Amazon FBA is the first stop for most sellers to enter the Amazon platform. Many conveniences allow sellers to choose this model first, but the shortcomings of FBA are also obvious. High storage costs and inflexible prices make sellers feel a headache.
Reducing Amazon FBA fees is not a dream. Although Amazon will not give discounts, sellers can change the way they use the service to avoid unnecessary fees. At the same time, ensure that all data is correct and request a refund for Amazon's wrong charges.
Here are 5 key tips to reduce FBA fees:
sea freight from china
1. Optimize products that are at the boundary of size and weight
FBA logistics fees are charged in segments according to the product size established by Amazon.
Segmented charges by size and weight means that products that are slightly larger or heavier than a certain segment value will be charged a higher fee.
For example, a large standard size product weighing 16 ounces has a logistics cost of 3.48 US dollars, while a 17 ounces of the same size product has a cost of 4.90 US dollars. This additional cost of $1.42 is 41% higher than the cost of low-end products. If you can sell 10,000 items a year, you will have to pay an extra $14,200.
Therefore, the first step to reduce costs is to check which size and weight segment the product belongs to. An extract of Amazon's current product size segmentation and FBA delivery fees is shown in the following figure:
sea freight from china
Find products that are at the lower end of the size or weight segment. It is best to choose simple packaging and try to be light and small.
2. Make the necessary preparations in advance
FBA has many requirements for distribution services, including inbound transportation, product packaging, barcode labels, etc. On Seller Central, there are only 15 pages of product packaging, covering general requirements for all products, as well as specific requirements for products such as liquids, powders, glass, batteries, plush toys, sharp objects, clothing, jewelry, baby products, etc. .
Many sellers are greedy for convenience and deliver to Amazon to do all the packaging and preliminary preparations. This approach has its drawbacks:
Amazon will charge a fee for each unit product.
It takes longer for the inventory to become a purchaseable item.
If the seller uses the manufacturer's barcode instead of the Amazon FNSKU barcode, it may cause the inventory to be "mixed" with the inventory of other sellers.
These costs can be reduced or avoided. Brands and private label sellers can require manufacturers to print Amazon's barcodes directly on product packaging and add plastic bags or other packaging at the factory to meet FBA requirements.
If the quantity of goods is large, the seller can carry out the preparatory work by himself or hire a professional FBA preparation company. Although it also requires a certain cost, it is far lower than Amazon's charges.
As for the contents of the box, the seller can fill in the information online or upload files, or create a reusable template. You can also use an inventory management system that handles FBA inbound transportation. It should provide Amazon with information about the contents of the box through the API.
If none of these options are feasible, you can also use specialized tools to generate all the information you need.
3. Clear unfulfillable inventory
If a customer returns an item, Amazon will check the item to determine if it can be sold again. Products that cannot be sold again are called "unfulfillable". If they are not removed, they will remain in the logistics center and continue to incur storage costs.
To find out if there is unfulfillable inventory, run the Inventory Health report in Seller Central and check the "Total unsellable quantity" column. For unfulfillable inventory, choose to destroy or return it to the seller.
Or, choose to use the new "FBA Grade and Resell as Used" or "FBA Liquidations" (FBA Liquidations) plan, the related costs will definitely be cheaper than endless accumulation of FBA storage costs.
sea freight from china
4. Review FBA invoices
There may be differences in the fees charged by Amazon, and sellers can apply for compensation according to the FBA inventory compensation policy.
Amazon's FBA compensation pays for the retail value of the affected inventory, not just the cost of the inventory.
However, the seller needs to apply for a claim within a limited time. For Amazon FBA American inbound goods, sellers have 9 months to reconcile, and the EU has 6 months. Sellers can claim for lost, damaged, processed or deleted unit products and wrong customer refunds within 18 months.
For the overcharged delivery fee, the seller only has 90 days to file a claim.
Sellers should review inventory, transaction and expense data to find differences, and file a claim to Seller Support within the specified time limit, upload the required information, such as bills of lading, proof of delivery, invoices, packing lists and other documents.
Although applying for a claim is a complicated and time-consuming process, it is worth the money. Sellers can also hire other companies to carry out the FBA fee claim process.
5. Manage inventory
Amazon sets storage fees, storage limits, and inventory performance index (IPI) in order to allow sellers to maintain low inventory levels to make full use of their warehouse capacity.
sea freight from china
Amazon's storage fees mainly have three levels:
1) The monthly storage fee from January to September is US$0.75 per cubic foot for standard-size products.
2) The monthly storage fee from October to December is US$2.40 per cubic foot for standard-size products.
3) In addition to the above-mentioned costs, the inventory stored in the logistics center for more than one year will be charged at $6.90 per cubic foot per month, or $0.15 per unit, whichever is higher.
It must be noted that the monthly storage fees for oversized items are different.
The method of reducing FBA storage costs is not troublesome.
Step 1: Identify existing inventory problems
First, find out the current inventory problem. The IPI score can be used to roughly understand the inventory management situation. Inventory Age, Inventory Health and Recommended Removal report more detailed information, which can be used to identify which ASINs need or will need to pay long-term storage fees.
sea freight from china
The seller can then submit a removal or processing order to avoid fees. You can set up automatic clearance of inventory, you can also reduce the price or set a discount to promote sales.
Sellers can also remove inventory with slow sales or accumulating storage fees. It should be noted that the FBA removal fee is also a non-negligible expense.
Step 2: Actively manage inventory
FBA storage of excessively long inventory is very expensive, so it is best to plan ahead to avoid this. While avoiding long-term storage costs, the standard storage costs are reduced to a minimum.
During peak shopping seasons, FBA fees will more than triple. Sellers can also avoid removal fees by reducing FBA inventory.
The above are some tips for sellers to use as a reference to manage inventory carefully and creatively.
sea freight from china
