% less expensive than two-day shipping methods offered by other major third-party logistics providers.

Notice the specifics here “less expensive than TWO DAY SHIPPING methods.” Of course marketers benchmark themselves against what they win at. But also Amazon is aiming at SPEED, mainly because with their plethora of FCs and their Prime delivery fleet, they have a massive lead on the competition. But speed costs money.

Low-Level Inventory Fee

The low inventory fee is bullshit, pardon my french. After years of penalizing sellers for being overstocked, Amazon is going in the opposite direction– AT THE SAME TIME. But because they don’t want centralized stock pulling, they have to make sure there’s enough stock to spread around evenly. 

Screenshot of Amazon's info on Low-inventory-level fees
Screenshot of Amazon’s info on Low-inventory-level fees

So – if there’s less than 28 days worth of stock, AND YOU SELL ONE, you get dinged $.32-$1.11. This is NOT an insignificant fee on the sale of a book, but how many books are affected?

Let’s look at some examples

So, first, go to: https://sellercentral.amazon.com/inventoryplanning/manageinventoryhealth (login required). If I look at my 800ish ASINs, I only have a bit over 100 that even have anything in the “Historical Days of Supply”. So this by no means affects a huge number of books. Then, of that hundred-ish, a little under half are in the safe zone of 28+ – therefore we’re looking at about 6% affected listings. Your number might be higher or lower than mine, but I think we can agree that this is not exactly going to rock the secondary book market. 

Screen shot of a Historical Days of Supply record from Seller Central

Plus, seasonality is highlighted: 

Screenshot demonstrating short-term and long-term sales demand for an item

Average daily shipped units:

.03×30= .9 (one sale in the past month)

.02×90=1.8 (2 sales in the past 90 days)

 

Even though this item sells abysmally (it’s been in my inventory since 2022), there are still enough units on hand that it’s considered overstocked.

 

I think this could also go the other direction – you find a book that is wildly undersupplied. Yes, you take the hit, BUT presumably your margins will make up for. 

 

Bottom line, I don’t think this fee will impact too much. People who hate it on principle will keep an eye on the offer count– everyone else will just price it into their model (or their margin). 

It’s still b.s., but it’s not going to have the impact of this next one.

 

Inbound Placement Service

 

A few people have reached out to me for this, and thank you for those who were concerned that split shipments would cause us efficiency problems. 

The truth is, since Amazon informally started their regional placement policy last spring, we’ve already been hit with these problems. EVERYONE gets split shipments, and there’s nothing you or I or anyone could do about it. So we just didn’t say anything about it. But it has had a huge impact on labor efficiency. 

People have asked us in the past whether they should pay for Inventory Placement Service (IPS), and we have said “No” because media was actually EXCLUDED from IPS– they would have charged you but it wouldn’t have made a difference most likely. 

 

So now Amazon is giving you a choice (at least, at the moment.)

Screenshot of Amazon's description of the new Premium and Discounted Services

 

Helpfully, there is also a rate card to help you track costs. Let us use for this example a 2lb textbook. Being on the east coast, we get cheaper rates than those out west (due to density perhaps?) 

But let’s say that a book costs $.45 for Premium Placement.

The obvious first place to look is, “what’s the difference in cost between a single shipment and a split shipment?” So, I went to the numbers. 

A recent shipment to ABE (NJ) – 160lb, $42.82= $.268/lb. 

 

I have no idea how we got so lucky with a single shipment actually. Christmas miracle, I guess. This is pretty on par with the rate I’ve quoted for years, which is that for a shipment of at least 100lb, you can expect to pay about $.28 per lb. 

 

But if you get a SPLIT shipment, you can expect to pay $.45-$2.00+/lb, and you don’t know ahead of time how bad it will be. But even assuming a best case scenario, on a 2lb book you pay $.17/lb more — that’s $.34 in extra shipping costs. So Premium Placement only costs you $.11 per book. 

 

In my opinion, this is MORE THAN worth it. 

 

Here’s why– Not just my labor productivity (my team thinks collectively, eliminating splits will make them 20% faster). But because we get such small shipments, we have to reuse shipping cartons instead of our custom, heavy-duty, double walled boxes. This means that the shipments are packaged better, in sturdier boxes, and don’t experience so much damage or loss en route. 

There’s less uncertainty about where your books have gone and when they’re going to get there. 

Now, it does take longer for books to get checked in, I will admit. But honestly I’m not sure Amazon is prioritizing them anyway. We already have a de facto Discounted Regional Placement Service. They’re not exactly coming on line at lightning speed. 

Assorted Fee Adjustments

Storage charges are dropping $.07/cf/mo, but only in Jan-Dec. Considering this is a $7/mo savings on 100cf, I doubt the average seller will notice. 

The other scary thing to many is the changes to aged inventory charges. This is based on Storage Utilization Ratio, which I will explain later:

Amazon's posted fee schedule for Aged Inventory.

Scary, yeah? Okay, but HERE is your Storage Utilization Ratio

Storage Utilization Ratio explaining that the storage Utilization surcharge isn't applicable below a daily average of 25 cuft

My inventory doesn’t even count in Amazon’s eyes, I have so little of it (about 450 live units at the time of this writing). Depending on the size of your books, of course, most smaller sellers have nothing to worry about here.

An interesting loophole opening up is that any item selling for under $10 is getting lowered Fulfillment fees. It looks like it runs about $.20/sale, but something to keep in mind when you need to dispose of inventory, because…. Disposal fees are going up again— about $.07 per item. Remember that Removal fees cost the same as Disposal fees BUT you can get them removed to SellBackYourBook and recoup a small amount. DON’T FORGET to turn OFF your Automated Disposal settings. 

 

In June, they’re rolling out a returns processing fee on “high return rate products in all categories” — but I don’t know that books fall into this category. However, you can monitor returns (and their reasons) here: https://sellercentral.amazon.com/fba/returns/ 

 

So, all in all, not exactly the book-apocalypse people have been reporting in the Facebook groups. 

  • Maybe 10% of your inventory will have Low Inventory dings
  • Storage Surcharges aren’t really a thing until you get pretty big
  • Other changes are minor

 

It remains to be seen how exactly the Premium Placement program will work — Scanpower will know before I do, and when I find out, I’ll let you know. But if everyone opts in, I know it will make the warehouse team VERY happy, and shouldn’t have a noticeable impact to your bottom line. 

 

Hope this helps! 

Shanna & Team CVAP

 

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