As you will have most likely heard by now, from May 12th 2022, Amazon are adding a 4.3% fuel and inflation surcharge to FBA fulfilment fees for the UK, Germany, France, Italy, and Spain.
What has caused the fee increase?
This has mainly come about as a result of increasing oil and fuel costs:
I’ve seen a lot of reactions to this most recent fee increase announcement and they are understandably negative… after all nobody wants to pay more in fees! Especially considering that it’s on top of the small increase to fulfilment fees which already came into place on March 31st 2022.
But I’m going to go against the grain here and say that this fee increase was 100% expected and very reasonable when you consider the amount of money Amazon spent increasing their fulfilment capacity over the last few years of COVID and supply chain bottlenecks.
In fact they actually overspent here in an attempt to deal with the pandemic demand, leading to a first quarter loss for Amazon of $3.8 billion. This is the first time since 2015 that Amazon hasn’t made a profit and the news led to a 14% drop in their share price in a single day:
Overall, Amazon claim to have “more than doubled” their fulfilment capacity across Europe, which us FBA sellers noticed first hand towards the end of 2021 where we saw Amazon fulfilment centre check in times drop severely and the inventory and storage limits, which had plagued many FBA sellers, start to be lifted.
And it’s for exactly that reason that I’m more than happy to pay slightly more in fees, rather than have to deal with inventory constraints.
Now I know what many of you are thinking right now – “but Andrew 4.3% isn’t slightly more!”
But my answer is that it really is.
How much is this fee increase actually going to cost you?
Firstly let’s point out that it’s a 4.3% increase to the current fees, not a 4.3% increase in total.
So let’s say you currently pay £2.21 in fulfilment fees for an item that you sell for £20. That means that your FBA fees works out at 11% of your sale price.
From May 13th that fee isn’t going to increase to 15.3%! No, it’s going to increase from 11% to 11.47%.
And suddenly the fee surcharge seems much more reasonable when you consider it as a 0.5% loss of margin.
I know this is obvious for most of you, but you’ll be surprised at the number of people who see the headline of 4.3% fuel and inflation surcharge and immediately think they’re losing that much margin!
So as I said, I think it’s a very reasonable increase. Especially when you consider how cheap Amazon’s FBA fulfilment fees are to start with!
I showed this in black and white in our Fuflilment Centre Showdown post last year where I tested 4 different UK based fulfilment centres and compared their costs to Amazon for a theoretical product.
And the closest any of them could get was 61% MORE EXPENSIVE than Amazon (with the highest being 255% more).
I hope now you can see why I consider 4.3% to be a very small increase!
What’s the best way to deal with the fee increase?
So rather than get hysterical and start bashing greedy Amazon, let’s see what we can do, if anything, to offset this fee increase.
And really you only have two options here:
Accept a lower margin
This is really the do nothing choice, where you simply absorb the additional costs and keep your prices the same.
Increase prices to maintain your margin
The other option is to increase your prices to keep your gross margin the same.
If you’re using a sales and P/L dashboard, such as Shopkeeper, which is what I myself use and recommend, then you’ll be able to see exactly what affect this fee increase will have on your margins as they include a full fee breakdown for each product.
Should you increase your prices on Amazon?
Which option to choose really depends on your specific business and product and it’s impossible to give one blanket recommendation.
You have to consider your competitors (have they increased their prices?), where you’re positioned in terms of pricing vs other products, if you’ve already increased your prices recently (due to increased shipping costs for example) etc!
Generally speaking I would try to increase prices rather than sacrifice margin, especially if you haven’t done so recently and are presumably already absorbing recent supply cost increases. Sadly it’s the year of inflation so customers will be used to rising prices and it shouldn’t negatively affect your conversion rate and sales.
So that’s all there is to it for now! For most of us these fee increases won’t have made a significant difference.
If however you’re one of the unlucky sellers whose product has now fallen into a different size and weight tier then you may be looking at a much bigger increase in your fulfilment fees.
In that case stay tuned as I have a future blog post planned that could potentially save you a lot of money!
