Important Amazon Seller Updates on Fees, AI, & Lawsuits

What Amazon Sellers Need to Know This Week

Here’s your weekly roundup of Amazon updates:

• 2025 fee updates: Changes to Buy with Prime (BWP), Multi-Channel Fulfillment (MCF), Amazon Warehousing and Distribution (AWD), and Supply Chain by Amazon Managed Service:
  • MCF fees increase by 3.5% on average.
  • Multi-Channel Distribution (MCD) shifts to distance-based fees.
  • New AWD Smart Storage option introduced.
• AI foundation models: Amazon introduced advanced AI platforms at the AWS conference, enabling text, image, and video generation.
• New legal challenges: Amazon faces a lawsuit in D.C. over misleading Prime delivery delays and an investigation in Japan for pressuring sellers to lower prices for better visibility.

Explore the full roundup to see how these updates might shape your strategies, enhance your selling experience, and affect your profitability.

Amazon’s 2025 Supply Chain Fees Unveiled

As Amazon adjusts its supply chain offerings for 2025, sellers face several fee changes across key programs such as Buy with Prime, MCF, and AWD. While these updates reflect Amazon’s ongoing investment in logistics and customer delivery speeds, they also come with implications for sellers’ cost structures.

Key Fee Changes and Their Impact

1. Buy with Prime Fee Updates (Effective January 15, 2025)

• No Increase in Prime Service Fees: Sellers benefit from unchanged service fees.
• Fulfillment Fee Reductions: Some large standard-size units will see lower fees.
• Competitive Delivery Rates: Amazon continues offering 1- to 2-day delivery at rates comparable to standard 3- to 5-day services by other carriers.‍
• Multi-unit order discount: A BWP seller might see reduced costs for fulfilling multiple-unit orders, which should encourage multi-pack offers.

• Holiday Peak Fulfillment Fees: From October 15, 2024, to January 14, 2025, sellers pay additional charges due to seasonal demand.

2. MCF Fee Adjustments (Effective January 15, 2025)

• 3.5% Fee Increase on Average: While smaller units (1 lb or less) remain unaffected, new Amazon fees for heavier items will rise based on size and weight.

3. AWD Changes (Effective April 1, 2025)

• Retiring Integrated Rates: Amazon is rebranding Integrated rates as Amazon Managed rates, continuing to offer discounts AWD storage and transportation fees but discontinuing processing rate savings. See Supply Chain Managed Service Updates below. 
• Introduction of Smart Storage Rates: Sellers maintaining optimal inventory levels across AWD and FBA through auto-replenishment enjoy a 10% discount, with rates as low as $0.43 per cubic foot.
• Separate AWD Processing Fees: Processing fees will be split into inbound ($1.35/box) and outbound ($1.35/box) charges (a net $0.20 increase compared to the previous flat rate of $2.50/box). This should improve cash flow but take a bite out of profit. SoStocked’s Master Carton Calculator can help to increase your units per box, thus lowering your per unit AWD processing costs. ‍
• Distance-Based Outbound MCD Fees: Amazon’s MCD service uses inventory stored in AWD centers to replenish for off-Amazon sales channels. Starting April 1, 2025, replenishment costs to external sales channels will depend on shipping distance, favoring shorter hauls. Dimensional weight applies for loose boxes. Dimensional weight for palletized loads is calculated by the formula length x width x height (in inches) divided by 250.

Importantly, transportation fees for inventory replenished into Amazon’s network will not update to this model, continuing to follow the fixed-rate structure without distance-based adjustments.

LTL/TL Example Calculation (Post-April 2025)

• Pallet Dimensions: 48 x 40 x 42 inches (80,640 cubic inches).
• Divisor: 250 
• Actual Pallet Weight: 223 lbs
• Dimensional Weight: 80,640 ÷ 250 = 322.6 lbs
• Shipping Weight: 322.6 lbs (greater of actual or dimensional weight)
• Distance: 1,100 miles (LTL/TL)

Fee Breakdown:

• Transportation Fee per Pound: $0.27 x 322.6 = $87.10

4. Supply Chain Managed Service Updates

• Discounts include 20% off AWD storage fees and 10% off AWD transportation fees for sellers opting into the Managed Service.
• Eligibility for discounts include using Supply Chain by Amazon services, keeping sufficient inventory on hand and auto-replenishing 70% or more with AWD.
• Simplified Amazon logistics can provide seamless movement from factories to fulfillment centers, increasing speed and reducing complexity.

Leveraging these services, a high-volume seller could save significantly while improving operational efficiency. Always do cost comparisons and stress test the supply chain before making any significant transition.

Strategies to Mitigate Potential Fee Increases

• Optimize Inventory Placement: Use AWD’s auto-replenishment to qualify for smart storage rates and avoid aged inventory surcharges.
• Leverage Multi-Channel Efficiencies: Focus on shorter shipping distances to benefit from the new distance-based MCD fees. Consider strategic adjustments your external warehouse locations to reduce shipping costs.
• Explore palletized shipping: For larger shipments, LTL/TL (palletized) delivery often offers lower per-pound costs than small parcel delivery over longer distances.
• Bundle BWP Products for Fulfillment Savings: Consolidate multiple units into single orders to take advantage of reduced BWP per-unit fulfillment costs.
• Adopt Amazon Managed Services: For end-to-end logistics, these services streamline operations while offering cost savings.

