An in-depth analysis of FBA fees, long term storage fees, and their exact impact on the business of Amazon sellers. A complete guide to Amazon fees, from every angle.
This may be the longest article I’ve ever written, because its among the most important.
I’m cutting through all the noise to give a detailed guide to Amazon fees from every angle. Let’s get into it…
Amazon has made major increases to FBA fees
There’s no sugar coating this: The increases in FBA fees have been severe.
The biggest impact has been (and continues to be) on these two categories of used media:
- Low-end sales (esp. items $10 and under).
- Long-tail products (slow selling items hit by new long term storage fees).
What have FBA fees NOT impacted?
Books and used media are still the cheapest and most abundant category on Amazon. They’re everywhere, and they’re cheap, and selling them is still 100x easier than getting a real job. However an elevated level of strategy is now required.
This is not the end of selling cheap used stuff via Fulfillment by Amazon. Just the end of us being able to do it lazily in a sleepwalking fashion and still make money. Today, we have to be smarter.
Three changes Amazon sellers need to make
Here are the top three adjustments FBA sellers must make after the latest Amazon fees increases:
- Greater attention to the FBA offers your scanning app isn’t showing you (to prevent sourcing books that will sell at a loss).
- Stricter standards applied to purchasing “long tail” books.
- A stricter formula for liquidating books before the 6 month mark.
I will go into each of these in much greater detail later in this article.
Part One is a synopsis of the latest developments in FBA fees, and later articles will break down the raw numbers and higher-level implications.
So why is Amazon raising its FBA fees?
The thing that motivates Amazon to raise their fees is nothing new: Their warehouses are bursting at the seams, costs of maintaining this fulfillment infrastructure are huge, and Amazon trying to firmly dissuade FBA sellers from shipping in all but the most profitable inventory.
Here is Amazon in their own words:
“At times we experience physical constraints on inventory capacity during key shopping seasons. To help minimize these constraints, we want to continue to allow the most efficiently managed inventory to flow through the network, while limiting less efficiently managed inventory.”
This is code for “stop sending us so much cheap and/or slow-selling stuff.”
You’ll notice that every increase in FBA fees is designed to 1) limit the amount of inventory getting shipped in, and 2) purge slow-selling inventory from FBA warehouses.
Here’s the quick lightning-round on every new change:
New thing #1: New FBA fees
What this is: Inceased commissions for anything sold via Fulfillment by Amazon (FBA)
What Amazon is saying: “We will adjust our fulfillment fees for most product size tiers and weights. The adjusted fees will apply throughout the year, and we will no longer have a separate rate for October through December.“
Severity level (1 to 10 scale): 7
More detail: This is closer to an 8 for lower-end books (sub-$10), and more of a 5 for higher priced books.
New thing #2: New FBA monthly storage fees increase
What this is: Monthly storage fees have been raised about 8%.
What Amazon is saying: “monthly inventory storage fees will be increased by $0.05 per cubic foot for standard-size and oversize items.”
Severity level (1 to 10 scale): 2
More detail: Not much to say about this. Compared to other new fees, this one won’t move the needle that much. The monthly fees are small enough as it is, that an added 8% just isn’t much of a big deal.
New thing #3: Long term storage fees imposed monthly
What this is: Every item in storage longer than six months will have be charged a LTSF each month (instead of every six months)
What Amazon is saying: “long-term storage fees will be adjusted and the assessment dates will be changed from a semi-annual basis to a monthly basis.”
Severity level (1 to 10 scale): 8
More detail: This one is huge. Instead of getting hit with a big fee every August and February, Amazon is hitting FBA sellers with a smaller fee, but every month. On a month-by-month basis, this very roughly translates to a little less than double the amount of old long term storage fees (LTSF).
New thing #4: New monthly minimum set for all items at Amazon over one year
What this is: For every item in your inventory for longer than a year, Amazon imposes a “floor” (minimum) on the monthly LTSF of 50 cents.
What Amazon is saying: “we will introduce a minimum charge of $0.50 per unit per month for items in fulfillment centers for 365 days or more. The greater of the applicable total long-term storage fee or minimum long-term storage fee will be charged.”
Severity level (1 to 10 scale): 8 (if you like your long-tail books as much as I do)
More detail: Before new fees, well under half of books were charged 50 cents every six months. These same books will now be charged that every single month. This adds a new seriousness to keeping books at Amazon over a year. You’ll essentially be charged a minimum of $6 a year for every book at an FBA warehouse.
