Podcast Episode 159 – How to Best Handle Amazon Fee Increases

[0:00:21.4] STEPHEN: Welcome to episode number 159 of the Full-Time FBA Show. Today, we are talking about Amazon fees. Now wait, don’t skip this episode yet. It’s going to be an important episode because we’re going to talk about how to best handle the Amazon fees that come throughout the year so that you can still succeed well in your Amazon business. And to talk to me and with you about all these things is my wife, Rebecca. Rebecca, what’s your opinion on Amazon fees?

[0:00:46.5] REBECCA: Boo, I don’t like them but I mean, who does?

[0:00:49.2] STEPHEN: Right, exactly.

[0:00:49.8] REBECCA: But it’s something we’ve got to deal with and figure out so that we can keep our business going.

[0:00:54.1] STEPHEN: Absolutely, it’s a normal part of every Amazon business. We’ll tell you how to come out on the other side as a winner when it comes to Amazon fee increases on this episode of the Full-Time FBA Show.

[INTERVIEW]

[0:01:06.3] REBECCA: So if you’ve been selling on Amazon for any amount of time, you know that from time to time, Amazon announces upcoming fees throughout the year and almost every time this happens, you’re going to see posts and comments on the Internet, on social media once those fees are announced. Those posts and comments just start to explode with everything from just general, “Well, this sucks” to “It’s the end of the Amazon reselling as we know it.” Or even, “You know, Amazon hates third-party sellers, they’re trying to get rid of third-party sellers” all of that.

And in 2022, there have been more fee increases this year than basically any other year. Some of those fee increases are expected every year. There are increases to certain fees but then there have been other fees that have come up this year, such as the Peak Fulfillment Fee that started October 15th that are new that were not expected.

But no matter how often Amazon increases their fees, there’s some wise ways and some unwise ways to respond to those fee changes. So let’s dive into the best ways to respond to these fee changes in your Amazon FBA business.

[0:02:14.5] STEPHEN: Yeah, I know a lot of Amazon sellers, when they get the announcement from Amazon that there’s going to be some upcoming fee changes, yeah, they freak out and you know, there’s been the peak fulfillment fee that just started recently. Earlier in the year, there was a 5% fuel and inflation surcharge.

I mean, a lot of the fee increases can be demoralizing if you just focus on that but here is my main tip for this episode: Don’t freak out, you can deal with this. Take a deep breath and decide how you want to respond. I mean, remember, usually, these fees are very small, very incremental changes and that’s just a normal part of doing business. I mean, in 2022, we’ve got inflation, we’ve got price increases, all around the board for different situations and that includes Amazon. So Amazon’s cost, they’re going up so they pass that along to sellers. So the best way to respond to these fee increases, don’t freak out, you can deal with it and just know that there are good ways to respond.

So let’s look at a few steps on how to respond to these fee increases. First off, just look and see how this fee changes impact the sustainability of your Amazon business. Most of the fees changes, you know, they’re really small across the board but we do understand that a lot of small fee changes for every single sale or every single month of storage or every single situation, they can add up over time.

So you want to look at your numbers, you want to be able to know your numbers and be able to make a wise decision on, “Is this something that’s really going to make me or break me or break the profitability of what I’m selling?” Look at that and see how it is. If by chance these fee changes do have a huge impact on your profitability, then there’s, you know, good ways to respond.

One of the ways you can respond is to raise your prices. You know, if Amazon is passing these fees that they’re incurring that are increasing for them onto you, the seller. Well, we can pass that on to the customers and our first reaction might be, “Well, raising prices might mean slower sales, right?” I mean, it might, it might not.

It all depends on what your competition does. You know, if your competition raises prices too then everyone can sustainably continue to sell the same items. If your competition does not raise their prices, then yeah, they’re going to sell out but the good news is, they probably won’t be competing against you anymore because they’re going to be trying to find other items with better profitability than the items that they’re selling right now.

