Inflation has impacted every aspect of our lives. While there are signs of prices stabilizing (best reflected in the price of fuel), merchants and consumers are still very much feeling the sting of high costs.
The costs associated with selling on Amazon are no exception. In fact, the August 2022 fee changes are some of the most dramatic ever, resulting in Amazon fulfillment fees increasing by 30% since 2020.
You’ve probably already factored those fees into your plans, but now’s the time to analyze store performance to better understand how these new fees will affect you.
The Scoop on Amazon’s Holiday Fee Hike
Amazon states that the increased fees will be limited to the holiday season and that the fees will be in effect from October 14, 2022, through January 15, 2023. Amazon also shared that this holiday increase is not limited to this Q4 and that sellers should expect it going forward.
The increase will average about 35 cents per item sold for US and Canadian merchants using Amazon Fulfillment Services. Depending on store size, this could result in thousands of dollars of additional costs.
Amazon cites rising fulfillment and logistics costs due to the volume of transported shipments as a reason for the increase. An Amazon spokesperson noted that temporary price hikes like this have been a common practice for many years. FedEx and the US Postal Service have already announced their fee increases for the holiday season.
Change Up Your Q4 Plan to Mitigate New Amazon Holiday Fees
Marketplace fee changes can throw off operations and inventory management and put a strain on cash flow. This newest round of Amazon fee hikes springs a further cost on sellers. While you can’t change the fees, you can change your forecast.
And you should do so immediately so that your budget is up to date and realistic. Don’t limit your recalculations to fees. Think about your plans for marketing and advertising costs. Shift your budget accordingly.
Don’t get caught underfunded when it comes to Amazon fees. Get ASAP cash to help you take the sting out of the new fees without sacrificing profitability. Choose the SellersFunding working capital solution that best fits your needs. Also, check out The Ultimate Roadmap To Q4 Succes for even more resources.
How to Handle Amazon Holiday Fee Increases
Amazon’s notice of increased holiday fees comes with little time to prepare or find alternatives for this Q4. It’s late in the game to pivot your inventory and fulfillment strategy and tactics for this holiday season.
But the increased fees and short notice should give sellers reason to think longer term and to try to find more affordable solutions, including these:
- Consider moving away from Amazon FBA (Fulfilled by Amazon). For many sellers, this isn’t an option given the convenience and benefits of FBA, but remember that Amazon is not the only fulfillment game in town. Investigate Amazon FBM/MFN (Fulfillment by Merchant AKA Merchant Fulfilled Network) solutions. Don’t stop there. Google “alternatives to amazon FBA” and you’ll see a wealth of options.
- Mix up your marketplaces. Regardless of how you fulfill your Amazon orders, diversifying platforms and marketplaces is an effective way to protect margins and build resiliency into your brand.
- Focus more on the DTC (Direct-to-Consumer) channel. Handling orders on your brand’s e-commerce website not only eliminates Amazon fees but can also help your website gain organic ranking. Consider adding budget to Google Ads and steering consumers to your branded DTC e-commerce website.
Final Word and Wrap-Up
As an e-commerce merchant, you’re constantly being hit with curve balls, some of them costly. Our team at SellersFunding is ready to help.
Watch this two-minute demo for a quick rundown of how our financial solutions drive merchant profitability.