I have been very lazy with blog posts for the last three months, but there has been a good reason for that! In August, September, October and November, I invested hundreds of hours into updating my Amazon Sharks video course for 2020! And I’m happy to announce that I have finally finished work on the course update!
This means just two things:
Amazon Sharks now is fully updated for 2020 to include the latest changes and rules on Amazon selling, advertising, sourcing, etc.
I will have more time to put out content on this blog.
The Amazon Sharks course was created early in 2018, and it’s not that the content has become outdated, but recently there have been a few major changes on the platform that have required me to update dozens of videos in the course, such as:
It has been almost 4 months now since my last blog post but it feels like YEARS! What started as a quick summer break slowly extended into a more complex transition time for me, my businesses and this blog. Especially the blog as you can see – we now have a brand new look & layout for it! I know that it’s hard to accept something new but I really hope you like how it all turned out and will get used to the new design very soon.
I’ve actually started to receive emails from long time blog readers asking whether everything is okay with me! Luckily I’m all good and actually in better shape than ever before! But I will leave that story to January, when it’ll be one year since my “Get Fit” start date.
Anyway, back to the question at hand – what have I been up to for all this time?
To start with, in the beginning of the summer, I went on a long awaited holiday to Croatia with my family – it was in the beginning of June, when the season over there technically hasn’t even started yet but for us it was perfect! 10 days with no rain, 30 degrees, a swimming pool and lots of relaxation.
At that time I didn’t even know that a major change for me and my business was just around the corner.
You have probably already noticed that something is different about the blog now?
That you see Amazon on every corner, and not eBay anymore?
Long story short, I quit eBay in August this year. Yes, after 10+ years of selling on eBay I stopped trading there completely and I have no plans to go back anytime soon (probably ever).
Why? Basically what happened is that the two Amazon businesses I started in 2015 and 2016 improved so much in sales over the summer that I asked myself – why the heck do I need eBay anymore as I get such a better ROI on Amazon? And not only a better ROI money wise, but time wise too – as on Amazon I’m fully relying on FBA for order fulfilment so my businesses basically run on their own, 24/7!
So I decided to leave eBay behind and fully concentrate on Amazon. Read More…
This week I have prepared something very special for you – let’s put aside eBay, wholesale and eCommerce for awhile and take a look at one specific way of making money online I have been practising with great success for the last few months. Yes, I’ll share with you exact strategy that generated me £1349 in ONE MONTH alone, and yes – I worked on this just 4 hours in total (1 hour every week)!
Question: How to get extremely wealthy? As wealthy as Warren Buffett for example?
Answer: by using Money to Make More Money!
In some way it relates to eCommerce World as well – we buy stock for wholesale prices and sell for retail prices to make a profit. But Warren Buffett didn’t open a B&M shop or a fast food restaurant chain, no – he used money to invest in financial instruments, such as stocks and shares. I have always been interested in such financial markers, stock trading and generally, in “using money to make more money” concept. Years ago I was heavily involved in Betfair trading, which is actually quite similar to stock market day trading. But already back then I realized that day trading is not for me:
It was a very boring way of spending your day, glued to PC;
It was very stressful;
Potential earnings were some way limited, at least for my trading techniques.
But still to this day, from time to time, I was looking for opportunities to invest money to make more money. With increased profits from my info products business and eCommerce stuff, I wanted to find a way I could invest my profits into some sort of financial instruments to let my money make more money, hands free way!
Problem is that with most traditional financial investment instruments, such as stocks, mutual funds, savings accounts etc. your potential ROI is very small. Risks vary from one instrument to other but in general, in my opinion, reward for taking those risks is way too small! Invest in dividend paying stocks for 5% yearly ROI? 5% per year? I would better use that money to buy a pallet of un-branded Tablets, made in China and sell off in 3 months time for 20-30% ROI on eBay. Yes, selling physical products involve way more work than financial investments but again, 5%-10% yearly returns doesn’t sound appealing to me either!
And then it happened – six months ago or so, when I was searching for some creative ways to invest money, I found a concept that totally blew my mind away! Same concept that few months later made me £1349 net profit in one month alone!!! And today, I’ll share with you exactly how I did it… Read More…
Today I have something a little bit different for you, but don’t worry, different in a good way!