My off-the-cuff assessment is that this means that for every book ranked roughly 3 million and up, FBA sellers need to get strict about shipping them in only if they have a sales price over a certain amount (and purging them when that price drops).
New thing #5: Inventory restrictions and the “Inventory Performance Index”
What this is: A new metric is applied to each seller as the basis for imposing inventory limits.
What Amazon is saying: “storage limits will be evaluated every three months on a quarterly cycle. If your Inventory Performance Index is less than 350 six weeks before the start of a quarter, you will be notified of your potential storage limits.”
Severity level (1 to 10 scale): 3 (though full impact still unclear)
More detail: This is a new metric Amazon is using to determine who has inventory limits imposed, and how much. Called the “Inventory Performance Index,” Amazon is assigning this number to each seller, essentially to measure how much of a burden they are to Amazon’s warehouses (they would put it differently of course). This score is a factor of several things, such as:
- Excess inventory
- In stock rate
- Stranded inventory
It’s not clear if the list above are the top factors overall, or just the ones I see in Seller Central that I personally need to improve (view your score here, then post in the comments below if you see additional factors not mentioned in this list).
I tend to think inventory turnover rate is a huge part of this metric, though they’re not divulging that outright.
The way it works is that each seller gets a score of 1 to 1,000. Anyone with a score of less than 350 will have restrictions imposed on the number of units they can store at an FBA warehouse.
The motive here is clear: Amazon wants to dissuade sellers who keep too much dead weight at their warehouses. The good news is, it appears to be really easy to stay above the 350 mark.
What now? How to assess the impact of new Amazon fees
Assessing new FBA fees: Run any book through the old tried and true “Fulfillment by Amazon Revenue Calculator” for the new payout amount for any item.
Assessing new LTSFs: The best way to preview your upcoming LTSFs on Amazon can be found under:
Reports > Fulfillment > Inventory reports column (left hand side) > Inventory Health.
This is a report you can view online or download that shows which items in your inventory are subject to upcoming long term storage fees.
PART II: The impact of new FBA fees – using hard math
Let’s get into exactly how new FBA fees will impact your profits, with real examples.
I took a sampling of five books to show the “before” and “after” of the new fees. The books were chosen because weight is a factor in fees, and I wanted a sampling of the five most common book sizes:
- Mass market paperback.
- Trade paperback.
- Average hardcover.
- Large hardcover.
- Textbook.
Refresher: How do Amazon selling fees work?
Yes this is major beginner material here, but as a refresher, here’s how it works when you sell something via Fulfillment by Amazon.
Fees that apply to everyone (merchant fullfilled and FBA)
- Amazon referral fee: 15% of sales price.
- Closing fee. $1.80.
Fulfillment by Amazon fees
- $3.19: 0 to 1 pound.
- $4.71: 1 to 2 pounds
- $5.09: 2 to 3 pounds.
- $5.47: 3 to 4 pounds.
- $5.85: 4 to 5 pounds
What’s changed in the world of FBA fees? The numbers
Let’s take 5 books at various weights and price points, and show how FBA fees of the past compare to new FBA fees today…
Book example #1: Rich Dad Poor Dad (mass market paperback edition)
Sales price: $7
Payout before: $2.18
Payout now: $0.95
Payout percentage change of most recent fees: -56%
Analysis: This is the end of the $7 book. RIP.
You see from the numbers above that this furthers the trend of new fees hitting low end books the most. The above example is the smallest size book you’re ever likely to sell (mass market paperback, i.e. romance-novel-sized), and at a $7 price point, new fees cut the price down by over half compared to a month ago. Brutal.
This pains me to say, but the days of selling $7 books via FBA are definitely gone. They were gone for anyone who needed $3+ payouts last year, but now they’re really gone – for all but the most serious bottom feeders.
Book strata #2: Standard paperback
Book example: Tipping Point (paperback)
Size / weight: 301 pages, 0.7 pounds.
Sales price: $8
Payout beofre: $2.45
Payout now: $1.79
Payout percentage change: –27%
Analysis: This a good example of an “average paperback book.” $8 is the current lowest FBA price as of the time I write this ($7.98), and it yields a less-than-impressive $1.79 payout.
