Cost-Saving Techniques for Amazon Sellers: Beating the 2024 FBA Inbound Placement Fee

In the realm of e-commerce, where speed and convenience reign supreme, every convenience comes at a price. 

For Amazon sellers, the introduction of the 2024 Fulfillment by Amazon (FBA) inbound placement service fee is a perfect example of this trade-off, spotlighting the delicate balance between convenience and cost-effectiveness. 

In this blog post, we take a look into the new fee structure, dissecting its implications and providing actionable insights for sellers deciding between cost effectiveness and convenience for their Amazon store.

Navigating Convenience and Cost

In the competitive landscape of Amazon selling, efficiency and convenience are important – but so is your bottom line. 

The ability to seamlessly ship inventory to fulfillment centers and reach customers quickly can make or break a seller’s success. However, as Amazon introduces the new FBA inbound placement service fee, sellers are forced to confront the inherent trade-offs between convenience and cost-effectiveness.

Understanding the Fee Structure

The FBA inbound placement service fee is a pivotal component of Amazon’s logistics ecosystem, designed to transfer some of the costs associated with distributing inventory across fulfillment centers back to sellers. 

Sellers have two primary options when creating shipping plans: minimal shipment splits or partial/Amazon-optimized shipment splits:

Minimal Shipment Splits: This option allows sellers to send inventory to a minimal number of inbound locations, relying on Amazon to distribute it across the network. While convenient, this approach incurs a fee that varies based on the inbound location and quantity of inventory.

Partial/Amazon-Optimized Shipment Splits: Alternatively, sellers can take a more hands-on approach by sending inventory to multiple inbound locations themselves. This approach can lead to reduced or even waived fees, but higher trucking costs, depending on the number of shipments and inbound locations.

Prioritizing cost-effectiveness by exploring alternatives to minimal shipment splits is crucial. For sellers who want to optimize their inbound placement fees, there are three possible approaches:

1. Minimizing Fees with Amazon Warehousing & Distribution (AWD) and Amazon Global Logistics (AGL)

The first alternative is to use AWD to store your inventory, as Amazon does not charge the inbound placement fee to use this. Furthermore, they will take care of any trucking when your products need a restock anywhere around the country. In this way, you save on the inbound placement fee and minimize the cost of trucking to multiple locations.

We sometimes advise considering AGL for consolidated imports from China, particularly for smaller shipments and lower prices; but expect frequent delays.  Only select this option if you can afford to wait for your cargo and the significant costs savings is worth the delay.  With AGL, you only incur a single trucking fee directly into Amazon, eliminating the need for separate payments for warehousing, transloading, and onward trucking services that you would incur if using third-party logistics (3PL).

2. Minimizing Fees through Software-Assisted Shipment Planning

For more advanced or higher volume sellers, it may make sense to explore third-party software tools, such as Nineyard or SellerChain, that assist in optimizing your shipments.  Using tools like these, sellers are able to optimize their logistics and have the bulk of their inventory sent to a single location while smaller quantities are sent to four other locations, minimizing shipping costs and reducing or avoiding the inbound placement fee.

Tools like these can be incredibly powerful for minimizing your overall costs; however, you’ll still want to work with a freight forwarding company to sort out shipping costs and optimize your options.  These tools also carry their own costs, with fees starting around $250 per month.

3. Minimizing Fees through Better Routing with Partial/Amazon-Optimized Shipment Splits

Finally, very savvy sellers may want to work with a strategically-minded freight forwarding partner in addition to the recommended software tools.  Often, we find that the software tools are hugely helpful in optimizing, but may be unable to find a solution for a particular situation, or don’t take every option into account.

In these situations, we work with our sellers and their chosen software tool to further optimize their logistics, taking into consideration not only the inbound placement fee and shipping costs but also the overall needs of their business to find the best solution for each shipment.

Here are some examples of the types of costs we typically see sellers incur prior to optimizing their strategy, or leveraging recommendations from tools like Nineyard or SellerChain: