Every year there are new opportunities, new challenges, and new costs, and Amazon FBA in 2018 is no exception.
With 2018 now in full swing, let’s talk about what is coming this year for Amazon, including the most substantial FBA fee increase to date. How will these changes affect your business? More importantly, what can you do to prepare and ensure you still thrive on Amazon in 2018?
What’s New For Amazon FBA in 2018?
One of the most significant changes coming to Amazon FBA in 2018 is the Amazon FBA fee increase, effective February 22, 2018. Here are a few differences coming your way:
- No more peak/non-peak fulfillment rates
- The dimensional weight divisor has been changed from 166 to 133
- Increases in almost all size categories (large increasing by 14.2% and small oversize increasing by 16.6%)
- Storage fees increase (details to be revealed in early 2018 by Amazon)
How Will These Changes Affect You?
No more peak/non-peak fulfillment rates for Amazon FBA in 2018 mean that your fees will be the same all year long. No seasonal pricing will take place, particularly during the holidays, so fees will go unchanged no matter how much inventory you sell during the year. Check out this handy pricing chart, courtesy of Amazon Seller Central:
The dimensional weight divisor change will mainly affect sellers that offer non-standard sized items. Formerly, the dimensional weight would be measured as (length x width x height)/166. Changing the divisor from 166 to 133 will add a significant cost. On average, your item’s dimensional weight can increase by about 25%.
Only the smallest standard size items will not see a significant fee increase. Standard size is particular in the Amazon world, and the company describes it like this:
- 18” on its long side
- 14” on its median side
- 8” on its short side
- Weight: 20 lbs.
If your item doesn’t meet those specifications, it will be considered “oversized.” Items that are oversized can increase your costs by up to 16% or more!
Amazon does seem to be planning new storage fees, but they will not announce the new fees to sellers until early 2018.
What Can You Do About All of This?
It’s not all doom and gloom, and there are some steps you can take to limit your costs significantly. Here are a few ways you can handle these new changes:
- No more peak/non-peak fulfillment rates: Whether you sell in December or June, fulfillment fees are the same. In this situation, not much can be done, so you’ll have to work with your prices to make sure your products are still profitable.
- The dimensional weight divisor has been changed from 166 to 133: Taking care of the dimensional weight problem takes a little more work. However, there are a few steps that can point you in the right direction:
- Determine the dimensional (DIM) weight of your products.
- Review your packaging and see if there’s a way to minimize the packaging to be more efficient with space.
- Calculate how your margins will be affected by the new changes. What will your average fulfillment fee be if you integrate the new changes?
- Increases in almost all size categories (large increasing by 14.2% and small oversize increasing by 16.6%): The increases in size categories are very difficult to avoid. Similar to the steps above for the dimensional weight divisor changes, you’ll want to look through your products and their packaging to figure out where excess space can be trimmed. Optimize your packaging wherever possible to avoid substantial expenses.
2018 is another year full of promise and challenge. Amazon will continue to evolve and change fees as it sees fit for its business model. These are all significant steps to get ready for the new year, but it’s important to understand their significance in the long run.
Being truly successful as a seller on Amazon, or any platform for that matter, requires constant attention, updated information, and adaptation.
What new 2018 Amazon updates have you most excited? Worried? Let us know in the comments below!
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