Amazon’s 2025 supply chain fee updates, while challenging, also introduce new opportunities to refine operations and control costs. Sellers who adapt strategically can stay competitive while increasing customer satisfaction with Amazon’s reliable delivery speeds.

Amazon’s Bold Leap into AI

The tech giant has announced its ambitious AI strategy at the AWS re:Invent 2024 conference, showcasing a suite of foundation models (FMs) called Nova, alongside other groundbreaking AI tools. 

What’s New?

Nova Models

Amazon’s Nova models can process text, images, and videos, making them versatile tools for content creation.

• Nova Reel: This AI tool allows users to create six-second videos from a single image or text prompt, with longer videos up to two minutes promised soon.
• Nova Canvas: A new image-generation platform that turns text prompts into visuals, allowing sellers to quickly generate professional-looking product images or marketing materials without hiring a designer. Amazon has also integrated watermarking to ensure responsible usage.
• Other Nova models: The Nova Micro is a fast, low-cost text-only model, while the Nova Lite efficiently handles text, images, and videos at a budget-friendly price. Nova Pro provides a balanced solution for diverse tasks, and Nova Premier, launching in Q1 2025, is a powerful model for complex reasoning and custom AI training.

Bedrock Marketplace

• Amazon expanded its Bedrock platform, offering access to 100 AI models for businesses, including specialized tools for various industries.
• Enterprises can soon choose the best-fit models for tasks like efficiency improvement or customer sentiment analysis.

How Amazon’s Approach Mirrors Its Ecommerce Playbook

Amazon's AI strategy borrows elements from its ecommerce dominance:

• Low Prices: Affordable AI tools make advanced technology accessible to small and medium businesses.
• Wide Selection: Bedrock Marketplace offers diverse models, much like Amazon Marketplace offers a variety of products.
• Convenience: A single interface for accessing multiple AI tools simplifies adoption for businesses.

These advancements not only position Amazon as a serious contender in the AI space but also bring practical applications that sellers and customers should watch closely.

To leverage Amazon’s new AI tools and mitigate any challenges, consider these steps:

• Experiment with Nova Models: Use Nova Reel to create short, engaging product videos and Nova Canvas for professional-looking visuals.
• Optimize Listings with AI: Leverage Bedrock’s AI models Bedrock’s AI models to analyze keywords, customer reviews, and competitor strategies to improve your listings.‍
• Monitor AI Costs: Keep an eye on pricing for AI tools and assess ROI to ensure your investment pays off.

Amazon Faces New Legal and Regulatory Challenges

Amazon is currently under scrutiny in multiple regions:

1. D.C. Attorney General’s Lawsuit

Amazon faces a lawsuit over allegedly misleading Prime customers in low-income D.C. neighborhoods about delivery delays. The lawsuit seeks to reverse the operational delivery changes and secure financial damages for affected customers.

However, the retailer asserts the operational changes were made for worker safety due to targeted attacks on drivers in these neighborhoods. The company maintains that customers were informed about expected delivery times during the checkout process.

Implications for Sellers

• Potential Customer Backlash: Sellers relying on Amazon’s Prime service to attract customers could face reputational risks if Prime members lose trust in the promised delivery times.
• Changes in Prime Membership Numbers: If the lawsuit succeeds, it could prompt more transparency around delivery expectations.
  

2. Japan’s Fair Trade Commission Raid

Amazon Japan is under investigation for allegedly pressuring sellers to lower prices in exchange for better visibility on the platform.

Per Reuters, Amazon Japan did not immediately comment on the investigation. However, it has previously faced similar issues, including a 2018 investigation into its practices around discounting products.

Impact on Sellers

• Sellers on Amazon Japan could face increased pressure to lower prices, which may hurt profit margins.
• The investigation could lead to stricter pricing regulations or penalties, influencing how Amazon operates in Japan and potentially other global markets.

What Sellers Can Do

• Stay Informed About Legal Developments: These legal actions could lead to changes in Amazon’s policies or practices that directly impact your selling strategies.
• Monitor Shipping and Delivery Expectations: If you sell in regions affected by Amazon’s delivery changes, ensure you manage expectations around delivery times as best as possible. 
• Evaluate Pricing Strategies: Sellers in Japan, or those selling globally, should assess how pricing is structured on Amazon platforms. In light of the anti-competition investigation, adjusting pricing strategies might be necessary to remain profitable and competitive.

As Amazon faces mounting legal and regulatory issues, be proactive in adapting to potential changes in policies and market conditions to minimize disruption to your business.

Other Amazon Seller News This Week

1. New language options: Starting November 18, 2024, sellers can submit listings in French or Dutch on Amazon.com.be.
2. Holiday Trends Report: Amazon released its first Consumer Search Trends & Insights Report, offering valuable data ahead of the holiday season.
3. Counterfeit crackdown: Amazon’s Counterfeit Crimes Unit, in partnership with Cisco, dismantled counterfeit operations.‍
4. Product Bundling Policy update: Amazon is addressing seller feedback about the policy’s lack of clarity.