As we sail into the holiday shopping season, Amazon sellers who store inventory with Fulfilled by Amazon (FBA) may discover their storage fees have increased—in some cases by as much as seven times for October-December, making the holiday season a costly one for many FBA sellers.
FBA storage and fulfillment costs typically go up this time this year, but now there’s an added ouch factor: on top of the seasonal increase, Amazon has announced an across-the-board price increase effective January 18, 2022. Come next year, FBA sellers can expect an approximate 5% and 10.5% hike for fulfillment and storage fees, respectively.
This price surge is likely the result of a combination of factors, such as supply chain bottlenecks, labor shortages, and a wage increase for Amazon employees, as well as a huge increase (45%) in new Amazon sellers, all of which have increased costs for Amazon. Read more about the 2022 FBA price changes here.
The bad news of this development is pretty obvious: These are substantial increases—some of Amazon’s biggest ever, in fact—and if you want to keep using FBA you’re going to have to take the hit.
But there’s good news, too. Once you absorb this cost increase, you probably won’t have to worry about another big hike for a while, because Amazon is unlikely to impose sellers with an increase this size two years in a row.
The other good news is that you can take action now to keep your margins profitable, even with the FBA price uptick. Following are three things you can do right away to get ready for the changes ahead.
Build the price increase into your margins now
Since the storage and fulfillment fee hike is inevitable, FBA sellers have no choice but to incorporate the added operational costs into their margins. If you start planning now, you won’t be caught off guard come January, and you’ll also have more wiggle room to work with if (really when) fees temporarily jump up again for Holiday 2022.
Stay on top of your inventory flow
Smart FBA sellers know that the equation for success is figuring out the minimal amount you can store with Amazon, while still keeping product level high enough to meet demand. In other words, you need to keep your inventory just high enough to avoid the risk of delayed delivery (and the bad ratings that come with it), but not so high that you’re paying rental space for products that won’t be moving anytime soon. There are good tools in the market that can help you plan and manage your inventory levels, so now is the time to invest in them.
Consider using a 3PL
Warehousing your products with an outside 3PL (third-party logistics) provider may at first seem like an insult-upon-injury proposition, given the extra expense. In reality, using a 3PL is an investment that can pay off for your business in the form of satisfied customers and lower costs in the long run. Why? In many instances, 3PLs offer better pricing than FBA storage, which means you can house your overflow inventory cheaper and flow products into FBA at a pace that works best for your profit margin.
As always, we’re here to help. If you need assistance recalibrating your operations in light of the FBA price increase for 2022
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