Popular online marketplace Amazon recently announced a new Amazon fee structure that will take effect on January 18, 2022.
The increase in Fulfillment by Amazon (FBA) fulfillment and referral fees aims to partially offset the higher permanent operating costs that the company will face going forward to support its growing workforce, fulfillment and sorting centers, delivery stations and regional air hubs across the United States.
In an announcement, Amazon said:
“Throughout the pandemic, we have worked to support you – postponing and keeping fee changes low, reducing or eliminating select fees like those for customer returns, and absorbing billions of dollars in increased costs on your behalf – all while making significant and necessary investments in people, technology, transportation, and infrastructure. As you’ve seen widely reported in the press and have likely experienced yourselves, costs are rising and we now need to make adjustments to next year’s fee structure in response.”
The 2022 Amazon fee hike comes eight months after the Amazon FBA seller fee increase implemented in June last year. However, the company emphasized that despite the changes in the current Amazon FBA fulfillment fees, the 2022 Amazon fee structure will cost sellers 30 percent less compared to fulfilling their orders independently.
What are Amazon seller fees? How much does it cost to become an Amazon FBA seller in 2022? Our Amazon marketing company answers all these and more to help you understand the new Amazon FBA seller fee structure. Read on and discover what adjustments you can make to cope with the Fulfillment by Amazon fee updates and continue to thrive in this competitive marketplace.
What Are Amazon Seller Fees?
An Amazon fee refers to the cost to sell on Amazon. Sellers are required to enlist in the Amazon Business Seller program to determine what associated monthly subscription fees and other Amazon seller account fees apply to them.
You might be wondering: Compared to other eCommerce payment plans, what are Amazon seller fees and how are they different?
Other marketplaces like eBay typically offer one fulfillment option to third-party sellers. You can either pack and ship orders yourself or hire a third-party fulfillment center to help you. With this setup, sellers are often only required to pay for their product listings and post-sales.
Amazon, on the other hand, offers several fulfillment options with corresponding Amazon seller account fees:
1. Basic Amazon Plans
Depending on your expected monthly sales volume, Amazon offers two plans to choose from: Professional Selling Plan and the Individual Selling Plan.
A. Professional Selling Plan
This plan is for vendors who expect to sell 100 or more items per month. Sellers subscribed to the Professional Selling Plan must pay Amazon seller account fees of $39.99 per month.
B. Individual Selling Plan
This plan caters to small retailers that sell fewer than 40 items a month. Amazon does not charge monthly individual seller Amazon fees. However, individual sellers must pay a $0.99 fee for each item sold.
2. Fulfillment by Amazon (FBA)
With this plan, Amazon handles everything from storing and packaging to shipping your products. Amazon FBA fulfillment fees cover the cost of picking, storing, packing and shipping orders, as well as providing customer service for products sold, such as removal or disposal of inventory and processing of returned products.
Amazon FBA fulfillment fees vary depending on the size tier, starting at $2.70 per unit for non-apparel items and $3 for apparel for inventory storage.
To determine if FBA is for you, Amazon has an Amazon seller fees calculator to help you compare the cost of fulfilling orders on your own vs. using Amazon’s service.
3. Referral Fees
For every product you sell on the Amazon marketplace, Amazon deducts an applicable referral fee. Values used to calculate your referral fee include the product price, delivery charges, gift wrapping charges (if applicable) and product category. Most referral fees are between 8-15 percent of your total sales.
4. Advertising Fees
Amazon offers advertising services within its marketplace. Depending on your needs and purpose, you can choose from: 1) Sponsored Products ads, 2) Sponsored Brands ads and 3) Stores ads. Pricing for all Amazon pay-per-click (PPC) ad types depends on your chosen format and placement. Be sure to consult with an Amazon marketing company to determine which Amazon PPC campaign will best increase your exposure and sales.
Amazon Seller Central fees vary depending on factors such as your selling plan, fulfillment strategy and product category. Use the Amazon seller fees calculator to estimate your Amazon seller central fees and generate a rough estimate of your sales margin.
How Much Does It Cost To Sell on Amazon in 2022?
