Amazon Fees: Retrospective Insights and 2025 Predictions with Chelsea Cohen

Andy Splichal:

Welcome back to the Make Each Click Count podcast where we dive deep into the world of e commerce and digital advertising. I'm your host, Andy Spikel, founder of True Online Presence and author of the Make Each Click Count book series. Today's episode is titled Amazon Fees retrospective insights and 2025 predictions. We're thrilled to have Chelsea Cohen, co founder of SO Stock, joining us today. Chelsea, who started selling on Amazon in 2014 and now she helps sellers manage inventory and avoid costly stockouts. Today she'll be sharing her insights on Amazon fees and how they've evolved, what they mean for sellers, and most importantly, her predictions when it comes to these fees in 2025. Welcome to the show, Chelsea.

Chelsea Cohen:

Awesome. Thanks so much for having me.

Andy Splichal:

All right, Chelsea, let's jump right in. When what I think really resonates with many Amazon sellers tuning in. Because you have boots on the ground, experience in your field changing faster, let's really dive into what people want to know is over the years, how have you seen Amazon's fee structure change and what are some best practices to deal with them? Because a lot of my clients get really confused.

Chelsea Cohen:

Yeah, yeah. Fees have changed a lot. The entire landscape of Amazon has changed a lot. When I started there were the long term storage fees kicked in at about a year. They were set, I believe I want to say 60 cents per unit, something like that. So that's first and foremost, it came about in 2020. Things started to shift in the direction of just having way too much stock at Amazon. So Amazon had placed those restrictions and now they're starting to really want to be profitable with fba.

Chelsea Cohen:

So that's kind of the biggest swing is they used to lose money. This last year they became break even. I think that they're moving towards being profitable with FBA as a, as a whole.

Andy Splichal:

So, so stocked it helps kind of keep track of, of these fees. How, how does it work?

Chelsea Cohen:

Yep. So first and foremost we are A forecasting tool, inventory forecasting being our area of expertise. When you forecast for inventory, obviously you're forecasting for sales first and foremost. So we forecast sales to tell, tell users what to order. And then as these fees started to come into play, as three pls kind of came about, it became really important to understand what is, you know, what liabilities are you creating when you have overstock, for example. So because we can forecast for those sales and we look eight to 12 months into the future, I have become obsessed with understanding Amazon fee policy. And so we've taken those policies, you know, particularly the monthly storage and the aged inventory, and we've baked the policies into our forecast so that you can understand on a monthly basis how much are you going to be incurring in storage fees based on your current forecast.

Andy Splichal:

Now, I'm curious if your system, because I'll have clients that are like, you know, we get paid this every two weeks and all of a sudden it's not this. And I don't know why, because I sold as much, you know, how does your system kind of bring some of those fees to light and make it, make it clear for clients why Amazon's charging them, what and when?

Chelsea Cohen:

Yeah, so Amazon has inventory age and with the inventory age, you can tell how much you're going to be charged. So there is a report that can be pulled, but you're only seeing what you're going to be charged in the next period for aged inventory. So if you're not using a system like SO stock, you'll pull a report called the FBA inventory report, which is very data rich, but that will tell you what you're paying this month. That report also gives you the age of the inventory. So we pull the inventory age for, from the API and inventory. If you have a thousand units, you could have 500 aged, you know, nine months, 400 aged at six months, and then the other hundred aged, you know, at 30 days. So we'll take that data and we'll be able to map it on a timeline based on these different ages to help you to understand based on the age of the product and how much you're being charged in fees, what are you going to incur in fees. So it's very transparent in terms of, you know, if I'm being charged this much this month, I can hover over that and see how old my inventory is and what those fees are.

Andy Splichal:

So I mean, you got stock outs, you got overstocking, you got Amazon's long term storage fee. I mean, it starts to add up.

Chelsea Cohen:

Yeah.

Andy Splichal:

What are key strategies that sellers could implement right away in 2025 to help protect margins?

