27 Tips on How to Build FBA Strategy
FBA is considered one of the most influential levers third-party sellers can utilize to improve Marketplace performance, but without a proper FBA analysis, many sellers will see their profitability fall short of projections. While some sellers are seeing profitable returns through FBA, many are still looking for new revenue channels to drive bottom line growth.
BLOG POST: How to Become Successful on Amazon Seller Central with FBA
Earlier this week, we hosted a two-day seller course with former member of the Amazon Seller Services Team, Pat Petriello, and Stitch Lab’s Co-Founder, Jake Gasaway, to talk about FBA profitability and how to effectively expand into new sales channels.
There were a lot of questions we didn’t get a chance to answer – so here they are now with answers from Petriello.
Q1. Does Amazon require a certain amount of money or units to be moving per day (or month) to avoid long term storage fees?
A. No, long term storage fees are not based off of velocity, but rather how long your inventory has been sitting in the Amazon fulfillment network. If inventory has been in Amazon’s Fulfillment Center for greater than 6 months or 12 months at the time of the inventory cleanups, long term storage fees will apply.
Q2. How do you ensure you are not getting overcharged/undercharged for measurement errors?
A. Amazon laser measures and weighs each item which enters their fulfillment centers. If you feel your items are being charged a rate for a different category than they should be, you can open up a seller support case and request a “bin check” for the ASIN in question.
Q3. I am 100% FBM and am looking for a way to upload products and receive an FBA fee preview? The FBA fee preview report within Seller Central is for sellers that are currently FBA.
A. Amazon does have an FBA Fee Calculator you can find here. CPC Strategy also has a bulk FBA fee calculator for identifying FBA fees in bulk.
Q4. My sales volume is low should I consider using FBA when my volume increases? How much is Amazon increasing the FBA fulfillment fee on average?
A. FBA will increase the discoverability and the conversion rate of products which will, in turn, increase volume. However, FBA will not work alone. Your products may be low volume because there is no demand for your product, the price is too high relative to competitive products, or the product content is not optimized for discoverability. Sponsored products can be used in conjunction with FBA to make sure your products are getting found and purchased as frequently as possible.
The weight handling fee for oversize products is increasing by over 50%, overall fulfillment fees are increase between 10% and 20% across the board.
Q5. Is Amazon FBA mandatory or can a reseller fulfill orders themselves?
A. FBA is not mandatory.
Q6. Are these price increases going to impact sellers on Amazon’s UK and European marketplaces?
A. The price increases referenced on this webinar were specific to the US marketplace.
Q7. In the situation where you are the only seller should you be using FBA anyway?
A. You’ll need to be analyzing your FBA allocation decision on an ASIN to ASIN basis. We have found that FBA is an extremely powerful tool for increasing the velocity of sales regardless of if you have buy box competition or not.
Q8. With FBA – the cost of shipping order from Fulfillment Center, are they baked is as well?
A. Yes, these costs are part of the FBA fulfillment fees. However, keep in mind that your cost of inbound shipments to Amazon FC’s are not included in Amazon’s fulfillment fees.
Q9. Is it better if you use stickered to avoid bad reviews caused by other sellers using knock off brands?
A. The decision between stickerless, commingled inventory and stickered inventory is all about risk tolerance and cost. Stickered inventory protects your orders from being fulfilled with inventory sent in from other retailers, but does require additional work in stickering your units.
While your seller reviews will be protected, keep in mind that if a customer receives a knock-off version of the product, they can still leave a negative product review.
Q10. Do you need the UPC to register for Brand Registry? Then do you use the FNSKU or UPC on labeling?
A. You do not need UPC’s to register for Brand Registry. In fact, one of the benefits of Brand Registry is the ability to list products without UPCs. For stickered inventory without UPCs, you will print out FBA labels directly from your Seller Central account which will have the FNSKU printed on them.
Q11. We don’t currently sell FBA, only 3P. Is the regular 15% fee on top of the FBA fees?
A. Yes.
Q12. Is there a limit to how many units you can send to fulfillment centers in one shipment or within a certain time period?
A. No. You are only limited by your storage limit, which you can find by going to Inventory -> Manage FBA Inventory within Seller Central.