Instead of looking at an eBay update or import tax or shipping, today’s post is all about… TV shows!
But of course this is a business blog and so we’ll be talking about business related TV shows. Personally I’m a huge fan of such shows and love watching them, but even more importantly I find them very useful when it comes to getting to thinking about and getting ideas for my own businesses.
So in a way, watching these shows can even be classified as work 😉
Let’s now go over some of the shows I watch – many of you will know some of them (but I’ll still include them in the list) but hopefully you’ll never have tried some of the others.
Plus I’d love for you to all share your favourite shows in the comments section below, to give some more ideas to your fellow blog readers (and me of course!).
For a while now I’ve been thinking about updating the design of my blog, specifically – making it responsive.
If you don’t know what responsive design actually is, it basically means that the design of the blog automatically fits whatever device it’s being used on. So If you’re viewing it on your desktop, it will fit perfectly, but if you then go and view it on your mobile device, it will still fit perfectly (even though you’ve gone from a roughly 20’ screen to a 4-5’ one).
Spicy Auction Templates 3.0, which was just launched last week, utilises a responsive design, so please take a look at that if you want a better idea of what responsive design is and how it works.
Of course the whole idea behind responsive design it to make it easier to browse sites on a mobile device – a market which has grown hugely over the last few years.
And when I look at it in that way, it seems like an obvious choice to switch to a responsive design for my blog…
BUT there’s just something that keeps me from doing this – a nagging feeling that I shouldn’t go responsive. I think that my main worry is that the actual usability and functionality of the blog will be negatively affected.
Also, another very important consideration, many websites look dreadful when viewed on a mobile device – it’s zoomed in on a tiny part of the page, menus are impossible to use, etc. etc. – basically the whole layout is messed up. Read More…
This is probably the main question I receive about SAT – people just want to know exactly what it is.
Put simply, Spicy Auction Templates is a resource/directory with hundreds of pre-made eBay listing templates which any seller can use in their business:
You don’t need any technical knowledge to use these templates and you can be up and running with them 5 minutes after joining. You just copy and paste the listing code we provide on to eBay or Turbo Lister or Auctiva or whatever listing tool you prefer, and the template will show up, ready for you to use. It’s as simple and easy as that.
All the SAT materials are available online for immediate download, via a special members-only area, so you get instant access upon joining.
And, to make it even easier for you, you don’t even have to worry about hosting these templates as we take care of that – all SAT templates are hosted on a state of the art server, based in the UK. Read More…
I hope everyone is okay, and not struggling too much with the sudden heat we’ve been having!
Today I wanted to post a quick warning to people who are registering, or are thinking about registering, a trademark. There are many scams attempted around this process and, very recently, one of my 60 Day Blueprint students received what I call “a scamming attempt”:
Basically, here’s what happened – one week after my client submitted a trademark registration application, he received this letter that states that he has to pay 1370 EUR for his application to go through – to a bank account in Poland.
If you check the small print and their website, basically they are doing nothing illegal – you pay that fee of 1370 EUR for your trademark to be included in their database. So technically it’s all within the law. Read More…
Yes, it’s that time of the year again – I’m giving away £100 worth of Amazon gift cards to my loyal blog readers! 🙂
As we’re approaching the end of 2014, I want to ask you – my blog readers – what topics you want me to cover on this blog in 2015. This will be a fun & simple contest where 5 people will win a £20 Amazon gift card, delivered to your email right in time for Christmas.
What do you have to do to enter this contest?
Simply suggest a question/topic that you want me to cover on my blog next year. As easy as that! Just leave your suggestion as a comment below this post and you’ll be automatically entered in the draw to win a gift card from Amazon.
Here are a few examples to get you going:
How to properly format eBay gallery images?
What’s the difference between sea freight and air freight?
Do I have to register for VAT when selling digital products?
How to set-up a custom email address?
How much to charge for gift wrapping?
How to make my eCommerce shop SEO friendly?
And so on!
So what I’m after here is a list of questions you would like me to cover in detailed blog posts, how-to guides and videos. The more detailed your suggestions/questions are, the better, as I will make sure to cover them extensively in future blog posts. Read More…
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