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Inbound Placement Fees: What They Really Mean for Sellers

It certainly feels like a sucker-punch. Of our roughly 60 clients, every one of them has been affected by the new inbound placement fees implemented on March 1, 2024. I was told once by an Amazon employee that, even though it sounds deceptive, the reality is that Amazon is going to make its cut one way or another. Amazon introduces fee structure changes every year and this one hurts sellers who sell high volume, resellers with slim margins, and other certain sellers who have small inexpensive items where every cent matters. What was the specific reason they increased fees on inbound shipping rather than in another way? They don’t want to be your warehouse. They want to be your fulfillment center – good coming in and going out quickly. Designed to streamline inventory management and warehouse operations, these fees put the pressure on all brands to make better inventory forecasts. This will also hopefully avoid the “low-inventory-level” fees, that that’s a discussion for another post.

What are Inbound Placement Fees?

Amazon’s new inbound placement fees are part of its broader initiative to enhance efficiency in its fulfillment centers. These fees apply to certain items that are received into Amazon’s fulfillment network. As of March 1st Amazon has 3 options for inbound placement, Minimal, Partial, and Amazon-optimized shipment splits. Amazon defines these options as follows;

Minimal shipment splits: You can send your inventory to the minimal number of inbound locations, generally to a single location, and we will spread inventory across our network on your behalf, for a fee. The fee may vary by inbound location—for example, there may be higher fees for shipments sent to locations in the West versus other parts of the country.

Partial or Amazon-optimized shipment splits: Send your inventory to multiple inbound locations yourself for a reduced or no fee. The reduced fees will depend on the number of shipments and inbound locations that you send your inventory to. For instance, if your shipping plan qualifies, you can select the inbound placement option to send your inventory to the optimal number of inbound locations recommended by Amazon, generally four or more locations, and pay no fee. If you select the placement option in which you send your inventory to a partial number of inbound locations, generally two or three, you will pay a reduced fee.

What do these options actually mean?

Essentially, sellers are charged for the placement of their inventory within Amazon’s warehouses. The Fees associated with shipments sent to a single location (Minimal shipment splits) and shipments sent to two or three locations (Partial shipment splits) vary based on the item size and unit weight and have two tiers Standard-size product fees and Large bulky-size product fees. Qualifying Amazon-optimized shipment splits sent to four+ locations have no fee.

However deceivingly simple that may seem at first glance, there are additional factors to consider that make planning for, and estimating these fees less clear. Creating shipments that have a combination of standard-size items, non-standard-size items, or special handling categories can result in Sellers having fewer inbound options to select from. Shipments with boxes that don’t all contain the same mix and quantities of SKUs may also have fewer options. Fees will vary depending on which region, West Coast, Central, or East Coast, the selected fulfillment center is in. The available options may also change based on shipment size, and overall demand. Inbound Defect Fees may be imposed for issues like shipments that are delivered to the wrong location, as well as deleted and abandoned shipments. And Sellers now have to plan for the logistical and financial implications of the split shipments.

Is it as bad as the forums make it seem?

Yes and no. The Inbound Placement Fees are one part of the overall Fee picture. Amazon will be decreasing FBA fulfillment fee rates by about $.20 for standard-sized and Large Bulky-sized products, reducing the non-peak monthly storage fees for standard-size products, rolling-out a lowered pricing structure for Amazon Vine, offering fulfillment fee discounts for eligible products in the SIPP program, and reducing referral fees for apparel products. They have also introduced a low-inventory-level fee and expanded the returns processing fee to apply to high return-rate products in all categories, excluding apparel and shoes.

While these changes feel more distinct, overall they seem to fall in line with the fee increases Sellers see each year. But it is clear from the chatter, Sellers are not happy with the implications and overall murky nature of the Inbound Placement Fee, and the harsh learning curve is being felt in the bottom line. 

For one seller, he saw an average of an additional $.27 per item to ship into Amazon. He was feeling some shipping sticker shock, but had to consider the $.20 discount in selling fees he received from Amazon recently. The net difference for him was $.07 ($.27-$.20=.$.07.) So at the end of the day (and at the end of your bottom line), it may not be as bad as it feels.

What can you do?

For existing sellers, we recommend going through several shipping workflows to see how each option affects your shipping rates. These fees can change depending on your category, if you ship full pallets, single parcel, or TL. You might also consider using Amazon Freight if you have enough volume heading into their warehouses. It’s can be the source of great savings! 

New sellers can take advantage of Amazon’s offer of $400 in credits that apply to the FBA inbound placement service fee. To get this credit, new sellers who create and send their first shipment to an Amazon fulfillment center within 90 days of listing their offer – will qualify for $400 in credits that apply to the FBA inbound placement service fee. In addition to sellers who list their first offer on or after March 1, 2024, new sellers who list their first offer between January 1, 2024, and March 1, 2024, are also eligible for this credit benefit when they use the FBA inbound placement service. More information can be found here.

While Amazon’s new inbound placement fees may initially pose challenges for sellers, they also present opportunities for optimization and efficiency improvement. By understanding the implications of these fees and implementing proactive strategies, sellers can navigate these changes effectively and continue to thrive in the competitive world of e-commerce.

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