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Ready for yet another Amazon fee? Amazon drops another bomb; this time in the form of a Digital Services Tax (DST).
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What is the Digital Services Tax?
The DST is a new charge being levied on companies like Google, Amazon and Apple. Naturally, Amazon is passing these costs on to sellers. This fee impacts sellers in Canada, the UK, France, Italy, and Spain, and it’s layered with several complexities.
Who Will Be Affected?
The Canadian government recently implemented a DST, joining the ranks of the UK, France, Italy, and Spain. To account for this, Amazon will introduce a new digital services fee starting October 1, 2024. The fee will be incurred if you sell in Canada or your business was established in one of the listed countries.
Here's how it works:
- Canadian Sales: If you sell on Amazon Canada, you’ll be charged a 2-3% fee on referral fees, regardless of where your business is based.
- Business Establishment: If your business is established in Canada, the UK, France, Italy, or Spain, you’ll also face 2-3% referral fees on sales in the US and Mexico.
- UK and France: Businesses established in the UK or France will face the same 2-3% on FBA fulfillment on top of referral fees.
Breaking Down the Fees
Here are some real examples:
- American Business Selling in Canada: If you sell a $15 product on Amazon Canada, you’ll pay your regular referral and fulfillment fees plus an additional 2% DST fee. This will cost you an extra $0.05.
- French Business Selling in the US: If you’re a French company selling in Amazon US, you’ll pay 3% on referral fees and another 3% on fulfillment fees for that same $15 product, which amounts to $0.17.
- Canadian Business Selling in the US: Starting October 1, 2024, a Canadian business selling a $15 item in the US store will be charged a 3% digital services fee ($0.07) on Selling on Amazon fees ($2.25).
- UK Business Selling in the US: A UK business selling a $15 item in the US store will be charged a 2% digital services fee ($0.05) on Selling on Amazon fees ($2.25) and a 2% digital services fee ($0.66) on FBA fees ($3.30), $0.11 total.
New Ad Fees Starting August 15th
From August 15th, you’ll notice a new line item in your ad invoices. DST fees will also apply to Amazon advertising. For every ad dollar spent, you can expect to add an extra 2 to 7 cents per click in the affected countries.
How to Offset These Fees
While many of these fees are unavoidable, there are strategies to save in other parts of your business. By looking at your business from multiple angles, you can find savings opportunities to offset the increases. Here are two action items you can implement:
- Reimbursement: Reclaiming the money that Amazon owes you due to its mistakes can boost your margins by reducing the impact of inventory shrinkage. Start your free reimbursement audit.
- Fee Prevention: Our new forward-looking inventory audit predicts fees before they hit, helping you avoid unexpected storage and low inventory costs. Start your free inventory audit.
- Brand Referral Bonus: Use advanced ad optimization and retargeting tools to drive external traffic to Amazon and earn up to 10% back with Amazon's Brand Referral Bonus. Start your free ASIN audit
Despite these new fees, there are ways to protect your profitability. With a proactive strategy, you’ll be better equipped to roll with the punches to thrive in the face of anything Amazon may throw at you.