On January 18, 2022, changes in the Amazon seller central fees will take effect. Here’s the summary of the 2022 Amazon seller fee updates:
• Amazon FBA fulfillment fees will increase by 5.2 percent on average.
• The higher unit weight or dimensional weight will be used to determine the shipping weight for all large standard-size products, excluding apparel.
• Removal and disposal fees will also increase. However, liquidation fees will remain the same.
• An increase in the monthly off-peak storage fee (January-September) for standard-size and oversize products will take effect. Storage fee charges in February 2022 will reflect in March 2022 charges. Peak storage fees (October-December) will remain unchanged.
• A tiered rate structure for long-term storage fees will be applied as a surcharge on top of monthly storage fees. It will also include a storage fee for inventory stored between 271-365 days. These changes will take effect on May 15, 2022.
• FBA Prep service fees will increase to align with operation costs on bagging, labeling and taping. Additional information will be announced by Q1 2022.
• Maximum weight eligibility for products in the FBA Small and Light program will increase from 12 oz to 3 lb.
FBA Grade and Resell
• FBA Grade and Resell is Amazon’s invitation-only program. In Q1 2022, FBA Grade and Resell with associated fees will be launched to allow sellers to recover value from unreturned items by grading and listing them as used offers.
Amazon Referral Fees
• Referral fees for lawn mowers and snow throwers will decrease from 15 percent to 8 percent for products with a total sales price greater than $500.
• All other U.S. referral fees will remain the same.
U.S. FBA New Selection Program
• There will be free liquidations benefits for a specific duration and number of units on eligible products. Changes will take effect by December 2021.
• Amazon will offer a 5 percent rebate on sales for eligible new-to-FBA parent-ASINs, for a specific period and number of units. The rebate will be offered to Amazon FBA sellers who completed the Brand Registry. Additional information will be announced in Q1 2022.
New Seller Starter Pack
• Amazon will launch a new program called “New Seller Starter Pack,” which aims to help new Amazon sellers grow their business in their first year.
• The New Seller Starter Pack covers several benefits available for a specific period. Eligible sellers who complete the Brand Registry will receive monthly bonuses. More details will be announced in Q1 2022.
How To Boost Amazon Sales in 2022
Despite the accessibility and wealth of marketing opportunities Amazon offers, it can still be challenging to succeed as an Amazon seller. Big brands and even individual merchants with no monthly individual seller Amazon fees face tough competition on a daily basis.
To stand out among more than 2 million active sellers on the platform and achieve your revenue goals, you need to level up your Amazon marketing strategy.
Here are actionable ways to increase your Amazon sales and offset higher professional, FBA and individual seller Amazon fees in 2022:
1. Optimize Your Product Listings
Invest in data-driven Amazon SEO services to create a robust and optimized product listing. Amazon product listing optimization plays a crucial role in increasing your visibility and ranking high in the Amazon search engine.
To get more people to click through to your listing, you need to:
• Choose relevant keywords
• Select accurate product categories for your inventory
• Avoid duplicate product pages
• Use effective product titles
• Craft informative, engaging product descriptions
• Use bullet points to highlight product features and benefits
• Leverage customer reviews and ratings
• Use high-quality product images
2. Analyze Your Product Level Profitability
Maximize the Amazon seller fees calculator to estimate your listing costs and create a data-driven budget strategy. Once you’ve identified a reasonable marketing budget, analyze each product in your product line and identify which ones have the highest profit margins. In doing so, you can focus your marketing and advertising efforts on items with high-level profitability.
3. Optimize Your Amazon Brand Store
Showcase your unique brand stories on your Amazon Brand Store and get your products in front of a broader audience segment.
Amazon Brand Store is a small, customizable version of the Amazon website solely for your brand. It enables you to showcase your best-selling products, communicate your brand story and give your target audience a peek behind the scenes of your brand.
A custom Amazon Brand Store makes an ideal landing page for Amazon Ads or offsite advertising since it allows shoppers to browse your full catalog of products without distraction from competitors.
