Fulfillment by Amazon (FBA) is one of the leading e-commerce platforms in the world. This system provides a clear path to success for budding entrepreneurs starting online businesses. Amazon saves you time and money by taking care of product packaging and customer service. Its comprehensive platform helps sellers with all aspects of their business, from pricing to advertising.
Despite the benefits of selling on Amazon, it can be costly. Purchasing, packaging, and shipping your products is expensive, even before you consider Amazon’s seller fees. To maximize profits and make smart business decisions, sellers should be fully aware of the costs involved in selling through the FBA platform.
Due to Amazon’s enormous and ever-increasing distribution network, numerous fulfillment centers, and comprehensive digital platform, it remains one of the best and most profitable avenues for e-commerce businesses. Online vendors can save significantly through minor strategic adjustments to their shipping supply when transiting inventory through Amazon.
How to Calculate Amazon Seller Fees
Amazon allows all sellers to list products on the site free of charge. You aren’t charged any fees until you make a sale. Charges include shipping, referral, and variable closing fees (VCF). Depending on the membership package you subscribe to, these fees vary.
Amazon bases its charges on the seller’s location, order handling costs, packing, storage, inbound shipping, and preparation services.
Apart from Amazon’s fees, other factors that affect the price of shipping your FBA inventory include:
- Product weight
- Packaging materials
- Packaging dimensions
- Packaging weight
- Mode of transport
- Speed of FBA shipment
- Location of the target destination
- Taxes and customs duties
- Declared value
How to Reduce Amazon Shipping Costs
To create a shipping plan focused on saving money, here are some tips for reducing overheads.
Consider Shipping From China
2021 saw the percentage of new China-based Amazon sellers increase from 47% to 75%. One of the main reasons for this is that China is still regarded as the best and cheapest place for manufacturing and sourcing goods.
FBA sellers that ship inventory directly from their chosen manufacturing facility in China often save significant time and money. If you source goods from China, consider sending them straight to Amazon from the manufacturing plant.
While this may provide savings for your business, it requires a slightly different approach. You’ll need to gain product quality assurance in China, prepare your goods for FBA in China, and ship them to Amazon through Chinese and US customs. Use a reliable freight forwarding service if you need help with any of these processes.
Partner With a Reliable Shipping Company
International shipping is a complex and expensive process that requires specialist knowledge. Hiring a reliable freight forwarder service and shipping company helps ensure you don’t overlook crucial factors, such as customs, taxes, product packaging, and labeling.
Working with a freight forwarder helps you secure the lowest shipping prices, as they have existing relationships with major carriers and logistics companies. Forwarding companies can also negotiate on your behalf, using their knowledge and experience to secure good deals.
Leading shipping companies, such as Asiana USA, stay up-to-date with the latest industry trends, rules, and regulations surrounding shipments. This ensures your goods are compliant with all protocols in China and the US.
Freight forwarding experts can be excellent sources of information, advising you on modes of transport, shipping strategies, product sourcing, packaging, and other key aspects of the FBA prep and shipping processes. Using freight forwarders can contribute to significant savings and increased profits for your business in the long term.
Choose the Right Shipping Method
Choosing the correct shipping method is perhaps the most effective way to reduce the costs of sending inventory to Amazon. There are two realistic shipping options for sending your products to an Amazon fulfillment center: Air or ocean freight.
Ocean freight is by far the cheapest transportation option, particularly when it comes to heavy or bulky items. Ocean liners allow you to transport high volumes of large goods at a low cost. However, it is a slow mode of transport, especially when compared to air freight. Due to the handling processes and length of the journey, ocean freight is less frequent, and products have a higher chance of getting damaged.
Air freight is extremely fast and reliable but can be very expensive. Depending on the demand for your goods and their size and weight, air freight may cost you in the long term.
Explore all available shipping methods and look for opportunities to save. Consider ocean freight since it’s the cheapest transport option for sending to Amazon.
Ensure You Have Correct Documentation
When shipping goods to the US, you’ll need certain documents to ensure they clear customs. Failure to produce mandatory documents may result in delays, product confiscation, and costly fines. Some of the most important documents for any shipment are:
This contains information for Customs and Border Protection (CBP) officers to determine if your imported goods are admissible. The commercial invoice contains product descriptions, product quantities, the value of the goods, country of origin, and purchase location.
Bill of Lading (BOL)
This is a crucial document issued from the carrier to the shipper and signed by the transportation vehicle owner or captain. It is signed to assure the CBP that the goods are as advertised and that the shipper was ordered to transport them to the destination port.
The packing list and goods invoice should be presented to the CBP to verify the shipment before being cleared to enter the country.
Arranging all necessary documentation can be a challenge. An experienced freight forwarder can help with the administrative aspects of shipping, ensuring you avoid costly mistakes.
Implement Strategic Pricing
Unfortunately, shipping prices are volatile. While you may be able to reduce costs, you can’t dictate market fluctuations. Through a strategic pricing strategy, you can offset high transportation costs.
The most important consideration is your profit margin. This figure is the percentage of revenue you retain after expenses, including shipping. To avoid taking a hit from rising shipping costs, try increasing your selling price on Amazon. You can also take this approach to offer free shipping to your customers.
Amazon’s seller central contains several useful tools to help you adjust pricing while staying competitive. For example, you can set business prices and discount vouchers to help draw in new target markets.
Gain an understanding of your profit margins and identify different ways to price your goods that mitigate high shipping costs. When you keep costs down, you entice customers to buy your products.
Save Money Shipping with Asiana USA
At Asiana USA, we understand the importance of reducing shipping costs to ensure competitive pricing, high turnover, and ultimately, long-term profitability. As a world-class shipping organization, we offer quality specialist services to FBA businesses, enabling them to succeed.
For more information on our services or to request a quote, contact Asiana USA today at (855) 500-1808.