Amazon’s New Inbound Policy 2024: The ‘Five Identical Boxes’ Rule and Its Financial Impact

Amazon has recently unveiled a significant update to the Inbound Placement Service Fee policy. This isn’t merely a small adjustment?—?it’s a substantial change that could significantly affect third-party sellers and their profitability.

“To qualify for the Amazon-optimized inbound option with no inbound fee, your shipments must include at least five identical cartons or pallets per item. Each carton or pallet must contain the same quantity per item and the same item mix.”?—?Amazon Seller Central

While Inbound Placement Fees are not new, the latest update introduces a critical change that could make it challenging for many sellers to steer clear of substantial new fees.

The “Five Identical Boxes” Requirement: A Significant Policy?Shift

Amazon-Optimized Shipment?Splits:

The most impactful change in the recent policy update is the introduction of the “five identical boxes” requirement to qualify for the Amazon-optimized shipment splits option, which offers lower or no inbound placement fees.

The availability of the Amazon-optimized option is influenced by various factors, such as product type, regional demand, and potentially other criteria that may not be disclosed. Even if you meet all these conditions, you may still not see the option for optimized or fee-free inbound shipments.

Key Considerations:

Partial or Amazon-Optimized Shipment Splits: Sellers can now send inventory to multiple inbound locations at a reduced or zero fee.

Qualification Criteria:

To qualify for the no-fee Amazon-optimized option, your shipments must now include at least five identical cartons or pallets per item.

Identical Contents Requirement:

Each carton or pallet must contain the same quantity per item and the same item mix.

For instance, if you’re shipping 100 units of a popular kitchen gadget to Amazon’s fulfillment centers, those units must be packed into at least five identical cartons, each containing the same number of units?—?say, 20 gadgets per carton.

If you only send four cartons, even if they are identical, you won’t qualify for Amazon-optimized shipment splits, and you may incur inbound placement fees. To avoid these fees, ensure that at least five cartons are identical in both size and content.

Partial Splits Option: If you opt to send inventory to a partial number of inbound locations (usually two or three), you will incur a reduced fee.

For sellers who regularly ship large quantities of the same item, the Amazon-optimized option can streamline logistics and minimize fees. By meeting the requirement to send at least five identical cartons or pallets per item, you can avoid inbound placement fees altogether. This is especially beneficial for sellers who focus on a few high-volume products, allowing them to pack shipments efficiently and send them to multiple Amazon fulfillment centers without worrying about additional costs.

For example, if you consistently ship 100 units of a best-selling kitchen gadget, you can divide these into five identical cartons, each containing 20 units. This approach qualifies you for Amazon-optimized shipment splits, ensuring your products are distributed across multiple fulfillment centers at no additional cost. This not only saves money but also helps ensure that products are closer to customers, potentially improving delivery times and customer satisfaction.

Additionally, the partial splits option, which allows sellers to send inventory to a reduced number of inbound locations at a lower fee, can benefit those looking to balance cost savings with logistical efficiency. This is particularly useful for sellers with regional demand, as it enables them to optimize their inventory distribution without incurring the full placement fee.

Overall, sellers who can meet the Amazon-optimized placement criteria stand to gain from lower fees, improved inventory distribution, and potentially faster delivery times, making this option highly attractive for those who can align their operations with these new requirements.

FBA Inbound Placement Service Eligibility Guideline

The Hidden Costs: How This Update Could Impact Your Profit?Margins

The new requirement of at least five identical cartons or pallets per item to qualify for the Amazon-optimized option presents significant logistical challenges, especially for smaller sellers with limited shipping budgets or those with diverse product lines.

For sellers with smaller quantities, meeting the five-carton requirement may be difficult. This could force them to either overproduce or ship fewer products using more expensive, non-optimized methods (such as minimal shipment splits), leading to higher inbound placement fees.

Important Note: When shipping inventory to a single location, you should expect to pay an inbound placement fee ranging from $0.21 to $0.68 per unit for standard-size items and from $2.16 to $6.00 for large, bulky products.

Here’s an example to illustrate how not qualifying for Amazon-optimized shipment splits could impact smaller sellers:

Small Seller with a Single Product?Line

Product: Small standard-size item (e.g., a phone case) Shipment: 500 units, each weighing 8 oz Carton Packing: 50 units per carton (10 cartons total) Amazon-Optimized Shipment Splits (No Fee)

Requirement: Five identical cartons Fee per unit: $0 Total fee: $0 Partial Shipment Splits (Two or Three Locations)

Fee per unit: $0.12 to $0.21 Total fee: $60 to $105 per shipment Minimal Shipment Splits (Single Location)

Fee per unit: $0.21 to $0.30 Total fee: $105 to $150 per shipment

If the seller does not qualify for Amazon-optimized shipment splits and incurs partial or minimal placement fees, the profit per unit drops by $0.12 to $0.30. While this may seem like a small amount per unit, it can add up significantly with larger volumes.

For instance, on a shipment of 1,000 phone cases, the seller could lose $120 to $300 in profits depending on the fees incurred. This reduction in profit can be substantial, particularly for those operating on slim margins. This example underscores the importance of qualifying for Amazon-optimized shipment splits to maintain profitability.

For sellers with diverse product lines, the challenge is even greater. These sellers often ship a variety of products in smaller quantities, making it difficult to meet the five-carton requirement for each item.

To avoid fees, they would need to either increase the number of units per product (which may not align with market demand) or consolidate shipments in ways that could disrupt their usual operations.

Both scenarios can result in higher costs, inefficient inventory management, and potential delays in getting products to Amazon fulfillment centers, ultimately impacting your bottom line.