After much consideration, I’m still committed to a $3 minimum payout for all my sales. To maintain this standard, you would have to list a book in the <1 pound range at $10 to get a $3 payout.
Somewhat good news to come out of the new fees: FBA prices have gone up, and noticeably so. For example with the above book, even with over 1,000 used copies for sale (a crazy high number) and fierce FBA competition, the lowest FBA price is still around $8. It’s not at all unusual to see books with 100+ used copies still having $10+ FBA offers.
So, FBA prices have gone up. But in terms of opportunity, does this mean $10 is the new $7? Have all the $7 books of 2016 simply become $10 books in 2018?
Not exactly, but there’s still tons of opportunity to hit a $3 minimum payout all day long, and do it with cheap used books, with a little effort.
Book strata #3: Standard hardcover
Book example: Flash Boys (hardcover)
Size / weight: 288 pgs, 1.2 pounds
Sales price: $10
Payout before: $2.95
Payout now: $1.97
Payout percentage change: –32%
Analysis: Books take a huge hit with new fees when they get above 1 pound. The free increase is $1.50, the biggest jump between any weight tier.
To illustrate, the paperback version of this exact same book (which comes in under a pound) will yield you a $3 payout at the $10 price point. That’s roughly a 33% difference over just a few ounces.
To get a $3 payout (you may have different standards), you’ll need to list this hardcover via FBA at $11.25.
This is a big lesson for new FBA fees: it’s heavier books (over 1 pound) that are most difficult to sell for a profit at “average” prices. More than ever, it pays to be able to roughly assess the weight of a book, and save yourself that extra few seconds in your scanning app to determine payout. If a book is over a pound, you can often just put that book down and walk away.
Book strata #4: Big hardcover
Book example: Money, Master the Game (hardcover)
Size / weight: 688 pgs, 1.8 pounds
Sales price: $10
Payout before: $2.55
Payout now: $1.96
Payout percentage change: –23%
Analysis: Notice the payout is only 1 cent off from the last example (which factors in one month of storage fees), yet this books is literally twice as thick. Anything between 1 and 2 pounds (such as the last two books) get the same fees.
There is huge gap between one and two pounds, and a ton (over half?) of books fall into it.
Spoiler alert here, but I’ve abandoned having a flat “minimum sales price,” in favor of setting a two-tiered minimum: one for books under a pound, and one for books over. And then I’ve learned how to assess what weight bracket a book falls into in the pre-scanning phase, without relying on my scanning app (because all apps have FBA offer blindspots, there’s too many clicks involved to get a clear payout amount for every book. More than ever, it really pays to estimate weight yourself).
Book strata #5: Average textbook
Book example: Introduction to Hospitality (textbook, ISBN 013281465X)
Pages / weight: 600 pgs/3 lbs
Sales price: $20
Payout before: $10.66
Payout now: $9.70
Payout percentage change: -9%
Analysis: While books sold at cheaper prices are severely impacted (see the first example), books at higher price points are barely impacted by new Amazon fees. I don’t want to diminish the impact that 10% can make on an Amazon business, but this is not a dealbreaking amount. This is a big and heavy textbook (over 3 pounds), and at $20, new fees only reduce payout by 96 cents.
For products above 2 pounds, the flat rate Amazon fulfillment fee only goes up 38 cents per pound. New fee changes shouldn’t make you cringe when you pick up a textbook, since the impact of a 3 pound book isn’t anywhere close to 3 times that of a 1 pound book.
Takeaways
- The cheaper the price point, the more severe the impact of new FBA fees.
- Books take a big hit from 1 pound to 2 pounds, and more than ever it pays to accurately guess what weight tier a book falls in before scanning.
- The sub-$10 FBA book sale is (moslty) dead.
- Most “average” paperbacks come in at under one pound, and can yield a $3 Amazon payout at a $10 sales price.
- Most “average” hardcovers and heavier paperbacks must be sold for around $12 to get a $3 Amazon payout.
- The impact of new FBA fees is greatly diminished for books in the $15+ range.
PART III: The impact of new long term storage fees – using hard math
How brutal are increases in Amazon’s Long Term Storage Fees (LTSF)? What do they mean for slow selling books (and more)? A look at the numbers.
Part One: Each Long Term Storage Fee increase, explained
Change #1: Long term storage fees (LTSF) will be charged each month.
Explanation:
Previously, the way it went was this:
- An Amazon FBA seller buys a slow-selling book (either a book with low but nonetheless steady demand, or one that is a gamble and may never sell again).
