The Hidden Costs of Amazon’s New Inbound Placement Fees: How It Can Reduce Your Profits

Amazon’s new update to its inbound placement fees is making waves in global e-commerce. These fees were designed to improve warehouse management and better organize inventory, but they also come with hidden costs. 

Let’s dive into these hidden costs and explore ways to manage them effectively.

What Are Amazon’s Inbound Placement Fees?

Inbound placement fees are charges Amazon imposes when you send inventory to a fulfillment center that is not the most optimal location for your products. Instead of distributing your goods to various warehouses closer to your customers, Amazon might choose a single or limited number of fulfillment centers, which could lead to higher storage and handling costs. 

To “correct” this placement, you can opt for Amazon’s Inbound Placement Service, but this comes with additional fees that can quickly add up.

Key Factors Affecting the Hidden Costs Of Inbound Placement Fees

Two crucial elements that impact the hidden costs of inbound placement fees are commodity inspection and export declarations. 

Here’s how they come into play:

1. Commodity Inspection:

Before goods are shipped to Amazon fulfillment centers, they often undergo commodity inspection. This process ensures that products meet regulatory standards and are free from defects. 

However, the costs associated with inspections can be significant, especially for international shipments.

2. Export Declarations:

An export declaration is a document submitted by exporters at the port of departure. It is necessary for international shipments, to ensure that goods comply with customs regulations and are correctly classified. The cost related to export declarations can be substantial.

The Hidden Costs Associated With Commodity Inspection and Export Declaration

1. Commodity Inspection Certificate:

Whenever bamboo/wooden items are shipped from China, the commodity inspection certificate has to be presented at customs for clearance. This commodity inspection costs around ($40-$100) for each destination which is a considerable cost.

2. Export Declaration in the Supplier’s Name:

Sometimes, suppliers want to declare the goods on their company name as an exporter which adds an extra cost of $50 per declaration (separate for each destination) in case of LCL inventories.

The Impact Of Both Hidden Costs 

Considering a shipment split between 5 locations:

• Commodity Inspection Certificate Cost x 5
• Export Declarations Cost x 5

This adds up to a total additional cost of at least $1,000! These fees could equal or even surpass your freight costs for smaller orders.

Navigating Solutions to the New Fees

1. Consolidate Shipments:

Work with your forwarder to consolidate shipments into one container. This can help minimize the extra costs associated with splitting your shipments.

2. Single Location Consolidation:

Instead of sending your products to multiple FBA centers, try consolidating them into one location. Evaluate if the savings on inbound placement fees outweigh the costs of commodity inspection certificates and export declarations.

3. FOB Terms:

Consider working under Free on Board (FOB) terms, where your supplier handles the shipping issues. However, be aware that this might increase the FOB rate.

4. Ensure Accurate Export Declarations:

Collaborate with experienced freight forwarders to ensure that export declarations are completed correctly and promptly to avoid customs issues.

5. Negotiate with Suppliers:

Discuss these hidden costs with your supplier. You might be able to negotiate for them to cover some of these charges, or increase your order quantity to better absorb these costs.

Final Thought: 

Amazon’s new inbound placement fees bring both opportunities and challenges. While the aim is to enhance efficiency, the hidden costs associated with commodity inspection, and export declarations cannot be overlooked. 

By understanding and managing these hidden expenses, you can save significant money and enhance your logistics efficiency.

Don’t let hidden fees cut into your profits. Reach out to Eleevate Logistics today, and let us help you navigate these challenges with expert solutions.