Chelsea Cohen:

Yeah, yeah. So a couple of them that come to mind. One is that if you're incurring fees right now, taking a look at, you know, that reporter at the software and being able to see what are those fees that you're going to be incurring and creating that visibility for yourself, then you put that over into your marketing plans. Instead of just a best sellers campaign or revenue driven campaign, you want to get into slow sellers and aged inventory to create a profitability campaign by way of moving that stock, recovering first of all, recovering that cash flow and at the same time avoiding those thousands of dollars in fees.

Andy Splichal:

So I mean, margin protection, it's crucial to the success of a business. A lot of times it just feels, you know, you're selling, you're selling, but you're just really feeding Amazon and their fees.

Chelsea Cohen:

Yeah.

Andy Splichal:

What are some smart margin saving strategies you can recommend?

Chelsea Cohen:

Yeah. So beyond you know, controlling that aged inventory, one of the things that we're seeing that has worked and identifying is on the packaging side of things, you know, being diligent about, you can go about it two different ways. We actually have a process. We have a free tool@soo.com tools which you can plug in your ASIN data, your packaging information and it will look at. If I downsize into the next lower size tier, what does that look like? How many, you know, fractions of inches do I have to reduce on which side to be able to get into a lower size tier? You know, what is my. Because we use dimensional weight. Right. One of the opportunities came in that Amazon at the beginning of the year split split weight tiers from half a pound to, to a quarter pound.

Chelsea Cohen:

So that presents some opportunities for dimensional weight shifts. So it's just a matter of, you know, looking at your catalog and seeing do I have an opportunity to downsize my product or maybe even request a remeasure? Because Amazon will let you request a remeasure where you just basically plug in an ASIN and they'll re cuba scan your product and potentially get you into a lower size tier.

Andy Splichal:

Yeah, it's interesting. What is that URL again? That'd be very helpful.

Chelsea Cohen:

Yeah. So stocked.com forward slash tools.

Andy Splichal:

All right. We'll have to, to put that in the show notes for sure now. I guess if it's smaller and smaller, how often are, I guess Amazon putting in a wrong dimension and charging you more?

Chelsea Cohen:

I mean, it's not uncommon I can't say, you know, percentage wise what it is, but, you know, we see it in, you know, probably at least a quarter of the cat catalogs that we scan. One of the, you know, one of the things that we'll see sometimes that, you know, you've got a product that is, you know, let's say, a pound, and they put it at 1.01 pounds. So those are surefire, you know, cases for requesting a rescan. And then sometimes you can get money back from the overcharges, the fulfillment fees that are charged. And that's actually something that seller investigators from Carbon 6. You know, so stocked was acquired by Carbon 6 in 2022. But being able to go back and say, hey, you overcharged me. Fulfillment fees, you know, we rescanned the product.

Chelsea Cohen:

They'll let you look back 90 days, and they're not. The success rate is not nearly what it is for, you know, shipping reimbursements. But being able to request that money back is. Is another piece to the resizing puzzle.

Andy Splichal:

Now, I mean, it's a little bit late for this as we're getting into the holidays, but I guess one of the concerns with trying to keep a tight inventory is that you run out of inventory, especially during peak times. Yeah, I guess. I mean, how do you balance between not having, you know, way too much where you're getting charged storage fees and. And being able to fulfill customer orders.

Chelsea Cohen:

Yeah. So there's something that we like to stick with that, that is a tool inside of so stocked. We call it min max restocking. And so that is looking at what is the minimum amount of inventory that you want at Amazon, and what is the maximum amount. And always forecasting based on that, know, let's say 35 days minimum. And I want to go no more than 90 days maximum. And so you kind of set those parameters and you have to account for your marketing because if you just basically take, you know, I'm selling five units a day over 90 days, that will be the basis of, you know, your forecasting. But if you're going to have a lightning deal and have an extra thousand units, that also needs to be considered within your forecast.

Chelsea Cohen:

So that's one of the ways that I think if you were to adopt that strategy, would help you to successfully avoid some of those fees.