- Once that book has been at an FBA warehouse for >6 months, it will get hit with a long term storage fee (LTSF) the following February or August (LTSFs were imposed twice a year).
- If an item incurred a long term storage fee after six months, you had another six-month grace period before it was charged again.
The six-month gap between LTSF charges meant we had the luxury of being a little lazy with how we dealt with slow-selling Amazon inventory. And even if we were so lazy as to ignore LTSFs altogether, on a book-by-book basis, they were rarely enough to make a book unprofitable (unless the price dropped).
In an effort to get slow-selling inventory out of its FBA warehouses, Amazon is creating a strong disincentive for us to continue being lazy. (And it pains me to say this, because I love being lazy). The six-month grace period is now gone, and Amazon is now charging us monthly.
Is this the end of long-tail books? No. Just the end of having the luxury of not understanding Amazon sales rank, and not knowing your numbers.
Change #2: Long term storage fees (LTSF) have almost doubled
Explanation:
Amazon has two tiers of long term storage fees: The fee charged for items in inventory for 6 to 12 months. And items in inventory 12+ months. On a month-by-month basis, both fees are almost doubling.
For all inventory in an FBA warehouse six months to one year
- Old LTSF, per cubic foot (6 to 12 months): $11.25 every six months.
- Old LTSF, per cubic foot (6 to 12 months, converted to a monthly rate): $1.88 / month.
- New LTSF, per cubic foot (6 to 12 months): $3.45 / month.
An increase of 84%.
For all inventory in an FBA warehouse over one year
- Old LTSF, per cubic foot (12+ months): $22.50 every six months.
- Old LTSF, per cubic foot (12+ months, converted to a monthly rate): $3.75 / month.
- New LTSF, per cubic foot (12+ months): $6.90 / month.
Also an increase of 84%.
Change #3: For all items in inventory for over one year, there is a monthly minimum LTSF of 50 cents.
Explanation:
If your first thought is “How many books would have cost over 50 cents per month anyway?” The answer is: Very few. In fact, this minimum increases the monthly LTSF for all but the hugest books.
Same trend at work here: Amazon is wanting to make it very painful for us to leave slow-moving inventory in their warehouse.
This is not the end of long-tail books, VHS tapes, and more. All the math needed to safeguard against losing money is pretty simple (and explained either below, or in an upcoming article) Those who dial in their numbers will emerge from this just fine. Those who decide that “math is too hard” will perish.
I don’t like FBA fees, but I love a good seller purge. So let the purge begin…
The Raw Math on Long Term Storage Fees (LTSFs)
This is what you came for: The numbers.
You have a book. It’s average Amazon sales rank is 4 million.. You’re going to sit on it for a while. You don’t know if you should buy it. How much will that book get charged if it doesn’t sell? How long will it have to sit before you actually lose money?
Here’s how this section is going to go: Since size is what determines LTSFs, I’m going to take a sampling of 5 books at the various sizes you’ll commonly encounter (ending with a worst-case-scenario of a big huge textbook that doesn’t sell for two whole years).
Here are the book sizes we’ll cover:
- Mass market paperback.
- Trade paperback.
- Average hardcover.
- Average textbook.
- Super-huge textbook.
5 scenarios for Long Term Storage fees
Disclaimer: For simplicity and ease of math, I did some light rounding of these figures.
Book Strata #1: Mass market paperback (romance novel sized)
- ISBN: 1612680194
- Book Dimensions: 4.2 x 1.2 x 6.5 inches
- Cubic Inches: 33.
- Cubic Feet Translation: 1/52 of a cubic foot.
- Monthly LTSF 6 to 12 months: 7 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 42 cents
- Total monthly + LTSF after one year in inventory: 54 cents
- Total LTSF after two years in inventory: $6.54 cents
- Sales price needed to break even after 1 year: $6.50 (+cost of book)
- Sales price needed to break even after 2 years: $13.60 (+cost of book)
Analysis: Setting aside the fact that this is a small book, these long term storage fees don’t look so devastating when you consider you still break even after an entire year selling this at a miniscule price ($6.50).
Book strata #2: Standard paperback
- ISBN: 0316346624
- Product Dimensions: 5.5 x 1 x 8.5 inches
- Cubic Inches: 47
- Cubic Feet Translation: 1/38 of a cubic foot.
