eCommerce is a booming and highly competitive industry. In the last year, the cost of shipping goods from China to the United States has increased for several reasons, including changes to customs fees, tariffs, and pandemic-related delays. As a result, it’s crucial for Amazon sellers who import goods from China and use FBA — fulfillment by Amazon — to look for ways to preserve and increase their profit margins.
Rising Shipping Costs
In 2020, due to a combination of COVID-19 and US tariffs, the cost of shipping goods from China to the United States increased significantly. The pandemic also contributed to shortages of shipping containers, interfering with global supply chains due to manufacturer closures, staff shortages, and container backlogs.
As costs rose, those who buy Chinese goods to sell on Amazon have had to compensate by reevaluating everything from the products they sell to their business strategies and SEO.
Others have chosen to explore alternative product sourcing solutions. However, what remains clear is that if you import products from China, you need to assess your strategy for long-term growth and sustainability in light of these costs.
Amazon FBA and China
Fulfillment by Amazon, or FBA, allows sellers on Amazon to assign all storage, packaging, shipping, customer support, and return-order processing responsibilities to the company. Many Amazon FBA sellers source a supplier in China, who then ships products directly to an Amazon FBA warehouse in the United States or a third-party for inspection. Shipping from China has its own unique challenges regarding shipping methods, lead times, customs, and public holidays that you should be aware of if you want to ship goods directly.
Fulfillment by Amazon (FBA) contrasts with fulfillment by merchant (FBM), where you, the seller, pack and ship products and interact with the customer directly. Many sellers choose to use FBA as it offers several benefits, including:
Increased focus on their business
By delegating the packing and shipping responsibilities to Amazon, you’re able to focus, instead, on managing and expanding your business. It also means you won’t need to hire as many employees to manage warehousing and order fulfillment. When you’re starting out, every cost you can save can significantly improve your company’s long-term sustainability.
Less negative feedback
FBA sellers generally receive less negative feedback than FBM sellers because Amazon’s order-fulfillment process is strictly controlled and highly efficient. Negative reviews can seriously hurt your reputation and sales on the platform, so anything that reduces their frequency is beneficial.
In 2019, there were more than 110 million Amazon Prime customers in the United States. As Amazon Prime members are more likely to buy products with the “Prime” badge, this can significantly increase your sales conversions.
What Can You Do?
As an Amazon seller, there are several ways you can increase the profitability of your business, despite the rising costs of importing from China to the U.S.
Research Products and Markets
First, conduct market and product research. Find out what products are most in-demand on the platform and what products of yours are selling the most. Next, conduct a detailed review of your closest competitors and see what they’re doing that works and what they’re doing inefficiently. Learn from their successes and failures.
See how many sellers offer the same kind of product. This is called “offer depth.” Sharing an ASIN (Amazon Standard Identification Number) with several other sellers can still indicate that there’s sufficient demand for you to see a reasonable return.
You don’t want to order non-competitive inventory that sits on a shelf in an Amazon FBA warehouse for months, collecting storage fees. This may also cause you to have to sell your inventory quickly and at a potential loss.
Consider Inventory Expansion
If you started selling one product category, that doesn’t mean you can’t expand into others. Consider branching out if you identify other profitable product categories and think they could be a good fit for your sales strategy. However, it may be easier for you to sell a different but related product first.
Identify FBA Opportunities
If a competitor’s product is available but not by an FBA seller, this can signal an opportunity to fulfill that niche. However, it’s worth considering why the current offerings do not use FBA. Is it because the product would violate FBA requirements? Amazon has several products prohibited from sale for FBA sellers, including alcohol, loose batteries, vehicle tires, gift cards, and goods with a hazmat designation.
Check Price Histories
If you find that a competitor’s product’s price history has a record of rapid fluctuations, this may indicate that competition has been fierce and one or more competitors have engaged in a price war. Price wars are not useful for growth on Amazon. While customers want value for money, they aren’t always looking for the lowest price. Ultra-low prices suggest that the product may be of poor quality or the vendor is unreliable.
Import High-Demand Products
Don’t bother with products that have relatively low rates of turnover. You don’t want to add storage costs to shipping costs. Instead, once you’ve determined what sells, prioritize the import of those products.
You should also develop a thorough understanding of your markets and who your products primarily appeal to. This enables you to more effectively target your key demographics, boosting your sales.
Optimize Your Keyword Use
SEO, or search engine optimization, is critical to reaching customers on Amazon and many other eCommerce platforms, ensuring that your products remain visible during keyword searches.
Consult Customer Reviews
Customer reviews can reveal a wealth of information regarding competitor products, allowing you to determine their strengths and weaknesses. However, product reviews should be verified. Some are fabricated; others may be based on faulty information. For example, if a buyer left a negative review because they didn’t read the listing properly, that’s not a mark against the seller or the quality of the product.
Take Advantage of Holiday Events
In addition to ordering bulk shipments of products proven to sell, you should also place orders to take full advantage of holiday seasons and events. These include traditional holiday seasons, such as Christmas; back-to-school events; Amazon-specific holidays, such as Prime Day; and summer sales events.
It’s not only a question of the season or sales event, however. Some products are more seasonally relevant than others. This can affect the rate of turnover and how often you should replenish your stock. If your products, for example, sell out constantly, regardless of season, then you need to ensure you’re replenishing at regular intervals. Not having enough stock to meet demand can cost you money, the same as having too much.
Explore Alternative Shipping Methods
If your priority is to reduce your shipping costs, you can either change the shipping method or change the way you place orders with your supplier. The ultimate goal is to reduce your shipping fees, and either option could save you money in the long run.
Compare air freight, sea freight, express shipping, and even regular mail to see which method makes the most sense for your products, the quantities you intend to order, and the transit times you need.
Air freight, for example, is considerably faster than sea freight; however, it’s also generally more expensive.
Consult Asiana USA Freight Forwarding Service
Asiana USA Freight forwarding services can help you determine the best strategies, shipping methods, and Chinese suppliers to meet your needs as an Amazon FBA seller.
At Asiana USA, we provide a wide range of logistics and freight forwarding services to help you ship Chinese-made goods to the US for sale to American customers. This can be a daunting task, from arranging shipping and customs clearance to meeting Amazon’s packaging and inspection requirements.
At Asiana USA, we can take care of everything. We can also source reputable suppliers in China, allowing you to start your production and sales sooner. Call us at (855) 500-1808, and let us help you improve your company’s bottom line.