Andy Splichal:

So, I mean, it's been unpredictable the last three years. I mean, they've been changing fees, kind of changing the rules all the time. Yeah, you know, I mean, you've been in this and looking at the fees, it's it's a company looking into 2025. Where do you think Amazon fees are headed?

Chelsea Cohen:

Yeah, so there's been a huge push this year for Amazon warehousing and distribution. I think we're going to continue seeing that. One of the challenges that's occurring is it's can be unreliable in terms of turning over that inventory on time. You know, inventory not getting into, into fba. I think we're going to continue to see a push in that direction. It's possible that there will be more pushes, more incentives away from using, you know, outside carriers. So potentially some incentives to switch more of your supply chain over to Amazon. You know, AWD had, was heavily incentivizing people to stop using their 3pls.

Chelsea Cohen:

So it's possible that we see kind of something in the direction of more, you know, more incentives. And you know, as Amazon starts to. Continues to launch these, these different programs, you start to see that every Amazon wants as much of your business as possible. The only program that they don't have, they don't have any way of getting you to pay them for your overhead. Right. Your salaries and things like that. But they launched a, you know, a sourcing, you know, a sourcing plan. So as much as Amazon can get, you know, your more of your logistics, more of your supply chain, I think they're going to be pushing in that direction because they're really pushing heavily on developing that side of things.

Andy Splichal:

Do you think that should scare a small retailer?

Chelsea Cohen:

I think you're giving a lot of power over to Amazon. So, you know, people who moved over to awd, they're facing a lot of, you know, challenges right now. And I think that getting rid of your 3 PL completely is never a good idea. We've seen a lot of that just from a financial perspective, having to maintain, you know, inventory levels at FBA, inventory levels at AWD and then at the 3 PL level, it gets a bit cumbersome. But putting all your eggs in the Amazon basket, I think is what, you know, what is scary. Being completely, yeah, completely beholden to Amazon is the thing that should, you should put a second thought there.

Andy Splichal:

So I mean, I was just thinking this might, for somebody tuning into this and who's not selling on Amazon, this might just scare them away.

Chelsea Cohen:

Yeah, right.

Andy Splichal:

What would you. I mean, Amazon, I mean, it's a huge marketplace, but Amazon takes a lot of fees. How can you optimize your. Not just sales but your profits if you're just starting to sell on Amazon?

Chelsea Cohen:

Yeah, everything starts with sourcing and a Friend of mine, AFU lobby, who has a company called Hanu Worldwide, he always says, you know, you make or basically you make or lose money before your inventory checks in. Right. You need to start from the supply chain. The most expensive parts of your business have to do with inventory moves or inventory, you know, not moving. So the first step, I would say, if you're going to source a product, make sure that that product is as small as possible. Meaning that you don't have extra packaging. Right. Not meaning that you shouldn't source big products, but don't waste that extra space.

Chelsea Cohen:

You know, if you've got, we had a product that we ordered, the product was like this, but the bag was like this. So finding ways to, before you even launch a product, reduce those fulfillment fees, get more units per carton. A lot of people just take what the supplier asks, you know, gives to them. And there can be a big difference, especially when you're using Amazon warehousing and Distribution, which charges per box. There's a huge difference between having 30 units per carton or 20 units per carton. Because every time you pay a per box fee, the smaller, you know, the less units you have per carton, the more you're going to pay per unit on that fee, if that makes sense.

Andy Splichal:

Yeah, no, of course. And what about that retailer who's already successful but they're not selling on Amazon, whether they, you know, they have their Shopify store, their big commerce store, their WooCommerce store, and they're thinking of moving into Amazon.

Chelsea Cohen:

Yeah. The first thing to do is to, I think, familiarize yourself with all of the fees and, you know, really take a look at your supply chain currently. Because what you're doing right now may not make sense, you know, on Amazon, look at, you know, should you use fba? Maybe they're already using FBA to fulfill their Shopify, for example, what are those, those fees? Sending your inventory in and not realizing there's an inbound placement fee or, you know, sending inventory in without knowing what the fulfillment fees are, knowing all of those fees and pricing that out and then looking at what the mark, what's happening on the, in the market, what are the competitor pricing so that you have an idea before you make the transition of what your profitability will be and where it might bite you.