- Monthly LTSF 6 to 12 months: 9 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 54 cents
- Total monthly + LTSF after one year in inventory: 78 cents
- Total LTSF after two years in inventory: $6.78 cents
- Sales price needed to break even after 1 year: $6.80 (+cost of book)
- Sales price needed to break even after 2 years: $13.90 (+cost of book)
Analysis: Again, because you rarely bring a book into your inventory not expecting it to sell anytime in the next year, in the event an average paperback book does not sell in one year, you only need to sell a book you paid $1 for for $7.80 (+the cost of the book) to break even. Not terribly daunting. No one wants to only break even, but it’s ok for this to happen (or even to lose money) on a certain percentage of your inventory, knowing you’ll make it up in aggregate.
Book strata #3: Standard hardcover
- ISBN: 0393244660
- Product Dimensions: 6.6 x 1 x 9.6 inches
- Cubic Inches: 63
- Cubic Feet Translation: 1/27 of a cubic foot.
- Monthly LTSF 6 to 12 months: 13 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 78 cents
- Total monthly + LTSF after one year in inventory: $1.02
- Total LTSF after two years in inventory: $7.02
- Sales price needed to break even after 1 year: $8.90 (+cost of book)
- Sales price needed to break even after 2 years: $16 (+cost of book)
Analysis: This is around the range we need to start getting serious about setting a minimum price we expect to list this for before bringing a long-tail book of this size into our inventory. Let’s say your standard minimum price for a book was $11. Then let’s say you picked up a book this size, and it had FBA offers around $11. So far so good. But then let’s say this book was ranked 3 million. Now you have to consider this book might sit a a warehouse for awhile, and you’ll have to answer the question: At what price is it worth it the potential LTSFs to bring this book into my inventory?
To settle this question, in an upcoming article I’ll break down some sample pricing guidelines at various sales ranks.
Book strata #4: Medium textbook
- ISBN: 013281465X
- Product Dimensions: 7.8 x 1 x 10 inches
- Cubic Inches: 78
- Cubic Feet Translation: 1/22 of a cubic foot.
- Monthly LTSF 6 to 12 months: 16 cents / month.
- Monthly LTSF 12+ months: 50 cents / month.
- Total LTSF after one year in inventory: 96 cents
- Total monthly + LTSF after one year in inventory: $1.32
- Total LTSF after two years in inventory: $7.32
- Sales price needed to break even after 1 year: $10.15 (+cost of book)
- Sales price needed to break even after 2 years: $17.20 (+cost of book)
Analysis: This is a decent-sized 600 page textbook. And even at this size, the storage fee is only 16 cents a month from six to 12 months. This definitely adds up, but doesn’t feel so menacing for a book in decent demand that you’re selling for $15+.
It gets considerably more serious after the one-year mark.
Book strata #5: Mega-huge monster textbook
- ISBN: 0134093410
- Product Dimensions: 9.2 x 2 x 11 inches
- Cubic Inches: 202
- Cubic Feet Translation: 1/9 of a cubic foot.
- Monthly LTSF 6 to 12 months: 38 cents / month.
- Monthly LTSF 12+ months: 77 cents / month.
- Total LTSF after one year in inventory: $2.28 cents
- Total monthly + LTSF after one year in inventory: $2.70
- Total LTSF after two years in inventory: $11.94
- Sales price needed to break even after 1 year: $13.60 (+cost of book)
- Sales price needed to break even after 2 years: $24.50 (+cost of book)
Analysis: Redundant reminder here, but this is a huge textbook, and pretty close to a worst-case-scenario. Presumably books this size already have an average selling price of over $15 for you, so you’re already covered here.
What this basically means is: When you bring a huge textbook into your inventory, and it doesn’t sell in six months, just keep an eye on it. Even with a textbook this size (two inches thick!), the fee is only 38 cents a month. Painful, but rarely lethal.
(Sidenote: This should not dissuade you from buying textbooks. “Textbooks only sell two months out of the year” is a huge myth. Textbooks sell year-round, so just stay on top of your repricing.)
Also note that Amazon’s new “50 cent minimum fee, per month” raised the monthly cost of every book we’ve looked at after 12 months except this one. This means that the 50 cent minimum will apply to all but the biggest books.
Wow, that was a long article
We made it. And you now have an in-depth understanding of all aspects of FBA fees and long term storage fees.
