Meet our contributing author from sellerboard, a German startup helping Amazon sellers maximize profits. With tools for profit analytics, inventory management, and PPC optimization, sellerboard simplifies operations while focusing on avoiding Amazon fees and recovering lost inventory refunds.
Alex Speian - Product Knowledge Specialist, sellerboard
Leads product knowledge at sellerboard. With a background in various industries, he enjoys learning, adapting, and making music.
Understanding Amazon’s seller fees is critical for maintaining profitability in the increasingly competitive e-commerce landscape. Tools like sellerboard can help sellers track expenses effectively, ensuring they are avoiding Amazon fees that could hurt their bottom line.
While some fees are unavoidable parts of doing business on the platform, many can be reduced or eliminated with strategic planning and proper inventory management. This comprehensive guide provides a detailed breakdown of Amazon’s fee structure, focusing on actionable ways to avoid unnecessary costs and optimize profitability for both new and experienced sellers.
The Amazon marketplace continues to evolve, with the company regularly updating its fee structure to align with operational costs and business objectives. In 2024-2025, several new fees were introduced while others were adjusted, making it more important than ever for sellers to stay informed and adaptable.
Whether you’re managing your business independently or partnering with an Amazon agency, this guide will help you navigate these changes and implement strategies to protect your profit margins.
Table of Contents
Avoidable Amazon Fees and How to Reduce Them
1. Low Inventory Level Fees
Amazon introduced low inventory level fees last year, which apply when your historical inventory days of supply fall below 28 days. These fees are charged at fulfillment, not as a separate storage cost, making them harder to detect in your account statements.
Strategies to Avoid Low Inventory Fees:
- Maintain At Least 28 Days of Inventory: Ensure that your historical inventory levels (both short-term 30-day and long-term 90-day supply) remain above 28 days to avoid these fees. This requires careful planning and regular monitoring of inventory levels.
- Check for Exemptions: Amazon exempts several categories from this fee, including small and light products, new sellers in their first year of operations, and sellers using Automated Warehousing Distribution (AWD). Review your product catalog to identify items that qualify for exemptions.
- Use Data to Forecast Demand: Regularly check Seller Central‘s inventory reports to ensure that stock replenishments are in sync with projected sales. Historical sales data, seasonal trends, and market conditions should all factor into your forecasting models.
- Increase Sell-Through Rate: Running promotions or temporarily lowering prices can help move inventory faster, preventing the low inventory classification. Consider bundling slow-moving products with bestsellers to increase visibility and sales velocity.
- Implement Just-in-Time Inventory: Develop relationships with suppliers who can provide quick turnaround times, allowing you to maintain leaner inventory levels while still meeting the 28-day threshold.
Key Takeaways:
The new low inventory fee is costly, unclear, and poorly explained by Amazon’s Seller Support.
Sellers may be unfairly charged when stock runs low due to factors beyond their control.
2. Inbound Defect Fees
Amazon penalizes sellers who send shipments that fail to comply with FBA shipping guidelines. This includes misrouted shipments, missing labels, and improperly prepped inventory. These fees have increased significantly in recent updates.
Strategies to Avoid Inbound Defect Fees:
- Ensure Compliance with FBA Guidelines: Use Amazon’s shipment creation tools to confirm correct warehouse assignments and follow all packaging requirements. Create a checklist for your team to verify compliance before shipments leave your facility.
- Label and Prep Inventory Properly: Work with your manufacturer or a third-party prep service to ensure products are correctly labeled and packaged before shipping to Amazon. Consider implementing quality control checkpoints specifically for Amazon compliance.
- Monitor Shipment Accuracy: Regularly review inbound shipment reports to identify and correct issues before penalties accumulate. Look for patterns of defects that might indicate systemic problems in your fulfillment process.
- Use Amazon Partnered Carriers: Amazon often offers lower shipping rates for inbound shipments through its partnered carriers, reducing errors and costs. These partners are familiar with Amazon’s requirements, minimizing the risk of compliance issues.
- Invest in Training: Ensure that all team members involved in preparation and shipping understand Amazon’s requirements. Regular training sessions can help prevent costly mistakes.