Andy Splichal:

And are there any resources out there? Where could they go to to find those fees?

Chelsea Cohen:

Yeah, so you'll find a, you know, you'll find them throughout Amazon policy. But it's very hard, you know, to isolate and locate.

Andy Splichal:

No, that's an understatement there.

Chelsea Cohen:

Yeah, exactly. So one of the things I did, you know, with Carbon six and Vanessa Hunger, who is, you know, a, a very well respected expert in the community, is we put out a fees white paper. You know, this year was the second year we put it out. We'll put out a new one with the new fees that launch next year. So if you went to carbon6io forward slash fee stack, that's where you'll get a white paper. But we'll all. We also did two webinars to kind of. The first one is explaining the fees and the second one is a workshop about things you can do to reduce or mitigate fees.

Andy Splichal:

Well, that's great. We'll put the links for those in the show notes as well.

Chelsea Cohen:

Awesome.

Andy Splichal:

Now, as the saying goes, learn from others mistakes if you don't want to make your own. So Chelsea.

Chelsea Cohen:

Yeah.

Andy Splichal:

You must have seen some classic feeblenders. What lessons can our listeners learn from those?

Chelsea Cohen:

Yeah, so first and foremost, not, not having your inventory team and your marketing team being in sync. That's the number one reason for stock outs, for example. And then you get into, now we have low inventory fees. And so creating that link where the marketing team gives the inventory team information on what they're doing to market to avoid those low inventory fees and those stock out challenges. And then the inventory team also needs to give data to the marketing team. And that data would be here are the products that are at risk of stocking out and here are the products that are at risk of incurring a lot of excess storage fees so that you can make those, those avoid those fees. Because we've seen, I've seen eight figure sellers, you know, where we project over a hundred thousand dollars in fees over the next eight months if they don't make a change. So it's a huge, it can be a huge problem that people just don't, don't see because it's not made readily available on the platform.

Andy Splichal:

It feels like Amazon almost hides them in a way.

Chelsea Cohen:

Yeah, they make it. Their dashboards aren't very user friendly. The data isn't pulled together very well and they don't project things. So they'll give you, you know, what the trend has been or they'll give you what you're going to be paying in this next cycle. It's hard to find that information. It's not, you know, right in your face. Because if, you know, if it was like we've, you know, again, we've had people who $14,000 in fees in the next 30 days. Amazon isn't, you know, that's not on the homepage, you know, of your seller central.

Chelsea Cohen:

They're not screaming that. So having something that gives you that information provides the urgency and the data to, to get your marketing team moving towards profitability in terms of selling through inventory and avoiding those fees.

Andy Splichal:

Yeah. So Amazon, I mean it's going to keep evolving and sellers who prepared, they're gonna, they're gonna thrive. What are some of your biggest tips to keep sellers ready in 2025?

Chelsea Cohen:

Yeah, so to keep, obviously, you know, you have to have systems like, you know, we already talked about marketing and inventory being coordinated, but also taking a step back and auditing your business and reassessing based on the new fees. It's something that should be done on, I would say on an annual basis at least something called unit economics, which is basically, you know, look back at what you actually paid over the last, let's say four months worth of, you know, of doing business, all the fees, what were the shipping cost averages, all of these things to figure out are these products actually profitable? And when people have large catalog, that can seem daunting. So I would say just do it on your top sellers because you know that you're putting out a lot of cash to keep reordering those products and they have, you know, a greater, you have a less of a margin of error when the impact can be so big because you're selling such volume.

Andy Splichal:

Yeah. So let's get into so stocked are you guys are a subscription based service based on ASIN monthly. And exactly what services are you guys providing?