-Peter Valley
Very informative article. Thank you for helping us weed through this stuff. One question I have regards single item ASINs. Once they sell, is there any advantage to deleting those inactive listings as it relates to Performance Index?
Guess you knew I’d be the first to comment, lol. Anyway, I’m most concerned about all this in regard to longtails, since they make up a huge portion of my inventory. Seems to me that most books that aren’t longtails are either, 1. priced so low by Amazon as to make a decent profit after COG & fees almost impossible when pricing under Amazon, or 2. priced so low by the mega sellers and other price tankers as to make them pretty much worthless to send in to begin with. High-priced longtails seem to be about the only books that escape both of these scenarios.
It is a lot easier to just inventory your books/media yourself and therefore eliminate all these fees. Amazon is trying to drive the small guy out of business (the folks who got Amazon off to a rapid start). This is just the beginning!
Don’t blame you but I could never go back to self-fulfilling. I’d make up for new fees in increased sourcing then go to the post office ever again.
Great question, and the “in stock rate” metric would seem to indicate it might be. I’m getting more consistent about archiving sold listings, even though I’m over the 350 mark (just barely).
I don’t think its quite so severe that we need to avoid all but high-value, slow selling books. But even with LTSFs, those are now a lot more appealing. I’ll break down all the numbers in the next article.
Whoops. Guess I wasn’t first, lol.
Good stuff as always. Look forward the the rest. Can you please address the biggest problem. It is not the new fees, it is the amount of split shipments happening. No Rhyme or reason. It is a nightmare.
Thanks for this information! Helps make sense of this craziness. I’m curious to hear what your repricing strategy will be. Complete against repricers, but I feel I have no choice otherwise my costs associated with the slower moving inventory will be through the roof. Looking forward to reading your other articles
I’ll be touching on repricing in at least two articles coming up.
I’ve been going through your resources since the WAHS Summit and was hoping to make a go of the OBA method but have gotten hesitant to take the leap since hearing about all of the latest changes from Amazon. I’m anxious to get more insight from this series of articles. How does a newbie recognize a book that is ranked well enough to hopefully sell in 6 months and avoid LTSFs but not ranked so well that competition ends up driving prices & profit margins down to nothing.
I’m also curious about one other topic you didn’t mention at all that seems to be another new major obstacle for FBA book sellers. I understand that the amount of splitting Amazon is requiring in people’s shipments has gotten horrific for some folks, even while in private mode. I’m guessing you use a prep service so maybe you’re a bit more removed from the issue but how has that impacted your costs or have you found any way to ease the impact of this issue?
Melissa: See my other comment about split shipments.
Good to read this! I was panicking a little when I got the emails from Amazon updating me about new fees. Was not really sure how to navigate it all.
I watched your interview on Caitlin Pyle’s WAH summit, and that’s when I started doing this FBA thing. It has not paid off yet (I’ve poured more money into it than I’ve gotten back so far), but I’m just breaking even now. So when the new fews were announced, I was like, NOOOO!!! Just when I was almost about to make a profit.
Your article is helping me not panic. I will stay tuned for the rest of this series. THANK YOU!
If you’re getting to break even point with FBA already, I’d say you’re doing really good.
Great question, and the “in stock rate” metric would seem to indicate it might be. I’m getting more consistent about archiving sold listings, even though I’m over the 350 mark (just barely).
Travis: It is extremely problematic, though I don’t find it to be of much value to do articles on issues that aren’t actionable. Split shipments are one of those things that are seriously annoying but there’s almost nothing you can do about it or strategize around it (other than keeping your shipments large) and I don’t like to post rants that don’t have an actionable takeaway.
I understand that. But the splits have caused my shipping costs to go up over 30% and I have tried everything to avoid the splits but its not working. And I dont want to send 1000 books at a time bc I feel like having shipments arrive more often helps my sales. I just hope Amazon realizes these splits are gonna cause ppl to quit more than the new fees will.
