“how to save on amazon fba shipping costs
It can really lower your Amazon FBA fees. You won’t let Amazon give you a discount, but you can change the way you use the service so you don’t incur unnecessary charges. You should also make sure all your data is accurate and claim back fees for any undiscovered mistakes Amazon makes.
Small changes can save you a little on every product you store in Amazon’s warehouses and more on every order Amazon fulfills for you. Multiply that by the thousands of units stored and thousands of orders fulfilled, and these small changes can save a lot of money.
Here are six key strategies to help you lower your FBA fees and add those savings directly back to your bottom line.
1. Ensure product dimensions are accurately recorded
Some different FBA fees are based on size and weight, including shipping and storage fees. Your product dimensions are already on Amazon’s system, but they are not always accurate. If Amazon thinks your product is bigger than it actually is, it will charge you more.
Why is your data inaccurate? To understand this, it’s useful to first understand how Amazon sets your product size. When you set up a new ASIN and send your product to an FBA warehouse for the first time, Amazon will scan the product using their Cubiscan system. They may then rescan your product from time to time to check if the dimensions have changed.
Despite using a high-tech measurement system, it’s not uncommon for Amazon’s measurements to vary significantly between scans. It’s not clear why this happened, but it could be air entrapment in the bag, sticky tape sticking out and confusing the scanner, or just operator error. Remember, Amazon won’t tell you if they’ve changed your product size, they’ll just update them and start charging you differently.
So what should you do? First, run the Expense Preview report. In addition to the FBA fee estimate, this also shows the full size and size class of all your products. Check them against your own data and determine if any measurements are inconsistent with your own data, especially if it pushes them to a higher level.
Then submit a case to Seller Support to rescan your product. Amazon will put your product back in the Cubiscan and (hopefully) correct the size. This should ensure you get the correct fee in the future, and you can also request a refund for overcharges on past orders – more on that later.
Check your product sizes regularly, as Amazon can update them at any time, or sign up for a listing monitoring tool to stay informed of any unexpected changes.
2. Improve items of various sizes and weights.
FBA fulfillment fees first depend on the size of the product, as specified by Amazon’s product size class. Products under 3 lbs that are classified as “”regular size”” are only paid according to the weight range they fall into. Products weighing more than 3 lbs are also subject to variable weight charges. There will be a $2.50 delivery fee for small standard size products up to 10 ounces in weight. Due to the size and weight classes used, additional charges may apply for products that are slightly larger or heavier than the top – sometimes considerably more. Let’s look at another scenario. A large, standard-size product weighing 16 ounces will be charged a $3.48 delivery fee, while the same size product weighing 17 ounces will be charged $4.90. That’s $1.42 above the bottom line, a 41% increase. If you sell 10,000 products per year, you’ll save $14,200, which may be adjusted slightly to fall into the lower end of these ranges. Therefore, one of the first actions all sellers should take to reduce fees is to determine which size and weight range their products fall into. Current product size tiers and FBA fulfillment fees can be viewed here. Below are excerpts from the book. The first item to search for is something at the very bottom of the size or weight range, such as those in the example above. How do you reduce the size of such items? Since selling items online is different from selling in a typical brick-and-mortar store, it is crucial to choose elegant product packaging that is as small and light as possible. However, if you want to save FBA costs quickly, try to modify the critical product in one of the following ways: The empty space in the box should be reduced or eliminated. Replace larger cushioning material with thinner cushioning material. Instead of keeping accessories in their own area, place them in the product. Some user assembly is required to get the product to fit in the box better. Making these adjustments can take some effort and effort, but as long as you sell the product, the investment will pay off. Remember, entire industries have been transformed by transforming packaging and merchandise to reduce size and weight – look at IKEA furniture.
3. Do all the necessary preparations in advance
FBA has many, many requirements on how sellers use the service. These cover inbound shipping, product packaging, barcode labels, and more. To give you an idea of how wide these requirements are, there are 15 pages on Seller Central for product packaging alone, covering general requirements for all products, as well as general requirements for liquids, powders, glass, batteries, plush toys, sharps, clothing, jewelry, baby products, etc.