So you might have a little delay in sales for the items that you’re raising your prices on but this is actually a normal expectation, especially for 2022. I mean, prices are going up all across the board in everything. So raising your prices just a little bit might be the best way for you to respond to the fee increases.

You know your inventory items better than anybody. You know which items can handle a little price increase and continue some consistent sales and you know which ones that you probably should just keep that price and sell through.

[0:05:00.8] REBECCA: Yeah, so that brings us to the third option which is similar to what you were talking about there at the end, rather than passing along those fee increases to your customers by raising your prices on your inventory, you would just price your current inventory to sell ASAP.

Basically, you’re liquidating some of your inventory by not increasing your prices. I’m not saying cut your prices, I’m saying just keep your prices where there are, rather than increasing your prices to pass along that fee but just keep your prices where they are because you know things are selling well at that price and then once those particular items sell out, then you would move on from that particular item.

You would not restock it, you would look for better inventory that would sell at a price that’s going to fit better with that new fee structure. So you would be able to make new decisions about whether or not an item is going to be profitable for you in the long run, with the new fee structure. So that would be the third option, not passing along that fee, just keeping your price the same, selling out and then starting the process of sourcing it for new inventory over again.

[0:06:02.7] STEPHEN: Right and so like we said before, you know your inventory best so you know which items probably can handle a little price increase and which ones you should probably just sell through. For the rest of this episode, we’re going to talk about other ways that we can handle these fee increases. At the beginning, we talked about how some people freak out and say, “This is the end of Amazon reselling as we know it” or “Amazon hates third-party seller.” We’ve also heard, “This is how Jeff Bezos is getting rich and paying for his space program by increasing Amazon fees.” Just to remind everybody that in episode 65, which is titled, “Is Amazon trying to get rid of third-party sellers?” that Jeff Bezos is not increasing fees just to get rich off of third-party sellers. This is not how he’s funding his space program.

[0:06:42.7] REBECCA: It’s just a part of it.

[0:06:43.7] STEPHEN: That’s right, just a little part.

[0:06:45.8] REBECCA: But it’s not the main part, it’s not the only part.

[0:06:47.9] STEPHEN: Right. I mean, so overall prices and services of everything are increasing. Everything’s going up and so, a good business like Amazon is going to respond appropriately with these increases and so we need to respond appropriately as well.

[0:07:00.5] REBECCA: Right, these fees are not going up because the space program cost more. It’s an appropriate fee that’s coming from an appropriate place.

[0:07:07.5] STEPHEN: Yes.

[0:07:09.0] REBECCA: So if you mostly do online arbitrage or wholesale sourcing, we highly recommend using the tool RevSeller. It’s an extension that you can use on the chrome browser that will help you see all of these fees that we’re talking about. Right now, you can go, when you’re using it, you would see the current fees and then when a new fee is introduced, RevSeller updates, so that they incorporate the new fees into their fee calculator and that would be at a Chrome extension that puts those fees right on an Amazon product page as you’re doing your research.

And then also, as fee updates get closer in time, RevSeller will show both the before and after of what the fee implications will look like. They will put that on that RevSeller extension box, they will show you exactly what you’re looking at before the fee increase for your calculations and what you will see for your calculations after the fee goes into place. So it’s a really good way to compare now versus the in the future when a fee goes up.

You can find that tool at fulltimefba.com/revseller and it’s one that we highly recommend for doing online arbitrage or wholesale sourcing.

[0:08:17.3] STEPHEN: Right and we’ll also put a coupon code to save you some money on RevSeller. We’ll put that in our shownotes, fulltimefba.com/159.

If you are doing retail arbitrage, we recommend using the sourcing tool, Scoutify, that will also be up to date with all the latest fee updates so that you’re always sure of what to expect. Another cool thing that Scoutify has in the sourcing app are a couple of tabs that really help you see what to expect in the future. There’s a profitability tab that kind of breaks down all the different fees that are going into each sale for each particular item. It’s easy to break down and you can also see at times when we get closer to fee changes what those fees are before and after.

