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What to do when Amazon raises FBA shipping and storage fees
It is my duty (though not my pleasure) to tell you this…
…Amazon is raising seller fees effective January 17, 2023.
Here’s the Seller Central article with all the particulars (it’s mostly on FBA & storage stuff):
This has happened before.
And will probably happen again.
Amazon has raised fees several times since COVID.
With inflation still running wild, Amazon has to raise prices to prevent their margins from going to 0%. This isn’t AWS; Amazon’s retail biz has thin margins.
But here’s the real question:
How should sellers react?
Today, I read several posts about these fee increases. Lots of hand-wringing. Lots of cursing fate. People are reporting this like Amazon’s asking for your first born child. “Can you believe they raised FBA outbound fees by $0.22!”
I have a different take.
Not everyone will agree, but here it is.
My take is this:
If Amazon fee increases can kill your business, build a stronger business.
Inflation’s going to happen (which is out of our control). And Amazon’s going to raise prices (a logical move in response to inflation).
So the question is more:
How do we make our Amazon businesses largely immune to fee increases?
This won’t be the last fee hike.
So, let’s ask:
“How do we build sturdy, thriving Amazon FBA businesses on a permanent basis?”
My strategy is 1 sentence with 2 parts:
(1) Sell niche stuff (2) infused with intangible brand benefits.
Unpacking that:
(1) Sell niche stuff
Every product you sell should have a specific demographic in mind. “If it’s for everyone, it’s for no one”. Not yoga mats; yoga mats to teach mindfulness to kids. Not t-shirt making kits; t-shirt making kits to start clothing brands. Not yearly planners; yearly planners for entrepreneurs. Niche down. It’s less competitive, and since it “speaks” to a specific person, you can charge more! Folks pay a premium to be understood and served in a personalized way. Think first class flights.
(2) Infused with intangible brand benefits.
We sell physical stuff. And that normally comes with physical product margins (of 10-30%). Most people’s profit per unit is capped. But, you can “defy the laws of gravity” and get 50-70% margins using brand. The product company YETI sells tumblers and coolers. They’re 2x the price of similar offerings. But they pull it off because of brand, a set of emotional associations. Folks pay 2x for Nike shoes because the swoosh means “victory and performance”, which is “worth” the premium. Brand takes time to build. But protects brands from fee hikes. Start now 🙂
With a strong niche and branding, when the next fee increase comes you can increase your price by $5 (outpacing the increase) and customers won’t care.
It’ll be awesome.
If you’d like someone to act as an extension of your team and launch smart and profitable Amazon ad campaigns, I have an expert lined up and waiting to work with you.
If you’d like, book a call here to see if our Amazon Ads system is a fit for your business:
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