3. Storage Fees
Amazon charges monthly storage fees based on the volume your inventory occupies in their fulfillment centers. Long-term storage fees apply to items stored for over 365 days, while the Aged Inventory Surcharge applies to products stored for over 180 days. These fees increase substantially during the holiday season.
Strategies to Reduce Storage Fees:
- Optimize Inventory Levels: Maintain a 60-90 day supply to avoid excess stock accumulating in fulfillment centers. Use historical sales data and forecasting tools to determine optimal inventory levels for each product.
- Utilize Removal Orders: Request removal of slow-moving inventory before incurring long-term storage fees. Plan removals strategically to coincide with fee assessment dates.
- Leverage Amazon Outlet and Liquidation Programs: Sell overstock at a discount rather than paying for removals or disposal. While this may reduce profit margins on specific items, it’s often more cost-effective than paying escalating storage fees.
- Manage Q4 Inventory Carefully: Storage fees increase significantly from October to December. Stock appropriately to meet holiday demand without overstocking. Consider staggered shipments to maintain optimal inventory levels throughout the season.
- Use a Third-Party Logistics (3PL) Provider: Storing some inventory outside Amazon can reduce long-term storage fees while maintaining quick replenishment capabilities. Develop relationships with reliable 3PL partners who understand e-commerce fulfillment requirements.
- Implement Seasonal Inventory Planning: Adjust inventory levels based on historical seasonal trends to prevent overstocking during slow periods and understocking during peak seasons.
4. Fulfillment Fees
Amazon’s FBA fulfillment fees depend on size and weight, increasing significantly for bulky items. A new Inbound Placement Service Fee was introduced in April 2024, charging sellers who ship all their inventory to a single warehouse rather than multiple fulfillment centers.
Strategies to Reduce Fulfillment Fees:
- Optimize Packaging: Redesign packaging to minimize dimensions and weight, ensuring products remain in the lowest fee tier. Even small reductions in package size can lead to substantial savings over time.
- Bundle Products: Create product bundles to increase average order value and reduce per-unit fulfillment fees. Strategic bundling can also enhance the customer experience and differentiate your offerings.
- Distribute Shipments Strategically: Ship to multiple fulfillment centers rather than paying the Inbound Placement Service Fee. While this may increase initial shipping costs, the savings in Amazon fees often outweigh this expense.
- Leverage the Ships in Product Packaging (SIPP) Program: Reduce per-unit fulfillment fees by using packaging that doesn’t require additional Amazon boxes. Design packaging that meets Amazon’s SIPP requirements from the outset.
- Consider FBM for Large Items: For oversized products with high fulfillment fees, Fulfillment by Merchant (FBM) may be more cost-effective. Calculate the total cost of both options before making decisions on fulfillment methods.
5. Referral Fees
Referral fees vary by category but generally range from 8% to 15% of the selling price. However, the Brand Referral Bonus Program allows sellers to lower these fees if they drive external traffic to their listings.
Strategies to Reduce Referral Fees:
- Select the Right Category: Some product categories have lower referral fees (e.g., apparel under $15 now has a reduced 5% fee). Ensure your products are listed in the most advantageous category while still maintaining accurate categorization.
- Drive External Traffic: Enroll in Amazon’s Brand Referral Bonus Program to receive a percentage of referral fees back. Develop off-Amazon marketing channels such as social media, email lists, and content marketing to drive qualified traffic.
- Enroll in Amazon Brand Registry: This unlocks exclusive programs that may offer fee reductions or credits. Brand Registry also provides additional protection against counterfeiters and unauthorized sellers.
- Utilize Amazon New Seller Incentives: If you are a new seller, you can qualify for 10% referral fee rebates on your first $50,000 in sales. Plan your product launches to maximize benefits during this initial period.
- Bundle Complementary Products: Create bundles that increase the average order value while maintaining the same referral fee percentage, effectively reducing the per-item fee impact.
6. Return Processing Fees
Amazon now charges return processing fees for high-return-rate products outside of apparel and shoes. These fees can significantly impact profitability for products with above-average return rates.