Remember, however, that you need to be a member of the Amazon Brand Registry to create an Amazon Brand Store. Once you’ve been approved for Amazon Brand Registry, the next step is to set up a store designed for easy browsing and optimal customer experience. Some tips for doing so are as follows:
• Use high-quality images and videos
• Craft a compelling brand story
• Identify and address your customers’ potential pain points with helpful tips and/or instructions for product assembly and use
• Keep track of your performance using analytics
• Optimize your store for mobile
• Leverage the Q&A section to address customer queries
• Keep your design simple
• Prioritize customer experience (CX)
4. Craft Amazon Content That Converts
A+ content (formerly called Enhanced Brand Content) is available to all Amazon Brand Registered Professional Sellers.
It integrates detailed product descriptions, rich images and comparison charts to help customers make informed buying decisions. A+ content is one of the most effective ways to build customer trust, rank high in Amazon search results and boost your conversion rates by as much as 20 percent.
Strategic A+ content includes:
• Multiple and varied images of your products
• Informative and short product descriptions
• Clear, scannable product features, specifications and benefits
A/B testing is critical in optimizing your A+ content. If you’re unsure how to perform split tests, partnering with an Amazon seller consulting company is your best option. A trusted Amazon marketing company leverages data and analytics to provide you with growth-driven tips and recommendations on creating high-converting A+ content.
5. Make Use of Amazon Posts
Amazon Posts is a free tool that allows qualified sellers to improve customer engagement through an image-based browsing experience. Through Posts, shoppers can find brand-related content that highlights your unique brand story and values and demonstrates your product use and features.
To ignite interest in your Amazon Posts, focused Amazon Posts management is essential. In addition, compliance with Amazon’s Posts Creative Acceptance Policies is necessary to get your post published.
Some tips:
• Use visually attractive backdrops
• Avoid using collaged images and overlaid texts
• Build on your visual story
• Keep images simple
• Share real-life customer photos
• Create unique product descriptions
• Establish social proof through customer reviews and ratings
• Measure the performance of your Posts
6. Leverage Amazon PPC Advertising
Besides Amazon SEO services, another key component to achieving Amazon revenue growth is Amazon advertising. A solid Amazon PPC strategy involves:
• Defining your target audience
• Using advanced long-tail and top-performing keywords
• Launching Sponsored Brands ads to increase brand awareness
• Continuous monitoring, analysis and optimization of ads
• Setting competitive bids
7. Use Social Media and Google Ads To Drive Amazon Sales
Through the Amazon Attribution and Brand Referral Bonus program, Amazon Brand Registered Professional Sellers can earn back referral fees on off-channel ads that drive sales on Amazon.
How it works:
• Brand Registered Sellers must enroll in Amazon Attribution and the Brand Referral Bonus Program.
• Sellers (or Amazon Agency Partners) generate codes using Amazon Attribution to append to paid placements like Google Shopping ads, social media ads, emails and more.
• When shoppers click on an ad that results in a sale, Amazon will credit back an average of 10 percent of that sale to the seller. All sales from that brand that come up to 14 days after the ad is clicked will receive the 10 percent credit.
• Credits will appear in the Seller Account after the 60-day return period has passed.
Offsite ads can now be measured for effectiveness and efficiency using the Amazon Attribution console. Through this, sellers can view clicks, page views, adds-to-cart and purchases that result from the ads.
Enhance Your Brand Messaging and Supercharge Your Amazon Sales
Amazon marketing can be tricky, especially if you don’t have the knowledge, expertise and resources to adapt to the marketplace’s changing structure. Neglect your branding and marketing efforts, and you risk losing customers to your competitors. Worse, you could be spending a lot of money paying Amazon fees without getting a return on investment (ROI).
Don’t let this be the case for your brand. Partner with an experienced Amazon seller consulting firm to create an Amazon marketing strategy that’s guaranteed to take your business to the next level.
Thrive Internet Marketing Agency is an established Amazon marketing company that delivers customized digital marketing and advertising solutions to its clients. Schedule a consultation with one of our Amazon experts and let us help you manage your Amazon product listings to achieve measurable results.
