If you currently use or have been thinking about using the Amazon Multi-Channel Fulfillment (MCF) program for your business, you may be wondering about Amazon’s recent news –– Starting mid-January 2023, Amazon MCF fees are increasing significantly.
You see, Amazon’s MCF program allows sellers to tap into Amazon’s vast network of warehouses and shipping services, thus helping the seller to reach more customers and improve their delivery times. But Amazon’s services come at a cost. A pretty high cost.
Amazon’s MCF fees, shipping costs, and fulfillment center (FC) prices have increased year after year for the last several years. This means that selling on Amazon can significantly exceed your initial cost expectations.
In this article, we’re going to take a closer look at the structure of Amazon’s new MCF pricing and see what other fees they’re adding to their fulfillment services. We’ll also explore an alternative solution to relying on Amazon for your third-party fulfillment needs. But first, let’s explore the answer to ‘What is an MCF order on Amazon?’ Or better yet…
What Is Amazon Multi-Channel Fulfillment?
Multi-channel fulfillment is a service that Amazon provides to merchants.
Most online eCommerce merchants sell through multiple channels, such as their Shopify store, Amazon, and other third-party platforms.
When a merchant wants Amazon to fulfill all their customers’ orders from their various sales channels in addition to Amazon, they use Amazon’s Multi-channel fulfillment service.
It includes features such as fast delivery, multiple software integrations, and up-to-the-minute tracking.
But as we mentioned above, all these features come at an expense. And that expense continues to grow.
Let’s take a look at…
Amazon’s New Multi-Channel Fulfillment Fees
Yet again, Amazon has recently announced that starting on January 19, 2023, they are increasing fulfillment costs for sellers who utilize its Multi-Channel Fulfillment (MCF) program.
Amazon’s 2023 MCF Fee Increases
- 2oz, single unit order: $7.15 in 2023 (50.5% increase from the former fee of $4.75)
- 6oz, single unit order: $7.15 in 2023 (33.6% increase from the former fee of $5.35)
- 1-2 lbs, single unit order: $9.50 in 2023 (24.2% increase from the former fee of $7.65)
- 1-2 lbs, 5 unit order: $4.75/unit in 2023 (53.2% increase from the former fee of $3.10)
These rate hikes are astronomically higher than the 5.5% shipping rate increases by USPS and 6.9% increases by both UPS and FedEx.
Because of this, thousands of online merchants took to social media and Amazon’s Seller Central forum to share their grievances about the new Amazon Multi-Channel Fulfillment shipping costs and fee increases.
Quotes From Dissatisfied Amazon MCF Merchants
- “Faster shipping means nothing when their handling time reaches 1-2 weeks. We’ve been marked down on other platforms because Amazon has failed to ship out MCF orders in a timely manner. It seems to be the last unit of an item that gets ‘stuck’ in fulfillment.”
- “Wow, at some point the shipping cost increases for a product will be so high that people will actually start going back to buying from stores as online will be too expensive.”
- “I thought Amazon wanted to expand their [third-party logistics], but clearly not.”
Amazon noted that these new fees will coincide with significant enhancements to their MCF program, including integrations with platforms such as Wix, BigCommerce, and Adobe/Magento, and improved standard delivery speed—from 7 days down to 5 days. (They’ll continue to offer two-day priority shipping and three-day expedited shipping.)
In fact, here’s what Amazon had to say about their Multi-Channel Fulfillment new fees:
“MCF will continue to provide best-in-class fulfillment services – which are, on average, priced lower than alternatives – with up to 50% discounts on multi-unit orders, and unbranded packaging at no additional cost.”
This sounds great, but what about the added cost burden on the sellers and their customers?
Given that many of these merchants already operate on slim profit margins, they’ll now likely have to pass the new hike in fees onto their customers, thus potentially hurting their sales.
What’s more, Amazon will also be increasing their FBA (Fulfillment by Amazon) fees starting January 17th, 2023.
Amazon’s New FBA Fees
Amazon is shaking things up with its Fulfillment by Amazon (FBA) program and unfortunately, it’s not for the better. Starting January 17, 2023, they’ll be increasing the fees for using their FBA program. This means that businesses will have to fork over more money to keep using this program.
Amazon’s 2023 FBA Fee Breakdown
- New fuel and inflation surcharge –– This fee was introduced last year as a “temporary” measure, but now it’s being rolled into the total FBA fee permanently.
- Increased outbound fee rates –– This fee will increase by $0.22 on average. They’ll also have more specific weight tiers for these fees, so they’ll more closely align with shipping costs.
- Higher removal and disposal fees –– The overall costs for these services have gone up everywhere, therefore Amazon is passing the cost to their sellers.
This is a big blow for businesses who rely on Amazon’s FBA program, simply because they will now have to adjust their profit analysis to see how it will impact their bottom line. It’s a tough pill to swallow, but it’s important to stay on top of these changes to make sure your business stays afloat.
