Last updated: 6/4/2024

Navigating Amazon's New Inbound Placement Fee and Is Using AWD The Right Strategy?

In March of 2024, Amazon implemented a new Inbound Placement Fee for Amazon FBA.

This new fee claims to enhance the efficiency of its delivery network by strategically placing inventory closer to customers, promising faster delivery times and potentially lower shipping costs. 

In this article, we'll explore how this new fee structure impacts your shipping plans, what strategies you can adopt to manage its effects effectively, and if using AWD is the solution.

Understanding Your Options with FBA Inbound Placement Service

When setting up a shipping plan with FBA, Amazon now provides several options for distributing your inventory across its fulfillment network, each with associated costs:

1. Minimal Shipment Splits:

 You can opt to send your inventory to as few locations as possible, usually just one. Amazon will then distribute it across its network. This option comes with a fee that varies depending on the destination within the country. For instance, sending inventory to the West Coast may incur higher costs.

2. Partial or Amazon-Optimized Shipment Splits:

 If you prefer handling distribution yourself, you can send your inventory to multiple locations, potentially qualifying for reduced or no fees. 

Following Amazon's recommendation of distributing to four or more locations could help you avoid the fee entirely. However, distributing to two or three locations will still incur a reduced fee.

Your choice will depend on factors such as the types and quantities of products you plan to ship, your current inventory levels across Amazon's network, and the geographical distribution of your customers.

How the Inbound Placement Fee Affects You

The Inbound Placement Fee is determined by several factors, which you'll see outlined in a fee table when creating your shipping plans. 

These factors include:

- Item Size: Items are categorized as small standard, large standard, or large bulky.

- Weight: For small standard items, the unit weight is considered, while for larger items, the greater of dimensional weight or unit weight is used.

- Number of Locations Tier: The fee adjusts based on whether your shipment is minimal, partial, or optimized according to Amazon's guidelines.

- Inbound Location: Fees also vary by the destination of your inventory, with some regions costing more than others.

Understanding these factors is crucial for strategically planning your shipments to minimize fees and keep costs in check. 

This new fee structure emphasizes the importance of efficient inventory management and planning, making sellers think strategically about distributing products within Amazon's fulfillment network.

 AWD: A Strategy to Manage Inbound Placement Fees

Amazon's strategic goal clearly is to gain full control of end-to-end logistics, from pickup in China to delivery at your doorstep. 

This involves using their ships, planes, bulk storage warehouses, and FBA warehouses, charging you a fee at each stage. 

For sellers using Amazon Warehousing and Distribution (AWD), the pricing structure includes FBA inbound placement services, meaning no separate inbound placement service fee is charged. 

AWD manages optimal inventory placement into Amazon’s network on your behalf.

Reducing or Avoiding the Inbound Placement Service Fee

To reduce or avoid the inbound placement service fee, you can use the Partial shipment splits option or the Amazon-optimized shipment splits option. 

With these options, you pay a reduced fee or no fee for sending your inventory to multiple inbound locations across Amazon’s network.

 AWD vs. 3PL: A Comparative Perspective

While AWD offers a streamlined approach with potentially lower costs, it may not provide the same level of bespoke services that a third-party logistics provider (3PL) can offer. 

3PLs are known for their exceptional customer service and customized solutions tailored to your specific needs. 

However, the ongoing increase in fees is pushing many sellers towards using AWD, whether they prefer it or not.

Making the Right Choice

Navigating Amazon's new Inbound Placement Fee requires a strategic approach to manage costs effectively. 

By understanding your options and leveraging AWD's inclusive services, you can potentially minimize these fees. 

However, evaluating whether AWD meets your business needs compared to a 3PL is essential.

Share your comments below if you have used AWD services before. 

How was your experience, and would you recommend it to other sellers? 

For those seeking to strategize their shipments, manage these new fees and early peak season charges efficiently, book a call with Proboxx today. 

Our team can help you create the best strategy for optimizing your cargo and navigating the new fee structures. 

Click the link HERE to get started.

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