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As 2023 draws to a close, it is time for Amazon to update its logistics cost policy once a year.
What is different from the past is that this time Amazon unprecedentedly lowered the sales commission for clothing products, causing an uproar in the industry.
It is learned that early this morning, Amazon US released an update notice on sales commissions and logistics fees, announcing that it will implement a series of fee changes to provide sellers with value-added services and reduce costs for both parties.
The specific adjustments are as follows (dates are all US time): 1. New charging items (1) Warehouse configuration service fee Starting March 1, 2024, if the seller is unable to fully comply with the system's recommendations for warehousing, such as when the inventory is insufficient or the warehousing location cannot meet Amazon's distribution requirements, Amazon will transfer the seller's inventory and charge a warehousing configuration service fee: - Standard-sized items are charged an average of $0.27 per item;
- Large oversized items are charged an average of $1.58 per item.
(2) Low inventory fees Starting April 1, 2024, Amazon will charge a low-volume inventory fee for standard-size items. This fee applies to products whose inventory levels remain too low for a long time compared to sales. Sellers can avoid paying this fee if they maintain inventory for more than four weeks based on product sales.2. Logistics and delivery fees (1) Starting April 15, 2024, Amazon will reduce the logistics and delivery costs of the following products:- Standard-size items will be reduced by an average of $0.20 per unit;
- Large-size oversized items will be reduced by an average of $0.61 per unit.
(2) Shipment in Original Package (SIPP) Program Starting February 5, 2024, Amazon will provide delivery fee discounts ranging from US$0.04 to US$1.32 (depending on the size and weight of the product) for products that meet the relevant requirements through the Shipped in Original Package (SIPP) program. Starting January 15, 2024, Amazon will reduce the sales commission for apparel products , while the sales commission for other products will remain unchanged:- For clothing items priced below $15, the sales commission will be reduced from 17% to 5%;
- For clothing items priced between $15 and $20, the sales commission will be reduced from 17% to 10%.
4. Changes in other expenses- Monthly storage fees: Starting April 1, 2024, Amazon will adjust the monthly storage fees during the non-peak season from January to September: the monthly storage fee for standard-size goods will be reduced from US$0.87 per cubic foot to US$0.78, an average decrease of US$0.09; the monthly storage fees for non-standard-size goods will remain unchanged.
- Amazon Logistics New Product Warehousing Promotional Program: Starting from March 1, 2024, an average of 10% sales commission rebate will be provided for eligible new Amazon products, the eligibility scope of large products to participate in the program will be expanded, and Vine product-related benefits will be provided.
- Amazon Vine Program: Lower rates for eligible Amazon sellers, applicable to products registered in the program on or after October 19, 2023 (U.S. time).
It is worth noting that although the announcement mentioned that many sellers will pay Amazon an average decrease in each item sold, Amazon also stated in the notice that after implementing these changes, the average fee per item sold is expected to increase by $0.15. In this regard, many sellers believe that, on the whole, except for clothing sellers whose sales commissions have been reduced, the operating costs of other Amazon sellers are still increasing. Therefore, as soon as this notice came out, it caused an uproar in the cross-border circle.
It is understood that affected by high inflation and rising energy prices, in 2023, Amazon has already made a number of adjustments to FBA logistics costs: the US site officially increased FBA delivery fees, off-peak storage fees, inventory turnover surcharges and other fees from January 17, and terminated the small and light commodity plan on August 29, and low-priced goods above US$10 will no longer enjoy the low FBA interest rate. MarketPlace Pulse data also shows that Amazon sellers' operating costs account for more than 50% of total sales revenue, of which logistics costs account for about 20% to 35%, and have been growing steadily over the past decade. Although FBA's various fees have risen and fallen in 2023, overall, sellers' logistics cost curve continues to rise. In this notice, although Amazon lowered its logistics delivery fees and monthly storage fees during non-peak seasons, it also added warehousing configuration service fees and low-volume inventory fees. Overall, it is expected that the average cost of each item sold will increase by US$0.15. Therefore, many sellers are very angry about Amazon’s adjustment notice: "Everything is charged. You can't ship more or less." "The warehousing configuration service fee seems to be the fee charged for product distribution after the operation center accepts it. Once the distribution warehouse is selected, the number of distribution warehouses and whether they are remote or not will affect the amount of the fee." "Try to get the best out of sellers. To sum it up in one word: price goes up!" However, at the same time, Amazon reduced the sales commission for clothing products priced below $20 in this adjustment, which also made many clothing sellers happy: “The adjustment of sales commission is favorable to clothing sellers.” “Is this the beginning of the involvement of TEMU and SHEIN?” "Anyway, the huge reduction in sales commission is indeed good news for Amazon's clothing sellers." Amazon Global Selling mentioned in the announcement that after this change, new sellers of clothing with sales prices below $20 will actually pay very low commissions, or may not even have to pay any commissions, by taking advantage of reduced fees and the new seller entry package benefits (a 5% discount on the first $1 million in sales). Many sellers believe that the reason why Amazon lowered the sales commission for clothing products is probably because it was impacted by SHEIN and Temu, which are known for their clothing products, forcing Amazon to make concessions. From this point of view, for sellers in the clothing category, Amazon's adjustment is indeed good news, but for sellers in non-clothing categories with low customer unit prices, it seems to be a signal that operating costs will continue to rise. Here we can only remind all sellers to adjust their operating strategies in a timely manner to ensure maximum profits.
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