If your brand is selling products on Amazon, you’re probably already familiar with Amazon’s FBA (Fulfillment by Amazon) program. As a quick refresher, FBA allows sellers to pay Amazon a per-item fee to pack a product in Amazon-approved packaging, store it in an Amazon-owned warehouse, and ship to customers via Prime delivery. This eliminates fulfillment processes and shipping issues while increasing the probability of a sale thanks to Prime options. While going with the FBA option makes sense for brands wanting to move a large quantity of inventory, it can be a costly partnership. And, starting in 2018, there are some big changes coming to FBA that sellers must be aware of.
Starting on February 22, 2018, the FBA rates for third-party inventory will increase across the board. Moving forward, small (less than a pound), large (less than a pound), and large (between 1 and two pounds) products will increase by a few cents on the dollar. You can see the entire fee increase chart here, via Amazon:
While the price changes on smaller size products won’t be too dramatic, larger standard-size products stand to see a significant fixed cost increase ($0.75 per piece!) alongside a steady variable cost increase (calculated per each pound over two pounds).
Unfortunately for many sellers, large standard-size products are one of the most common product types on Amazon, and these fee increases will gradually start to negatively impact the overall profitability of sellers. (Hint: If you’re a registered Amazon seller, check out all of the fee increase FAQs here.)
For brands with a sizeable inventory of larger products, it is possible to take proactive steps to mitigate risk and protect your brand against the FBA fee increases:
If there’s one thing that both brands and consumers can count on, it’s that Amazon is exceptionally good at bringing in revenue. As a savvy brand working with Amazon, it’s safe to assume these fee changes are not permanent and that they will most likely increase again in the near future. Brands with established audiences on Amazon must find new ways of fulfilling merchandise on the Amazon marketplace without increasing time or resources spent on fulfillment.
These FBA fee increases are a perfect opportunity for brands to start working with a single third-party seller to represent their products on Amazon and other online marketplaces. Instead of paying Amazon a per-product fee, brands actually ‘sell’ their inventory to a third-party seller, thus passing on the responsibility of FBA charges and guidelines altogether. The third party then tackles the entire process of storing, packaging, shipping, and tracking merchandise, passing the analytics back to the brand when it comes time to order new inventory.
Working with a single seller can also streamline the supply and fulfillment process all around. Brands can rely on a trusted seller to store inventory, manage Amazon seller profiles, optimize product images and messaging, and keep Amazon warehouses well-stocked with in-demand products. Having a trusted relationship with a single third party seller minimizes the risk of any MAP violations and ensures the integrity of the products sold online. A third-party seller optimizes all stages of the supply chain process to maximize results and profitability on the other end.
If your brand is looking for ways to survive in the midst of the Amazon FBA fee changes, look no further. The e-commerce experts at SupplyKick can help increase your profits on Amazon without worry of fulfillment processes and issues. Get started today!
Photo by Maique Madeira