Strategies to Reduce Return Fees:
- Improve Product Listings: Provide clear, detailed descriptions, high-resolution images from multiple angles, and accurate size charts to reduce misleading purchases. Include videos when possible to demonstrate product functionality.
- Implement Quality Control: Ensure consistent product quality to minimize returns due to defects. Regular supplier audits and sample testing can help maintain quality standards.
- Monitor Return Rate Thresholds: Amazon applies fees only when returns exceed the category’s average return rate. Track your return rates against category benchmarks and address issues promptly when rates begin to rise.
- Offer Exceptional Customer Support: Quick responses to customer inquiries can prevent unnecessary returns. Provide clear usage instructions and proactively address common questions or concerns.
- Analyze Return Reasons: Identify patterns in return reasons to address root causes. If returns commonly cite specific issues, work with manufacturers to resolve these problems.
Key Takeaways:
Forcing customers to pay return shipping is often necessary to protect profit margins.
Handmade sellers face high FBA and return fees, making it crucial to assess FBA vs. FBM for cost efficiency.
7. Removal and Disposal Fees
Amazon charges fees for removing or disposing of inventory, with increases in the last year. These fees apply when sellers request that Amazon return or dispose of unsold inventory.
Strategies to Reduce Return Fees:
- Improve Product Listings: Provide clear, detailed descriptions, high-resolution images from multiple angles, and accurate size charts to reduce misleading purchases. Include videos when possible to demonstrate product functionality.
- Implement Quality Control: Ensure consistent product quality to minimize returns due to defects. Regular supplier audits and sample testing can help maintain quality standards.
- Monitor Return Rate Thresholds: Amazon applies fees only when returns exceed the category’s average return rate. Track your return rates against category benchmarks and address issues promptly when rates begin to rise.
- Offer Exceptional Customer Support: Quick responses to customer inquiries can prevent unnecessary returns. Provide clear usage instructions and proactively address common questions or concerns.
- Analyze Return Reasons: Identify patterns in return reasons to address root causes. If returns commonly cite specific issues, work with manufacturers to resolve these problems.
8. Advertising Fees
While Amazon advertising can boost sales, inefficient campaigns waste money without generating adequate returns. As competition increases, effective ad management becomes increasingly important.
Strategies to Optimize Advertising Spend:
- Run Targeted Campaigns: Focus on high-converting keywords and audiences. Use negative keywords to prevent your ads from appearing in irrelevant searches.
- Regularly Audit Ad Performance: Eliminate underperforming ads to improve return on investment. Set clear performance metrics and review campaigns weekly to optimize spending.
- Use the Amazon FBA Calculator: Before launching a campaign, calculate ad spend relative to total costs to ensure profitability. Never advertise products with margins too thin to absorb advertising costs.
- Implement Dayparting: Schedule ads to run during times when conversion rates are highest, optimizing ad spend efficiency.
- Balance Organic and Paid Strategies: Develop a comprehensive approach that builds organic ranking while using advertising strategically to boost visibility during key periods.
9. Subscription Fees
Amazon offers Individual and Professional selling plans. Individual sellers pay $0.99 per unit sold, while Professional sellers pay a $39.99 monthly fee regardless of sales volume.
Strategies to Choose the Right Plan:
- Assess Sales Volume: If selling over 40 items per month, the Professional plan saves money. Regularly review your sales volume to determine the most cost-effective plan.
- Downgrade Temporarily if Not Selling: If you’re taking a break from selling or experiencing a significant seasonal slowdown, downgrade to the free Individual plan to avoid unnecessary monthly charges.
- Consider Additional Benefits: The Professional plan provides access to bulk listing tools, inventory reports, and other features that may justify the cost even at lower sales volumes if they improve operational efficiency.
10. Packaging Compliance and Ships in Product Packaging (SIPP) Discounts
Amazon offers discounts for sellers who package products in a way that avoids Amazon’s need to use additional shipping materials. This program aligns with Amazon’s sustainability goals while reducing costs.
Strategies to Reduce Packaging-Related Fees:
- Use SIPP-Compatible Packaging: Ensure your product can ship in its own packaging without extra Amazon boxes or padding. Design packaging with appropriate durability, security features, and professional appearance.
