FBA Fee Freeze, Equal Air Cargo Priority, & AI Challenges

What Amazon Sellers Need to Know This Week

Here’s your weekly roundup of Amazon updates:

• Amazon freezes fee increases for 2025: No new US referral or FBA fees will be introduced next year, keeping costs steady for sellers. Storage fees unannounced.
• Equal treatment for third-party air cargo and Amazon parcels: Amazon commits to giving equal priority to third-party logistics partners and its own shipments.
• AI Challenges at Amazon: Leaked documents reveal major flaws in Alexa’s delayed AI redesign, while the new discount storefront faces scrutiny over accuracy issues with AI-generated product visuals.

Dive into the full roundup to learn how these developments could impact your strategies, selling experience, and bottom line.

Amazon Fee Freeze for 2025

Amazon sellers received a welcome holiday surprise this year on the fees front.

Breaking Down the Updates

In its announcement, Amazon highlighted several changes for 2025, one more notable than the others. 

• Fee Stability: This was the big one! No increases to referral and FBA fees, maintaining cost predictability for sellers. 
• Lower Placement Fees for Bulky: The inbound placement service fee for large bulky products will decrease by an average of $0.58 per unit starting January 15, 2025.
• FBA New Selection Waivers: Fees will be waived for new parent ASINs qualified under the FBA New Selection Program, with up to 100 inbound units exempt per ASIN between December 2024 and March 2025.
• New Seller Incentives: Targeted discounts on everyday essentials and high-demand products will encourage sellers to add new products to the platform.

It is important to note that we are still waiting on the 2025 storage fees announcement. It is yet to be seen whether these fees will change in the new year.

However, for sellers navigating inflation and razor-thin margins, this news has been met with both relief and skepticism.

Mixed Reactions from Sellers

Seller feedback on Amazon’s 2025 fee freeze is divided, ranging from cautious optimism to frustration.

• Appreciation for Stability: Many sellers welcomed the absence of fee hikes, viewing it as a rare relief amid inflation.
• Skepticism and Concerns: Some sellers remain cautious, raising issues such as hidden costs (e.g., mismeasured FBA items leading to higher fees) and demanding more transparency.
• Shifting Market Dynamics: In a newsletter published November 20th, Scott Needham, CEO & Co-founder at SmartScout, pointed out that Amazon’s dominance is less secure than before, and the freeze may be part of a strategy to retain loyalty amidst rising competition and cost of goods.

Actionable Strategies to Maximize the Fee Freeze

To make the most of these changes, sellers should:

• Evaluate New Selection Opportunities: Take advantage of FBA New Selection Program incentives by launching new product categories or items with strong demand.
• Leverage Revenue Calculators: Use fee calculators like Amazon’s or SoStocked’s to optimize pricing and profitability.
• Audit FBA Costs: Regularly review inbound shipments to avoid hidden costs, such as incorrect dimensions or unexpected placement fees.
• Explore Multichannel Selling: Consider diversifying your sales channels to reduce reliance on Amazon while capitalizing on its logistical strengths.
• Invest in Advertising: Use tools like DSP Prime and PixelMe to boost your brand visibility and drive sales across multiple channels. See how Adam Heist used DSP to drive 8.8X ROAS.

This fee freeze offers sellers a chance to plan for 2025 with fewer financial uncertainties. However, it also underscores the need for vigilance in managing operational costs. Competitors like TikTok Shop, Temu, and Shein are actively courting sellers, creating new opportunities for diversified selling strategies.

Flying Fair: Amazon Assures No Priority Bias in Air Cargo Operations

Amazon’s air logistics arm has announced it is now prioritizing equal access to air cargo capacity for both its parcels and third-party freight forwarders. This update comes as Amazon aims to balance its growing dominance in ecommerce logistics with building trust in the broader freight market.