But that’s not the end of Amazon’s new fees for sellers. As it turns out, Amazon’s FBA and Multi-Channel Fulfillment fees are also being affected by new costs associated with using their Fulfillment Centers (FC).
How Much Does an Amazon FC Cost?
According to Amazon, storage fees are being adjusted for the use of space in their fulfillment centers. These fees will be based on the daily average volume for the space your inventory occupies, starting at $0.83 per cubic foot.
Additionally, new fees will be added throughout this year as part of Amazon’s cost increases for their FBA and Multi-Channel Fulfillment services.
FC Fees for Amazon’s FBA Program
- Starting January 17th, 2023, Amazon will be raising its storage fees for items in their warehouses from January to September. Standard-size products will increase by $0.04 per cubic foot, and oversized products will increase by $0.03 per cubic foot.
- During the peak months of October to December, Amazon will increase storage fees for items in their non-sortable network by $0.20 per cubic foot. However, the fees for the sortable network will stay the same.
- Amazon is also charging extra fees for some sellers who have a lot of inventory stored in their warehouses. In other words, they’re implementing a surcharge for sellers who maintain a significant amount of inventory in their fulfillment centers compared to their weekly sales volume. This new cost increase will go into effect starting April 1st, 2023. And no, it’s not an April fool’s joke.
What’s more, Amazon is also adding extra charges for items that have been stored in their fulfillment centers for a long period. For example, if your inventory is stored between 271-365 days, you can expect to see an increase in surcharges.
They will also be introducing surcharges for “aged inventory” that has been stored between 180-270 days, except certain products such as apparel, shoes, bags, jewelry, and watches. These changes are set to take effect on April 15, 2023, so it’s important to keep an eye on your inventory levels and take action before these surcharges go into effect.
It’s also important to keep in mind that these cost increases are a result of Amazon’s fees that have been newly added to the Fulfillment by Amazon (FBA) program. Although they may not have a direct impact on the Multi-Channel Fulfillment fees set by Amazon, it is reported that fulfilling orders through MCF tend to be more costly than using FBA. Regardless of the method used, sellers can expect to see higher costs throughout this year.
Does Amazon Charge Referral Fees on MCF?
When you sell on Amazon, you gain access to a vast audience of potential customers. However, this privilege comes with a cost. Amazon charges a referral fee for each item sold on its platform. This fee acts as a commission for Amazon’s role in connecting you to its customers.
The referral fee is a percentage of the item’s total sales price, including the item cost, shipping, and any gift wrapping charges. The fee varies by category, with a typical range between 8-15%. Additionally, every category has a minimum referral fee, which is typically $0.30 but it may be higher for some products. It’s also worth noting that some categories may require approval before they can be sold.
Now, if you’re a seller in the Multi-Channel Fulfillment (MCF) program, there’s some good news for you. By choosing not to sell on Amazon, you will not have to pay the referral fees that the platform charges to its sellers.
On the other hand, sellers in the Fulfillment by Amazon (FBA) program still need to pay referral fees, but there’s a silver lining. Amazon has announced that these fees will remain the same as they were in 2022, which means that sellers in the FBA program will not see any additional referral fees. It’s perhaps one of the few positives regarding Amazon’s new fees.
That said, it’s understandable that as a seller, you may have relied on Amazon’s Multi-Channel Fulfillment and FBA program as a go-to option for your fulfillment needs. However, with the constant increase in fees year after year, it’s important to consider other third-party fulfillment providers that not only care about your business but also provide better service that can help increase your profits.
More Sellers Are Choosing AMS Fulfillment
Just because Amazon is the most well-known fulfillment provider, it doesn’t mean they are the only option available to you.
If you’re looking for a partner that truly cares about your business and is dedicated to helping you succeed, then AMS Fulfillment is the clear choice.
Here’s why…
High-Value & High-Capacity Service
- At AMS, we go beyond basic warehouse fulfillment services. We’re a partner that can handle complex eCommerce and wholesale/B2B order fulfillment for a wide variety of industries and successful product brands.
Proactive & Dedicated Team
- Our seasoned and experienced team members are passionate about gaining an in-depth understanding of your unique needs, and we’re dedicated to proactively working to meet those needs.
State-Of-The-Art Systems & Technology
- Our in-house team of developers utilizes the latest technology to ensure smooth, automated integrations and efficient warehouse operations.
Shipping Expertise
- Our shipping team procures the best deals for you with all the top carriers. We also rate-shop each package to ensure you’re getting the most affordable and efficient delivery options.
Returns Processing & Back Office Support
- We help streamline the returns process on your behalf, and we also provide complete back-office administrative solutions.
Strong Financial Support
- With scalability to meet your business needs, we can handle large quantities of orders and manage a multitude of value-add special projects with ease.
When it comes to third-party fulfillment, AMS Fulfillment is the partner you can count on to help your business succeed. We invest in and care about your business, and we’re dedicated to delivering the services, expertise, and support you need to thrive in today’s competitive market.
