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Selling on Amazon FBA is still worth it in 2024, but only if you go all in with a real brand, precise inventory management, and profit-tracking software. The casual “buy from Alibaba and toss it on Amazon” strategy is dead, because a brand-new per-item placement fee, a new low-inventory surcharge, a 37 percent rise in cost per click since 2020, and pricing pressure from Temu (where identical products sell for up to 40x less) have combined to squeeze margins in ways they never were 2 years ago.
This is a solo episode of the My Wife Quit Her Job podcast where I walk through every major Amazon change that landed in the first quarter of 2024, the exact fee mechanics, the refund math most gurus hide, and my honest take on whether Amazon FBA is still a viable business in this environment.
Here is the full breakdown: the new fees, the Temu problem, the refund math, and the criteria that determine whether Amazon FBA is right for you right now.
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Table of Contents
Key takeaways
- Amazon rolled out its biggest and most complex fee increase ever in 2024, headlined by a brand-new per-item inbound placement fee (21 to 68 cents on standard items, 2.16 to 6 dollars on oversized).
- The new low-inventory surcharge penalizes you for carrying too little inventory relative to sales velocity, on top of the existing long-term storage fees for carrying too much.
- Amazon PPC cost per click has climbed from 71 cents in 2020 to as high as 97 cents in 2024, per AdBadger data, and further increases are expected.
- Temu is selling identical unbranded products for up to 40x less than Amazon (a bath mat sold at 46 dollars on Amazon was 1.07 on Temu). Apparel-category Amazon sales are reportedly down 30 percent year over year.
- Average Amazon return rates: 12 percent overall, 15 to 20 percent for electronics, up to 35 percent for high-fashion apparel. Seller Central does not deduct refunds from your revenue display, so guru income claims are inflated by 20 to 35 percent.
- Amazon still owns over 50 percent of US e-commerce and the Prime badge remains an unmatched conversion lever, which is why FBA is still worth it for serious brand-builders.
- You must run third-party accounting software (like Sellerboard) and inventory reimbursement software (like Getida) to be profitable in 2024.
What are Amazon’s new 2024 FBA fees?
Amazon’s 2024 fee overhaul added two brand-new charges (a per-item inbound placement fee and a low-inventory surcharge) on top of the existing referral fee, FBA fulfillment fee, and storage fees, making it the most complex fee change in Amazon’s history. On average FBA fulfillment fees dropped about 19 cents per standard item, but that reduction is dwarfed by the new charges layered on top.
The per-item placement fee runs 21 to 68 cents on standard-size items and 2.16 to 6 dollars on oversized items, and it is charged in addition to the existing 15 percent referral fee and the FBA fulfillment fee. That single change alone can wipe out the margin on low-priced items that used to work fine.
The bigger structural problem is opacity. These fees are calculated from historical demand data that Amazon controls and does not fully expose, which makes them nearly impossible to predict in advance and difficult to dispute after the fact.
The low-inventory surcharge, explained
The low-inventory surcharge penalizes sellers who consistently carry less inventory in Amazon warehouses than their unit sales suggest they should. If you typically sell 1,000 units per month and let inventory slip to 500 units, Amazon charges a fee on those 500 units for being under-stocked.
Amazon’s stated justification is that adequate inventory lets Amazon place stock closer to customers across the fulfillment network. In practice, sellers now face fees for holding too much inventory (long-term storage) and for holding too little (low-inventory surcharge) at the same time, with no clear middle ground that fits every SKU.
For anyone who has run a real warehouse, maintaining precise inventory levels across dozens or hundreds of SKUs is already extremely difficult, and I have run Bumblebee Linens’ warehouse for over 16 years. Getting penalized for imperfect inventory is a new tax on the operational reality of the business.
How much have Amazon PPC costs risen in 2024?
Amazon PPC cost per click has climbed from an average of 71 cents in 2020 to as high as 97 cents in 2024, a roughly 37 percent increase in 4 years, per AdBadger’s data. Ad costs are projected to rise further this year, which compresses margin on any product that depends on sponsored ads to be found.
Amazon PPC is technically an auction, driven by supply and demand, but sellers have reported inflated suggested bids from Amazon on new keywords. Every time I add a new keyword, Amazon’s recommended bid tends to be well above what actually clears. Whether that is model design or an intentional lever, the practical effect is that ad spend keeps climbing whether you want it to or not.
How Temu is hurting Amazon sales in 2024
Temu sells the exact same unbranded China-factory-shipped products that Amazon third-party sellers offer, at prices that can be 10x to 40x lower, with free 7 to 15 day shipping direct from the factory. That direct-from-factory price advantage is now visibly pulling price-sensitive buyers off Amazon, especially for generic and lightly-branded goods.
The concrete example I found: a bath floor mat listed at 46 dollars on Amazon was 1 dollar 7 cents on Temu, the same product, 40x cheaper. Two-day Prime shipping is a real value, but a 40-dollar savings will convince most buyers to wait 2 weeks.
The reported downstream effect: colleagues in my ecommerce mastermind circles say Amazon apparel-category sales are down roughly 30 percent year over year, and generic-goods categories are seeing similar pressure. If your product has no brand and no unique value proposition, Temu is going to win the price-comparison shopper.
What Temu means for your Amazon strategy
You cannot source generic products from China and dump them on Amazon anymore and expect to be profitable. The only defensible model going forward is a real brand with a unique value proposition, packaging, and design that Temu simply does not have.
The second requirement is owning your customer relationship. Your own branded website, an email list, and a real customer database are what let you sell more to the same buyer and survive a marketplace where price alone is going to lose.