Many sellers will take the simple option of paying Amazon for all the necessary packaging and getting it ready for them. This has some big drawbacks:
Amazon charges a fee for every item they have to prepare for you.
It will take longer for your inventory to be available for purchase.
If you choose to use manufacturer barcodes instead of Amazon FNSKU barcodes, your inventory can be “”blended”” with other sellers’ inventory.
4. Get unfinishable inventory from FBA
When a customer returns a product, Amazon will inspect it and decide if it can be resold. Products that are in such poor condition that they cannot be resold are called “”unfulfillable””. They will stay in the fulfillment center and incur storage fees unless you take action.
To find out if you have any unsellable inventory, run the Availability Report in Seller Central and check the “”Total Unsellable”” column. If you have any unsellable inventory, you can choose to either destroy it or return it to you.
Alternatively, you can choose to use the new FBA Grading and Resale or FBA Liquidation programs. All of these options have associated fees, but they will certainly be cheaper than charging for FBA storage indefinitely.
5. Review and file claims for your FBA invoices.
Many FBA sellers are unaware that there may be inconsistencies in Amazon’s fees and that they are eligible for repayment under the FBA inventory reimbursement policy. The following are the most important details to be aware of.
The average annual charge discrepancy, in our experience, varies between 1% and 3% of yearly FBA sales. In other words, claiming all of the FBA reimbursements you’re eligible for could boost your net profit margin dramatically. Another way to look at it is that out of every 100 units shipped to FBA, one to three will have a discrepancy along the route.
Keep in mind that Amazon pays the retail value of the affected inventory, not only the cost of the inventory, when providing an FBA reimbursement. As a result, you receive both the profit you would have made on that inventory and the money you spent to purchase it.
You only have a certain amount of time to file claims. In the United States, Amazon allows 9 months to reconcile Amazon FBA inbound shipments, and 6 months in the European Union. For lost, damaged, discarded, or removed units, as well as improper customer refunds, you have 18 months to file a claim. You only have 90 days to file a claim for overpriced fulfillment fees.
It is your responsibility to review your inventory, transaction, and fee data for irregularities and make claims before the deadlines pass. What evidence do you have to back up your claims? You’ll need to file cases with Seller Support to alert them to the discrepancies and supply any extra information they need. Documentation such as bills of lading, proof of delivery, invoices, packing slips, and more may be requested.
Seller Support may dispute your claims or pay a lower compensation than you requested. To establish the case for a full refund, you’ll need a clear understanding of the charge and reimbursement regulations, as well as how to effectively reconcile your data.
Auditing your data for FBA charge recovery chances and filing claims with Amazon is a time-consuming and difficult procedure, but it’s typically well worth it. If you don’t want to do it yourself, there are companies who specialize in recovering FBA costs on on behalf of sellers.
6. Manage your inventory to minimize storage fees
Amazon’s use of storage fees, storage limits, and the Inventory Performance Index (IPI) provides a clear picture of how they want sellers to use FBA. All of these factors encourage sellers to keep inventory levels low so Amazon can fully utilize its warehouse capacity. If you treat Amazon’s fulfillment centers as personal storage units, you’re going to be heavily penalized.
Amazon’s storage fees are divided into three main levels:
From January through September, the monthly inventory storage fee for standard-size products is $0.75 per cubic foot.
The monthly inventory storage fee for standard size products from October to December is $2.40 per cubic foot.
In addition to the above fees, the long-term storage fee for inventory that has been in the fulfillment center for more than a year is $6.90 per cubic foot per month.
Please note that the monthly storage fee for oversized items varies, with a long-term storage fee of $0.15 per item, which applies if it is calculated higher than the quantity-based fee.
You can see that the total cost for 1 cubic foot of storage varies between $0.75 in January (products stored less than a year) and $9.30 in October (products stored more than a year). This is the same space but will cost you 12 times more.
Some sellers want to make inventory management as simple as possible and send bulk stock orders to FBA directly from the factory. This can be very expensive, especially if sales are slower than you’d like. The good news is that reducing your FBA storage fees is easy.”