There’s also a storage fee tab, which tells you basically how many months you can store this item and still be profitable. So you can be like, “Oh hey, if I sell this in the first month, this is what I’m going to make. If I sell this two months from now, this other thing is what I’m going to make.” So you can see the profitability of the storage fees and so, this is good to know when it comes to future storage fee increases so you can make the best decisions. So that’s what we use with our retail arbitrage. Scoutify comes bundled with InventoryLab, which is the overall inventory management system that we use and promote. fulltimefba.com/inventorylab to get a free month of that plus Scoutify.

[0:09:30.6] REBECCA: Ultimately, if you’re looking at these fee changes and they are taking a really big bite out of your profits so that you think that these fee changes are going to steal away all of your profits, then it is really likely that your profit margins are just too thin and you will need to adjust your sourcing strategies and setup some new criteria for yourself when you’re sourcing, so that you can find inventory that has better profit margins and still be successful.

One way that you can do that is to take a look at our Keepa course where you can find teaching that will help you make smarter sourcing decisions over the long run that can help you look at items’ sales history and also the pricing history, so that you’ll be able to buy items to sell online that will keep that higher price and they won’t tank in price and actually will go up in price over time.

So to find that course, you would go to fulltimefba.com/keepacourse and you’ll find information about how to learn all you’re going to need to know about making smarter sourcing decisions for your Amazon FBA business.

[0:10:35.5] STEPHEN: And finally when it comes to price increases, just remember that Amazon gives you plenty of time to make these kinds of changes. If you’re reading your Amazon emails, especially the newsletters, Amazon lets you know usually at least a month in advance, sometimes two months, when these fee changes are going to happen, exactly what they are, links to graphs to see before and after comparisons of fee changes.

So be sure that you continually read Amazon emails so that you know when these fee changes are coming and then use tools like RevSeller or Scoutify to help you make a better smarter sorting decision when it comes to the profitability of items before and after these fee changes. And then no matter when you’re listening to this, you go to fulltimefba.com/feechanges and see all the most recent and upcoming fee changes that Amazon has announced just to see how that will impact your Amazon business.

So that link will always forward you to the latest edition of Amazon’s updated fees and you can kind of go through it and see all the fee changes that have been announced by Amazon that have been recent and plus, what is upcoming so you can make the best decisions possible.

So in concussion, wrapping everything up, when it comes to Amazon fee changes, don’t freak out. There are smart, calm and sensible ways to respond to these fee changes in your Amazon business. It’s all normal part of business. It’s what everyone else is experiencing as well and we can respond appropriately, make good decisions and come out ahead in the end.

[CLOSING CONVERSATION]

[0:12:02.3] REBECCA: Thank you so much for joining us for this episode of the Full-Time FBA Show. As a reminder, you can find the shownotes for this episode at fulltimefba.com/159. At that link, you’ll find the transcript for this episode as well as any links that we’ve mentioned in the episode in the shownotes, fulltimefba.com/159.

And also if you wouldn’t mind, going to leave us a review. We love it when we get five star reviews for the podcast and it helps other people find the podcast, who are needing help turning part-time hours into a full-time income with Amazon FBA. You can leave a review for the Full-Time FBA Show at any of your favorite podcast players or at fulltimefba.com/leaveareview.

[0:12:44.3] STEPHEN: And next week on the show, we have Kristin Ostrander coming back to the show, one of our favorite guest from before. We’re going to be talking about the secret to Black Friday profits. So join us next week on the show to listen to that.

[OUTRO]

[0:12:58.7] ANNOUNCER: That is all for this episode of The Full-Time FBA Show. So head over to fulltimefba.com/podcast, where you will find the shownotes and links from this episode. While you’re there, subscribe to our newsletter where you’ll get several free downloads of our popular and helpful Amazon FBA resources. Now, take action on what you have learned today, so you can find success at turning part-time hours into a full-time income with Amazon FBA.

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