4 Ways to Save Money on Your Amazon FBA Fees
The Amazon FBA is one of the world’s most advanced fulfillment networks. Through the Fulfillment by Amazon program, sellers store their products in Amazon’s fulfillment centers. When customers order an item, the team at the center gets, packs, and ships the product. They provide customer service as well.
The FBA was put into place with the goal of helping sellers scale their business and reach more customers.
Since the FBA streamlines the whole shipment process, it is a cost-efficient way of using the platform for selling your products. However, you can also save more money and get more from your inventory, especially if you are shipping from China when you follow the tips below:
1. Create your FBA shipping plan
Making your shipping plan is one of the steps you should never skip when you join the FBA.
The FBA shipping plan is the datasheet that informs Amazon how many units you are shipping to them and where they will need to send these units.
Many sellers ship their inventory to only one fulfillment center. However, Amazon can decide which centers they will allocate these products. They often do this to test various markets to find a location where they can sell more of your goods.
Whether Amazon chooses a fulfillment center for convenience or sales-related reasons, if they stock your inventory at a location that does not work for your customers, you may be charged additional fees.
To be on the safe side and avoid possible extra charges, create a shipping plan with your target market in mind and send this to Amazon as soon as possible.
2. Be smart when selling add-on products
As a seller, you have the right to label some items as add-ons, which you can sell with products that have lower prices. Because of this, you will have higher sales and profits.
However, Amazon has the final say in categorizing products as add-ons. Presently, the company has a vague price threshold on goods that are best featured as add-ons. Because of this, they can re-classify these items anytime, especially when you increase their prices due to popularity.
When the add-on is sold as separate, main merchandise and a customer buys this with another product, Amazon adds the fulfillment by FBA fees of the two items together. As a result, you will pay higher charges.
To save money, it is best that you research first and ensure any add-ons you decide to sell are profitable and worth the extra fees.
3. Manage your inventory methodically
Under the FBA, products that have been sitting in a fulfillment center for more than 365 days are subject to long-term storage charges. These items will be subject to a per-unit long-term storage fee for each month.
These fees can be quite costly, especially if you have a large stock of unused merchandise. Paying for them can result in a loss in potential revenue. As such, it is crucial that you practice good inventory management and ship only enough products to meet the forecasted sales demand.
In case you still have a lot of products in the center before the next inventory cleanup, avoid the long-term storage fees by submitting a removal order.
If you send a timely removal order, your products won’t incur any charges even if they are not physically removed before the cleanup date.
4. Work with a third-party FBA prep and shipping service provider
Some shipping companies offer dedicated FBA services. These third-party firms take over your inventory once they pass local quality assurance and prepare them for shipment following established FBA guidelines.
Your shipping partner will then consolidate your products with other FBA-bound shipments and deliver them to the assigned fulfillment center.
When you choose the right freight forwarding company that offers FBA services, you will save a lot of time and money on the whole shipping process. You will also be sure that Amazon will not reject your inventory, thereby sparing you from further stress and expenses.
If you want to avoid paying more than you have to under the FBA, follow the tips above. Always stay updated with Amazon’s terms of service as well to manage all related costs efficiently.
As Chief Product Officer for Shipa Freight, Paul Rehmet is responsible for translating the vision of Shipa Freight into an easy-to-use online freight platform for our customers. Formerly Vice President of Digital Marketing for Agility, Paul managed Agility’s website, mobile apps, content marketing and online advertising campaigns. In his 25-year career, Paul has held various technology leadership positions with early-stage startups and Fortune 500 companies including Unisys, Destiny Web Solutions, and US Airways. Paul has a Masters in Software Engineering from Carnegie Mellon University and a Bachelor of Computer Science from Brown University. Paul is based in Philadelphia.