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Understanding Amazon's FBA Fees

Jul 29, 2020 8:00:00 AM

Unboxing how these fees work and what you can do if you’ve been overcharged.

Amazon's FBA (Fulfillment by Amazon) is a popular option for shippers looking to quickly get orders to their customers via the eCommerce giant's vast network. It's a simple process in practice, requiring the seller to store inventory in one/several of Amazon's many national fulfillment centers. When an order comes in on the seller's side, the order is passed along to Amazon to perform fulfillment to get the purchase to the buyer.

What's not so simple is the FBA pricing. The structure can vary considerably based on time of year, nature of the seller's business, and the package's metrics. Knowing the system and its flaws are the best way to avoid being overcharged.

How FBA sets its fees

There are three overarching FBA categories: apparel, non-apparel, and storage fees. Each has a different pricing structure. These fees are generally charged to cover Amazon's picking and packing of orders, shipping and handling, customer service, and product returns. Shipping weight is calculated by adding packaging weight to unit weight with 12 weight classifications across seven size tiers.

The fulfillment fee per unit climbs in correlation with the item's weight, and there's always an extra $0.11 charge for lithium batteries. Monthly inventory storage fees are charged for all items stored in an Amazon fulfillment center based on calendar month and your daily average volume of inventory. Charges vary seasonally and (believe it or not!) cost less per cubic foot for oversize items between October and December.

Shippers can estimate their FBA fees beforehand via Amazon's revenue calculator, and you should be aware of how other FBA fees can compound your expenses.

Further potential fees with FBA

Long-term storage fees are added if inventory has been in an Amazon distribution center for over 365 days, with rates varying by object type and the number of units. Amazon offers assistance on how businesses can identify which inventory is subject to these extra charges. One way is to submit a removal order, but this triggers another fee.

Amazon gets to look great by offering free returns shipping on specific product categories; if the consumer takes them up on the offer, it’s the FBA merchant who pays the returns processing fee. Amazon will also charge any business that doesn’t properly pack and label inventory before it’s stored in the fulfillment center. While Amazon will make sure the error is fixed, it charges an unplanned service fee per item to do it. Avoid this fee by knowing how to stick to their guidelines.

Lastly, inventory storage overage fees may be added to both monthly and long-term fees if a seller exceeds their allocated warehouse storage limit (even if they rectify the matter within the same month).

The Amazon fulfillment downside that makes an existing problem worse

Sellers who fulfill their orders from picking to packing then shipping at least have full control of that process before surrendering their shipments to the mercy of UPS, FedEx or another carrier. FBA shippers lose that initial control and must rely on Amazon to be accurate and careful when measuring, picking, packing, and posting.

Damaged merchandise, improper packaging, and incorrect mailing addresses may occur on Amazon’s side. They may also overcharge for one of the many FBA fees if they’ve incorrectly measured or weighed an item, or if they overestimated storage time. FBA customers can request a reassessment via their inventory tab on Amazon’s Seller Central.

The difference will be refunded in the seller’s favor if Amazon is found in error, but this is something FBA sellers must stay on top of and fight to achieve. Fee overcharges on large batches of inventory on a per-unit fee basis could run into hundreds, if not thousands, of dollars.

A look at this Amazon FBA seller forum discussion provides plenty of reasons to scrutinize Amazon on matters of refunds, returns, and lost and damaged items (one seller even recovered $15,000 in one year by auditing & submitting claims, holding Amazon accountable).

71lbs can help keep third parties honest.

Protecting shippers from these types of losses is one of the reasons 71lbs exists. We specialize in shipping advocacy that helps businesses get compensation due for lost and damaged deliveries and late-delivery refunds. Amazon may say it automatically identifies and reimburses customers for its errors, but how can you be sure when we are finding tens of thousands of dollars for our customers weekly. 71lbs also performs these audits for carriers like UPS and FedEx. We can also provide invoice auditing across 65 key metrics to ensure you’re not being overcharged.

Don’t let any other business take a bite out of your shipping budget. Let us hunt down shipping errors and refunds while you focus on day-to-day operations.

At 71lbs, we focus on two things: a) helping customers save money on shipping, and b) helping customers more easily understand their shipping costs. We provide refunds and savings on shipping insurance, freight and imports, among other benefits. Our automated dashboard displays easy-to-understand shipping costs and insights so you can make better business decisions. Learn more & get started with 71lbs Amazon refunds services!

Topics: FBA, Amazon, fulfillment

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