Chelsea Cohen:

Yeah, so subscription based. It's a software based on the size of an account in terms of orders per month. And so we, and it's, you know, we get, have three, six and 12 month contracts where one of the things that we do first and foremost is to see, you know, we'll do an audit of your account. You know, what is, what is the history of stockouts? What are the overstock fees that, you know, we're projecting you to have, how many products are currently incurring fees. And then from there, you know, getting into your business and understanding what is your workflow. Will so stock actually work for you? How do we customize it to what you need it to do and even streamline, you know, your processes to improve both the profitability of your inventory as well as, you know, just the time that you spend.

Andy Splichal:

So when it comes to software, I mean it's always is this worth it right? I mean every, all of us have so many different SaaS, subscriptions, merchants.

Chelsea Cohen:

Yeah.

Andy Splichal:

Are there any numbers on what you guys. Actually so stocked actually saves customers by being having a subscription, right?

Chelsea Cohen:

I would. I mean, it varies, you know, you know, if someone is really good at managing their inventory, they don't have a lot of storage fees, then, you know, it is mostly time saving and you know, saving in terms of the accuracy of not, you know, having stock outs. I wouldn't say there was a percentage necessarily, but we've had cases where, you know, someone had tens of thousands in, you know, storage fees or they had, you know, a habit of running out of stock or doing air shipments. You know, an example being there's someone, someone who we worked with, they were doing air shipments because they just didn't have a system in place. Then they were able to switch to ocean freight and they saved 75 cents per unit doing that. So you can save in different, you know, different areas based on really having a good inventory system, you know.

Andy Splichal:

So I mean, it seems more and more that being on Amazon is almost a big company game. But I'm thinking one hand that your software would be good for smaller companies because they don't have the resources to really do this internally or, or the time. But then I can see it, it's good for large companies too who might be spending what, what did you say before, like $40,000 on fees coming up or.

Chelsea Cohen:

Right. Yeah.

Andy Splichal:

What's your ideal client?

Chelsea Cohen:

Yeah, so I would say, you know, seven figure sellers do really well with us in terms of, you know, that kind of that space. We work with private label and wholesale in terms of, you know, retail arbitrage tends to be something where you purchase something and then you sell through it and you're not restocking. So we don't tend to see a lot of those. But you know, when you start adding different marketplaces, you start add, you know, increasing the number of products in your catalog. You have complex supply chain. Those types of things work really well with so stocked because were very customizable and can conform well to a lot of different supply chains and processes.

Andy Splichal:

Well, this has been great, Chelsea.

Chelsea Cohen:

Yeah, sure.

Andy Splichal:

The listeners have liked it. I mean, you've given a ton of information.

Chelsea Cohen:

Awesome.

Andy Splichal:

Is there any final takeaway you can leave us with today?

Chelsea Cohen:

I would say that, you know, looking at your business, obviously there's a lot of different things that we talked about that you can do the first thing, you know, because you always want to take one thing away. You can't ever do everything all at once. So the one thing that would have the the greatest impact immediately would be to take a look at your aged inventory. You know, like I mentioned, you know, you can use a product like so stocked. You can also download the FBA inventory report and see it has your inventory age. So you can prioritize the oldest inventory and start developing a sales campaign to move that inventory. And that would be a first step that I would advise to, you know, stop the bleeding on the products that you have that are, you know, aging and incurring fees.

Andy Splichal:

Well, this has been great. Thank you again for joining us today.

Chelsea Cohen:

Of course. Thanks so much for having me.

Andy Splichal:

For listeners, remember, if you like this episode, please go to Apple Podcasts and leave us an honest review. And if you're looking for more information connecting with Chelsea or so stock, you'll find the links in the show notes below. In addition, if you're looking for more information on growing your business, check out our all new Podcast Resource center available at podcast. Make each clickcount.com where we've compiled all of our different past gets by show topic and included each of the contact information in case you would like more information on any of the services discussed during previous episodes. Well, that's it for today. Remember to stay safe, keep healthy and happy marketing. I'll talk to you in the next episode.