Q13. Does it matter, in long term storage fees, what warehouse your product is in? ex. TX warehouse has inventory there for an ASIN for over 6 months, but it’s moving quickly out of the rest of their warehouses?
A. The FC does not matter, as Amazon is using a FIFO (first-in, first out) methodology for determining long term storage fees. If you sent in 100 units of a product six months ago, and haven’t sold at least 100 units of that product since then, the remaining units will be subject to long term storage fees regardless of what warehouse they are in.
Q14. I have just started on Amazon sold only 3 items (lingerie), should I jump into FBA right away or should I stick with manual fulfillment for a while?
A. As you only have 3 items, your exposure to overstocking is very low. There are no FBA minimums, so start with a very small amount of inventory to learn the process and test the results of FBA without tying up large sums of capital in FBA inventory.
Q15. As an apparel brand that relies heavily on seasonality, our inventory needs to be very fluid. Is there a specific strategy recommendation for a brand that would push product to FBA until it goes out of stock, and keep replenishing new ASINs continuously?
A. With a constant influx of new ASINs, generating consistent sales history and momentum can be challenging. While you are adding new products due to seasonality, it would be useful to identify your core products which can be made available in certain sizes and colors year round. The most difficult (and expensive) period of a product’s lifecycle is at the beginning, so the more mature products you have which can serve as the reliable core of your business, the better.
Q16. How do I get on FBA without Bar Codes?
A. If you do not have UPCs, you can use stickered inventory to create FBA labels you can print directly out of your Seller Central account during the inbound shipment creation process.
Q17. Can the manufacturer or brand owner prohibit using stickerless inventory for one or more UPCs?
A. No, the brand owner does not control how other sellers choose to sticker their FBA inventory.
Q18. Is the storage fee going to be monthly starting now – or monthly after a period of time stock has been in the warehouse?
A. Amazon’s monthly storage fees bill in arrears for the previous month’s storage usage.
Q19. Is the pick and pack an inherent fee associated with the fulfillment fees? If we pack our product as we would ship it to the customer and it ships to the Fulfillment Center, will Amazon be unpacking it and charging us the fee?
A. The FBA pick and pack fee cannot be avoided as Amazon still has to pick and pack the product themselves when a customer places an order.
Q20. If you have an FBA private label item, should you be selling it FBM as well?
A. FBM can be used as an inventory backup in the event that you run out of FBA inventory for a given product. You’ll either need to create a separate FBM specific SKU or remember to switch your fulfillment method from FBA to FBM when you run out of FBA inventory as this will not happen automatically.
Q21. I’m having a problem changing oversize items with incorrect measurements to a standard item. Any advice on how to get Amazon to change product packaging dimensions?
A. Amazon laser measures and weighs each item which enters their fulfillment centers. If you feel your items are being charged a rate for a different category than they should be, you can open up a seller support case and request a “bin check” for the ASIN in question.
Q22. Question regarding commingled inventory — if you need to create a removal order, how does Amazon take the product out? Will you potentially get someone else’s product?
A. Yes, when you create a removal order, Amazon will treat it just like a customer order and it’s possible that you will receive inventory that another seller originally sent in.
Q23. Will the FBA revenue calculator still be a good tool to calculate profits considering the new fees?
A. Yes, this calculator will be updated with the new fees.
Q24. Is there a program to help determine sales volume on existing products that are being sold on Amazon ? ex: How many units sold by sellers for a period of time?
A. JungleScout has a sales estimator to gauge total sales of a given product.
Q25. Is it advisable to overstock on certain items to reduce the number of times you have to reevaluate and restock?
A. It’s better to have too much stock than it is to stock out, but only to a certain extent. There’s no use having a year’s worth of inventory in stock simply to avoid the effort of restocking since you will run the risk of long term storage fees and will be paying more in monthly storage fees than you need to.
Q26. What is the BEST Bar Codes to use??
A. It depends on product types. UPCs are used for traditional retail while ISBNs are used for for book identifiers.
Q27. Is the shipping based on outbound weight, ie includes the weight of the box and packing material?
A. That’s correct.
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