On August 16, 2022, Amazon announced that they will be adding a new per-unit holiday surcharge to third-party merchants using US and Canada Fulfillment By Amazon (FBA) services. In an announcement titled 2022 Holiday Peak Fulfillment Fee, the company explained the factors leading to this decision.
“The entire industry sees increases in fulfillment and logistics costs during the holiday peak period due to the concentrated volume of shipments,” the article explains. “ We have previously absorbed these cost increases, but seasonal expenses are reaching new heights.”
For Amazon sellers, this translates to heightened importance of getting ahead of margins, so they can increase profits and outperform their competitors.
What is the Amazon Holiday Peak Fulfillment Fee?
The “holiday peak fulfillment fee” will be in effect from October 15, 2022 to January 14, 2023.
This means that every purchase for Halloween, Thanksgiving, Black Friday, Cyber Monday, Christmas, and New Year - as well as the semi-confirmed second Prime Day event - will be increased by an average of USD $0.35 per item sold, based on size and weight.
While shoppers may never know or care about this extra fee, many sellers are justifiably upset at the news.
An additional 35 cents per item may sound minimal, but is quite serious when considered in context. For one, this surcharge is added on top of all other FBA fees, including peak holiday storage fees of $2.40/cubic foot. Additionally, sellers of low-margin and high-volume products may lose a significant portion of their profits
ZenArbitrage coach Bill Jakeway explains, “This is why it is critical you make purchasing decisions with margins that will cover those unexpected expenses.” He also warns sellers that Amazon will “word this as if it might be temporary. Don’t plan on that.”
Jakeway has a point: Amazon has upped its fulfillment fees by 30% in the last 2 years.
Competing with Amazon’s “Fee Stack”
In a recent Facebook post, SoStocked cofounder Chelsea Cohen referred to Amazon’s increasing fees as the “Amazon Fee Stack.” In 2022 alone, Amazon increased fees for:
Although Amazon has clearly indicated the end of the surcharge period for the Holiday Peak Fulfillment Fee, their justification for implementing the fee in the first place is their own increased expenses in logistics.
With CNBC reporting on seller fees continuing to increase, including a recent 5% fuel and inflation surcharge, it is possible that more and more costs will be passed on to the sellers.
How to Maintain Margins Amidst Amazon Fee Increases
“Competing on Amazon is tougher than ever and you have to be adaptable,” said Clayton Atchison, Carbon6 Community Ambassador, when asked about the new fee increases.
Amazon sellers cannot expect that fees will disappear or decrease in the future. Many sellers trust SoStocked’s fully customizable inventory management and forecasting software to stay on top of inventory at FBA to avoid holding costs on slow-moving stock.
“The landscape is always changing,” said Atchinson. “The people who are planning for the inconsistency that is Amazon will be better prepared to weather the inevitable storms.”