Analysis of Amazon’s new warehousing configuration fee and its impact on sellers

Background interpretation

Recently, Amazon announced the introduction of a new warehousing allocation service fee, which is designed to reflect the costs of moving seller inventory to fulfillment centers closer to consumers, thereby reducing Amazon Fulfillment (FBA) fulfillment fees. In the past, because many sellers tended to choose U.S. West Coast warehouses to save on first-mile costs, these warehouses frequently ran out of stock, increasing the storage burden on Amazon’s fulfillment centers. Therefore, Amazon recommends that sellers follow the warehousing location and quantity recommendations provided by the system. When there is insufficient inventory or the warehousing location does not meet Amazon’s requirements, Amazon will be responsible for allocating inventory and charging the seller a certain warehousing configuration fee.

Inbound configuration options

Under the new policy, Amazon provides two warehousing configuration options: premium service and discount service.

• Premium Services: Sellers can send inventory to a designated receiving center or fulfillment center, and Amazon will then distribute the inventory across its fulfillment network. This service will incur a certain fee, and the fee will vary depending on the distance from the warehousing location.
• Discounted service: Sellers can choose to ship their inventory to multiple storage locations at low or no cost. The exact discount depends on a variety of factors, such as shipment quantity and warehousing location.

Fees standards and application details

The average cost per item is $0.78 for standard-size items and $1.58 for oversize items. Sellers can choose to send goods to a single or multiple locations based on actual needs, and the fees will be adjusted or even waived accordingly. The fee will be charged within 45 days of receipt of the item.

Dispute about warehousing configuration fees

Some sellers claim that the warehousing configuration fee can be waived with the help of certain freight forwarders. There are also suggestions that changing the shipment location to Mexico or Canada can circumvent the time constraints of air freight and make it easier to distribute to U.S. West Coast warehouses. However, these practices may involve gray operations. According to Amazon customer service response, fees will only be incurred after the warehousing configuration function is enabled. Normally, there is no need to pay this fee for direct shipment, but if there is a split warehouse, you will need to pay the corresponding fee.

Other new fees: Incoming defect fees and low-volume inventory fees

In addition to the warehousing configuration fee, Amazon has also introduced two new fees: warehousing defect fee and low-volume inventory fee. Inbound defect fees apply if goods are shipped to the wrong location or fail to arrive on time. The low-volume inventory fee is aimed at those products that have maintained low inventory levels for a long time. The purpose is to encourage sellers to maintain appropriate inventory and ensure the normal circulation of products in the Amazon logistics network.

Properly plan logistics and inventory

To sum up, sellers should treat Amazon’s new fee policy with caution. When choosing a logistics solution, you need to combine your own actual situation and fully understand the impact of the latest policies on your business to avoid unnecessary expenses. At the same time, inventory management planning must also be done to prevent additional costs caused by low inventory.