Key Amazon Air Cargo Updates

• Commitment to Equal Priority: Amazon Air Cargo General Manager, Tom Bradley, assured freight forwarders that third-party cargo will not be deprioritized for Amazon’s parcels.
• Expanded Air Cargo Services: Amazon now accepts cargo from third parties, offering various options, including ad hoc bookings, reserved capacity, and full charter services. These services are available in the US, Europe, and India, enabling broader reach for shippers.
• Modernized Fleet for Efficiency: Amazon has been updating its fleet with younger aircraft like the Airbus A330s, which boast lower emissions and higher reliability. Freight forwarders, such as Kuehne+Nagel, are already using Amazon Air to address gaps in ecommerce logistics, like relaying shipments from China to the US mainland via Honolulu.‍
• Opportunities in Underutilized Routes: Amazon’s network often has directional imbalances, with excess outbound capacity from hubs like San Bernardino and Fort Worth Alliance. Forwarders seeking lift in these areas may find more availability with Amazon Air, helping to fill the vacant cargo space.‍
• Addressing Industry Concerns: Integrated carriers like FedEx and UPS have historically prioritized their express shipments during capacity constraints, raising skepticism about Amazon’s own impartiality. However, as Ram Menen, the former head of Emirates SkyCargo, points out Amazon’s ability to forecast demand and allocate resources strategically should reassure forwarders.

Challenges and Concerns

• Competitive Pressures: While Amazon’s entry promises additional capacity and choices for forwarders, its ability to meet demand on high-volume routes like Asia-US may still be limited.
• Operational Hiccups: Recent incidents, such as a Prime Air aircraft skidding off a runway, highlight potential challenges as Amazon scales its air logistics operations.

To make the most of Amazon Air’s expanded services while mitigating potential risks, consider:

• Combining Amazon Air with other carriers to ensure flexibility during peak seasons or capacity constraints.
• Using analytics to forecast demand and align shipments with Amazon’s schedules, particularly in regions with directional imbalances. 
• Reserving capacity on underutilized routes.
• Tracking Amazon’s service levels and being prepared to adapt if operational disruptions arise.

As Amazon continues to refine its air logistics operations, sellers and freight forwarders stand to benefit from improved options and efficiency—provided they stay proactive and informed.

AI Hurdles: Alexa’s Delays and Haul’s Visual Missteps

Amazon’s ambitions to conquer consumer AI are hitting significant roadblocks, as internal challenges with Alexa’s AI redesign and the launch of its discount storefront, Haul, highlight key flaws that could impact both sellers and shoppers.

Alexa’s AI Struggles Revealed

Leaked Amazon documents uncover that the new Alexa faces severe latency issues, delays between request and response, leaving testers dissatisfied. Additional concerns include:

• Limited Compatibility: Up to 3.8 million existing Echo users may need new devices to access the upgraded Alexa.
• Reduced Features: The new version is expected to launch with only 300 “Skills” compared to the 100,000 currently available, limiting user experience.
• Subscription Risks: Potential plans to charge for the new Alexa could frustrate users given its diminished features.

These setbacks could make Alexa less appealing to consumers and hamper sellers relying on the Echo ecosystem for marketing and ecommerce integrations.

Haul Storefront’s AI Image Accuracy Problems

Amazon Haul features AI-generated product visuals that Modern Retail critiques for inaccuracy. Many images fail to represent the products accurately, which could undermine customer trust in the platform.

Seller impact:

• Misleading visuals might increase returns, chargebacks, and negative reviews.
• Sellers could struggle to establish credibility in this competitive discount marketplace.

To mitigate the impact of these AI challenges:

• Adapt Marketing Strategies: Focus on platforms beyond Alexa and Echo, like Amazon Ads or social media, to reach shoppers.
• Enhance Listings: Ensure product descriptions and photos on Haul are detailed and accurate to counteract AI image issues.
• Monitor Feedback: Actively manage reviews and customer inquiries to address dissatisfaction promptly.

While Amazon works to refine its AI offerings, staying agile and focused on delivering value to customers will help sellers navigate this transitional phase.

Other Headlines This Week

1. Amazon Q3 sales milestone: Amazon achieves its second-highest total sales to date.
2. Amazon’s market supremacy and holiday influence: Amazon solidifies its dominance as the lowest-priced US retailer for the eighth consecutive year, while DigiDay Research highlights the platform’s growing importance in marketers’ holiday strategies.
3. Improved Seller News Experience Updates: Key updates include a dedicated homepage with “Featured Stories,” improved categories like Policy & Compliance, and a “Recently Published” section for the latest updates. Additionally, the Amazon News newsletter provides breaking news, leadership insights, AI innovations, and exclusive updates on Amazon’s initiatives.‍
4. AI-powered Alexa expands services: Amazon is reportedly partnering with Uber, Ticketmaster, and Instacart for tasks on the new AI-powered Alexa. These integrations are still in testing, with final features yet to be confirmed.