I would be interested to hear your and other people’s thoughts about the long term viability of selling used media via FBA. Especially sourcing in person as I mostly do. I’m more concerned and curious about Amazon’s long term trend in changing FBA fees than the current changes. Like I wonder what it will be like another 2 years from now? 4 years? If the changes keep coming at the rate they have been, that will be a lot of change. I think that some level of increased fees will be counterbalanced by less competition, resulting in easier sourcing and higher prices of used books for prime. But I wonder at what point will the game possibly change so much that it makes sourcing used media in person and selling FBA not that profitable. Thank you for the blog and your efforts! 🙂
Thanks for that question, Kyle. I’ve been wondering the same thing. I also do all my sourcing in person, usually involving very long drives. I’ve already stopped buying the following types of books (with occasional exceptions): A. Books where Amazon is on the listing for anything less than about $18 (because of their propensity to drastically tank their own prices). B. Anything with an average rank worse than about 1.2M unless the lowest Merchant price is high enough to give me the minimum profit I’m looking for. C. Any longtail books looking like they will take six months or more to sale, unless there is an initial HUGE profit potential. D. Overall, I hardly ever anymore buy anything that doesn’t look like it will sale for at least $18-20 or more. The bad thing is that this greatly reduces the number of books I buy on any given sourcing trip; the great thing is that I don’t have to always be creating Removal Orders for hundreds or thousands of books. The criteria may have to become even more strict as time goes by.
The numbers aren’t holding up as it is.
If you sell only books, namely used books, you have to look at the average price of item in your inventory. I sell out of print and antiquarian titles, and have dealt in collectible association copies for years, so I do have a stock of books in the 3 and 4 digit range. But your standard used book is going to be nowhere near that. Not even textbooks anymore, because the gating is increasing. Textbooks are in a way their own game. If you look at trade paperbacks and hardcover nonfiction and fiction, the standard books you can expect to find sourcing, the average prices are much lower. Try $10. A “good” book is one that you are going to be able to ask $20 for and get it.
I move thousands and thousands of books a year and can tell you that it’s not easy to get those $20 and up books. I discard more books than I sell. I have also noticed that the discards have shot up – way up – since last fall’s changes. We get rid of it to recyclers, the better books go to a bookstore, but we are not talking about anything lucrative. It just beats having to pay to dispose our mess.
My friends in this business who do well, and I have a few, have made a decision to move from FBA to FBM. That is a huge change, monumental if your inventory is over 10k books and your staff is small.
I don’t want to do that. However, I have seen that the $10 book is not viable on FBA anymore. Let alone the $5 book. Amazing to think that just 4-5 years ago a large chunk of our FBA inventory were $5 books. Over half of our inventory was $10 and under. Now today, we have exactly ZERO of those books in inventory. It just isn’t viable. We are still selling and still have ongoing FBA operations, but are looking at a completely different system, and yes even non-Amazon options are being contemplated. I’ve basically stopped sending inventory in until I can figure this out.
I have been in the book business since the late 90’s, and selling on Amazon since 2005. We started selling right when Amazon announced Prime. Then went to FBA as an experiment a few years later. Then became a 100% FBA operation in 2009. The clouds began to darken in 2016 and by Oct 2017 we realized we had to make a major change or be driven out of business.
Unless there is some kind of miracle turn-around on the part of Amazon, or some new professional selling structure that allows businesses with volume, or experience, or “something” get in and sell at a reasonable cost, it’s obvious the party is over for selling used media on FBA. It doesn’t matter if you have NO competition on your FBA listings, te fees as they are now with new MLTSF will make it IMPOSSIBLE to sell $10 books that don’t sell immediately, even $20 books that don’t sell in 6 months. The system will eat all your profits and you will be working for less than slave labor in Africa. They obviously want their FC’s for brand new mass market items that move fast by the pallet, not bins of used books.
There is also another factor. These changes that occurred in the past two years making the system so different means that you can’t expect regularity or stability on the platform. It’s unstable, you can’t trust it. How can you build a business on something that is moving under your feet?
I have been asking myself the same questions, and have pretty much come up with the same answers….or non-answers. I loved this whole post, especially the last paragraph, about the Amazon platform being unstable. I am not really as concerned with what is happening now as I am about the trend, and what it will mean in the future. Is Amazon going to shove all booksellers out? Push them all on to Abe Books, and renovate it in some way to accommodate them? Demand an invoice for a used book, as they did with me this week? Keep increasing the fees until only the mega sellers can survive?
My answers seem to be the same as those expressed here. Look harder for those $20+ books, sell more FBM, pull books sooner. What bothers me the most is that book selling is different from other selling. There are people who sell books, and there are booksellers. Books are not widgets. Amazon is trying to turn us all into just people who sell books. Without some booksellers among them I don’t feel the future of books is very promising.