Amazon is one of the largest retail companies in the world, with revenue of over 500 billion dollars per year. And it’s likely that you are part of that statistic. But if you’ve ever tried selling something through Amazon then you’re no stranger to the heavily inflated FBA fees, which results in reduced earning potential when selling thorough Amazon. The FBA fees cover the cost of packaging and shipping your products from an Amazon Fulfillment center, but they are so high that you may be wondering if it’s even worth it.
Selling through Amazon gets a huge volume of eyes on your products, so finding ways to reduce your FBA fees can help you be profitable selling through the platform. In this guide, you’ll find out everything you need to know about FBA fees, and our 6 top ways to reduce costs.
What Are FBA Fees?
FBA stands for Fulfillment By Amazon. This fee is determined by the size and weight of the item that you’re selling.
FBA fees cover the storage, packing, and shipping of your order. Amazon has different tiers based on the product’s size that will dictate the cost, and it will appear as a flat fee included in your payment. These costs can fluctuate over time, so keep an eye out for any changes so you know what to expect.
Why Are Amazon FBA Fees So High?
Amazon FBA fees can be objectively high, but as a seller you may be making Amazon FBA mistakes that are costing you more. The primaryreason why sellers experience high FBA fees is that the items being sold are large and heavy.You’ll be charged more for these items because they will place you in a higher price bracket.
Another reason you could be experiencing high fees is that your items were measured inaccurately. Given that this fee is based on the dimensions of a product, an inaccurate reading could result in sellers being charged more than they should.
With Amazon measuring millions of items each day through their Cubiscan system, it’s not entirely surprising that they occasionally mismeasure an item. So we recommend requesting that they remeasure your product if you think you may be overcharged.
Many argue that Amazon is being greedy by having such high fees. But considering the logistics that they take care of, including the storage and shipping of your products and increased online visibility, it’s understandable that they should be adequately compensated.
How Can You Reduce These Costs?
If you are over paying extortionate FBA fees, there are a few steps you can take to minimize the costs.
Have The Product Remeasured
As mentioned, if you feel that your current FBA fees are too high then the first step is to have your product remeasured.
There are loads of different reasons why the package has been miscalculated, from packing mistakes to system errors.
When you add human error to the mix, there’s bound to be some mistakes
If you believe that there has been a miscalculation, the first step that you should take is to conduct a Fee Preview Report. This will give you an estimate of the FBA fee. Plus, it will include the dimensions that Amazon has recorded for your product. That way, you can see whether these measurements stack up to your readings.You might find a discrepancy, where the measurements you have recorded are significantly lower than the ones Amazon has. This discrepancy will be particularly important if this is the difference between the Amazon size tiers. If your product falls into one of the lower tiers than you should be paying a reduced FBA fee.
Once you have done this, you can use Seller Support to start a case and have Amazon rescan the product. If the Cubiscan registers a different measurement, your FBA fees will be lower.
This also means that if you sell the same item again, you won’t have to go through this process another time. Instead, these new measurements will be registered with Amazon.
Consider The Tier Sizes
As stated, Amazon calculates the FBA charge according to various size tiers.If you wish to avoid high FBA fees, you should look into the borders of these tiers and aim tosell items that are just below a border.This will allow you to continue to sell substantial products without paying the inflated costs of the higher tiers.Bear in mind that these tiers are subject to change, including both the classification of each tier and the fees associated with them. So keep an eye on the tiers so you’re aware of any changes.
Sell Smaller Products
If you have become frustrated with these fees, you can simply sell lighter and smaller products.You will still have to payFBA fees for these items. However, because they have been placed on a lower size tier, it will help you save some cash.This technique won’t work for everyone, as it will depend on what type of items you sell and if you’re able to make changes to your products.
Get Items Packaged Together
Bundles are a great way of overcoming the issue of high FBA fees.You can sell a group of items in one package, which can save you a fortune when it comes to FBA fees. This is because the package dimensions will likely be lower. Not all items will go together. If you put a random assortment of unrelated items in one bundle, it’s unlikely that anyone will buy them. Instead, you should try to match items that complement one another. For example, you can sell cooking utensils together or sets of office stationary.
Pay Attention To Your Inventory
Amazon allows sellers to closely monitor their inventory. All you have to do is go to the Seller Central section of your Amazon account. From there, click on the Performance Dashboard. On your Performance Dashboard, you can perform an array of actions in relation to your inventory. Amazon will give you inventory suggestions, which will let you know when to restock or when you have too much inventory. By tracking your inventory, you can limit the number of products you have at the Amazon Fulfillment center, which helps to lower your fees.
Remove Unfulfillable Items
When an item is returned to Amazon, its quality will need to be evaluated to determine whether or not the item is of good enough quality to be resold. If products are deemed unworthy of resale, they will remain in storage.
These items are known as “unfulfillable products.” Try to avoid these items building up at Amazon Fulfillment because you can be charged storage fees.
To see whether you have any unfulfillable items goto Seller Central. From there, go to your Inventory Health. If you have any items here, you can choose what you want to do with them. You can either have them sent back to you, at your own expense, or disposed of. But make sure you pick an option to avoid paying storage fees.
Amazon’s FBA fees can be frustrating for sellers and cut into your profits, but understanding how they work can help you reduce them. These strategies are really simple, but they’re effective to help you lower your fees, and boost your overall revenue when selling on Amazon. Once you’ve figured out how to minimize FBA fee costs as much as possible, the next step is to increase profits. Consider using a top Amazon seller tool like Helium 10 or Jungle Scout to optimize you prescnece on the marketplace and grow your business.