The ugly truth about Amazon FBA refunds
Amazon’s average return rate is 12 percent across all categories, 15 to 20 percent for electronics, and as high as 35 percent for high-fashion apparel, and Seller Central does not deduct refunded orders from your displayed revenue number. That single accounting quirk is why every YouTube and Instagram Amazon “seven-figure income” screenshot is inflated by 20 to 35 percent.
When a refund happens, the cost stack is worse than most sellers realize. Amazon immediately refunds the customer before the product comes back, charges you a return processing fee, and does not return your FBA fulfillment fee. That fulfillment fee is gone forever on every returned unit.
The product itself is frequently returned unsellable. One year an Amazon customer bought several dozen of our Bumblebee Linens napkins, obviously used them for a party, and returned them soiled for a full refund. We ate the closing fee, the FBA fee, and the full cost of goods because the napkins could not be resold.
How to actually track Amazon profit in 2024
Amazon accounting software like Sellerboard is now essentially mandatory to track true profit, because Seller Central alone hides fees and does not deduct refunds from revenue displays. Without it, every reporting decision is based on an inflated top-line number that can be 20 to 35 percent off reality.
You should also track return rates per SKU, and write down inventory as it comes back unsellable. If you sell a category with a naturally high return rate (apparel, electronics, personalized items), the return rate needs to be baked into unit economics before you decide to scale spend on that product.
Amazon inventory mistakes: why you have to watch them like a hawk
Amazon regularly loses, damages, and mis-counts inbound shipments, and Amazon will not proactively tell you or reimburse you unless you file a specific claim yourself. Every experienced seller has stories: partial shipments arriving with boxes missing, damaged units silently disposed of, “lost” inventory that reappears months later and gets deducted back out of your account.
The specific pattern that burned me: Amazon lost several boxes of our goods, reimbursed us for the inventory, then 3 months later “found” the boxes and promptly deducted the reimbursement from our account. We had lost 3 months of sales on that inventory in the meantime and had nothing to show for the reimbursement cycle.
The practical fix is a reimbursement software service. Getida is the one most Amazon sellers use to track shipments, discrepancies, and lost units, and it auto-files reimbursement claims on your behalf. New users can get 400 dollars in free reimbursements through the link in this episode’s show notes on my podcast episode page.
Malicious activity is still constant
Listing hijackers, knockoff sellers, black-hat competitor attacks, and false intellectual property claims are all still happening in 2024 despite Amazon’s stated efforts. If you have a successful listing, expect at least one attempt per quarter, and have a documented brand registry plus a plan for filing removal requests.
Is Amazon FBA still worth it in 2024?
Yes, Amazon FBA is still worth it in 2024, but only for sellers who commit fully, build a real brand, and run the operational systems required to survive the new fee structure. The casual seller with a generic product and no accounting software is going to lose money on the fees alone.
The reason FBA is still worth it: Amazon owns over 50 percent of US e-commerce, and the Prime badge (free two-day shipping) is still an unmatched conversion lever. There is no other marketplace where a product can be discovered at that volume with that level of buyer trust.
The commitment required to win: know your true profit down to the SKU with Sellerboard, maintain precise inventory levels that avoid both storage and low-inventory penalties, use Getida for reimbursement tracking, defend your listing against hijackers, and build your own website plus email list so Amazon is one channel and not the whole business.
Frequently asked questions
Is Amazon FBA still profitable in 2024?
Yes, Amazon FBA is still profitable in 2024 for sellers who run a real brand, track profit with third-party accounting software like Sellerboard, and manage inventory precisely enough to avoid both storage fees and the new low-inventory surcharge. Casual sellers with generic products and no profit-tracking system typically lose money on the fees.
What are Amazon’s new 2024 seller fees?
Amazon’s 2024 fee changes include a brand-new per-item placement fee (21 to 68 cents on standard items, 2.16 to 6 dollars on oversized), a new low-inventory surcharge on under-stocked SKUs, and rising PPC costs (from 71 cents CPC in 2020 to 97 cents in 2024 per AdBadger). Standard FBA fulfillment fees dropped about 19 cents on average, which does not offset the new charges.
How does Amazon’s low-inventory surcharge work?
Amazon’s low-inventory surcharge charges a fee on units when your in-stock quantity is consistently lower than expected demand. For example, if you typically sell 1,000 units per month and only have 500 units in Amazon warehouses, Amazon applies a fee on those 500 units for being under-stocked.
Is Temu really killing Amazon sales?
Temu is applying real price pressure on Amazon, especially in generic and unbranded product categories, because Temu often sells the identical China-factory product for 10x to 40x less with free direct-from-factory shipping. Independent ecommerce operators are reporting Amazon apparel-category sales down roughly 30 percent year over year.
How high are Amazon return rates in 2024?
Amazon’s average return rate is about 12 percent overall, 15 to 20 percent for electronics, and up to 35 percent for high-fashion apparel. Seller Central does not deduct refunds from displayed revenue, so gross-revenue income claims are typically inflated by 20 to 35 percent versus real net revenue.
What software do Amazon FBA sellers need in 2024?
At minimum, Amazon FBA sellers in 2024 should run Sellerboard (or an equivalent) for true profit tracking that accounts for hidden fees and refunds, plus Getida (or an equivalent) for inventory reimbursement tracking that auto-files claims for lost and damaged units. Both are essentially required to run a profitable FBA business at scale today.
Should I still start an Amazon FBA business?
You should still start an Amazon FBA business only if you are willing to build a real brand, run profit-tracking software from day one, maintain your own website and email list, and commit to going all in on the operational discipline required by the 2024 fee structure. The dip-your-toes-in approach that worked a few years ago is no longer viable.
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