- Work with Your Manufacturer: Design packaging that meets SIPP requirements from the beginning to qualify for per-unit discounts. Include SIPP compliance in your product design specifications.
- Enhance Branding Opportunities: SIPP packaging allows your brand to be seen by more customers during shipping. Invest in high-quality branded packaging that creates a positive unboxing experience.
- Conduct Packaging Tests: Verify that your packaging meets Amazon’s requirements through drop tests and other quality assurance measures before implementation.
Mastering Amazon Fees with Profit Analytics Software
Amazon’s intricate fee system and operational demands can make profitability feel like a moving target. A well-designed Amazon profit analytics software equips sellers with the insights and tools needed to monitor costs, streamline operations, and make informed decisions that safeguard their margins. Here’s what to look for in such a platform and why each feature is critical:
- Real-Time Profit Tracking
Sellers need instant visibility into profits, revenue, and expenses, broken down by factors like Amazon fees, advertising costs, and refunds. This real-time clarity ensures hidden or unexpected costs don’t silently chip away at earnings, giving sellers a true pulse on their financial health. - Detailed Fee Breakdowns
A strong analytics tool should dissect Amazon fees—FBA fulfillment, shipping, storage, and more—down to the order or product level. This granularity helps sellers pinpoint where costs are rising and adjust pricing or strategies before margins shrink too far. - Inventory Health Monitoring
Maintaining the right stock levels is a balancing act. Look for software that tracks inventory in real time and forecasts replenishment needs based on sales trends. This prevents overstocking, which triggers hefty storage fees, and understocking, which risks lost sales or penalties. - Advertising Campaign Insights
With advertising often eating into profits, a good platform should analyze campaign performance, revealing true costs and returns through metrics like ACOS or ROI. This helps sellers cut wasted spend and double down on what drives sales. - Automated Alerts for Key Metrics
Time is money, and manual monitoring can’t keep up. The best tools offer customizable alerts for events like fee hikes, low stock, or listing issues. These proactive notifications let sellers act fast to protect their bottom line. - Reimbursement Identification
Amazon errors—like lost inventory or fee overcharges—happen more often than sellers realize. A solid analytics solution should flag these discrepancies and simplify the reimbursement process, recovering funds that might otherwise slip through the cracks. - Historical Trend Analysis
Understanding how fees and performance evolve over time is key to long-term planning. Look for software that stores and visualizes historical data, helping sellers spot patterns, assess the impact of Amazon policy shifts, and refine their approach. - Multi-Marketplace Support
For sellers branching beyond Amazon—say, to eBay—a platform that unifies profitability tracking across channels is invaluable. This centralizes data, making it easier to compare performance and manage growth across platforms. - Customizable Reporting
Every seller’s priorities differ. A flexible tool should let users tailor dashboards, tag products, and export data for deeper analysis. This adaptability ensures the software fits the unique needs of a business, from private labels to agencies. - Operational Automation
Beyond analytics, features like automated review requests or ad bid adjustments save time and reduce errors. These efficiencies free sellers to focus on strategy rather than repetitive tasks, boosting overall productivity.
Equipped with these capabilities, a profit analytics platform becomes more than just a tool—it’s a strategic partner for navigating Amazon’s complexities. By zeroing in on these features, sellers can stay ahead of costs, optimize their operations, and build a more resilient business.
Take Control of Amazon Fees & Boost Your Profitability
Understanding Amazon’s fee structure is crucial for managing costs and ensuring profitability. By implementing the strategies outlined in this guide and utilizing tools like Sellerboard for comprehensive fee tracking and analysis, sellers can avoid unnecessary costs, maximize operational efficiency, and increase overall profitability.
The most successful Amazon sellers approach fee management proactively rather than reactively. By regularly reviewing fee structures, optimizing inventory levels, improving operational processes, and leveraging analytical tools, sellers can maintain healthy profit margins even as Amazon continues to evolve its fee policies.
Investing time in understanding and optimizing your approach to Amazon’s fee structure is one of the most direct paths to improved profitability. With careful planning and the right tools, the impact of fees on your bottom line can be significantly reduced, allowing your Amazon business to thrive in an increasingly competitive marketplace.
