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Amazon Will Open Three Fulfillment Centers and Increase Storage Fees For Merchants

Merchants using Fulfillment by Amazon services are set to incur higher fees.

The company announced Wednesday that it plans to open three new fulfillment centers this year. Two of those will be located in California, in Eastvale and Tracy, while the third will be in Joliet, Illinois.

Akash Chauhan, Amazon’s vice president of North American operations, spoke about how the company’s great relationships with each city impacted expansion decisions.

“We have found an abundance of talent in Joliet and we are excited to bring a new fulfillment center to the city and create 2,000 great full-time jobs with benefits. This community and the elected officials throughout the city and state have been very supportive of Amazon and we thank them for helping make this possible,” he said.

Amazon’s fulfillment center openings aren’t positive for everyone though. The company recently notified Fulfillment by Amazon merchants about increases in storage fees by the end of the year.

According to a company statement, “Retailer clients will pay more than double this holiday season to have their products in Amazon’s facilities, and that will force some to be more selective and strategic about how much inventory they ship and when.”

The fee will increase to $2.25 per cubic foot for standard-size products and $1.15 per cubic foot for oversize products, which is much more expensive than $0.75 per cubic foot and $0.57 per cubic foot charged last year.

Fulfillment by Amazon merchants will have to be more cautious about this price jump in terms of their products and customers.

Scot Wingo, executive chairman of ChannelAdvisor Corp, advised retailers about this e-commerce change.

“Sellers need to get in front of the curve on this and have a deep understanding of which products are most appropriate for FBA; how they tie Amazon to their supply chain to optimize the situation, and how they will manage shipping to non-Amazon channels in this new, more expensive FBA world,” he said.