If you’re an Amazon FBA seller who imports goods from China, there are several challenges to successfully operate your online business.
Understanding how to minimize freight costs and customs duties and meet Amazon’s strict packaging and labeling requirements is essential to reduce business costs and boost your bottom line.
What is Amazon FBA?
In the highly competitive e-commerce industry, individuals and companies that sell on Amazon have several fulfillment options. One of the most popular is FBA (fulfillment by Amazon). FBA allows the seller to assign the responsibilities of packaging, shipping, and customer support to Amazon. FBA can reduce your operational costs significantly, depending on the turnover rate of your inventory.
Tips for Shipping
When you’re trying to maximize the efficiency of your Amazon FBA business, there are several tips that can help you reduce overhead, including:
Select the Best Method of Transportation
When you’re organizing the shipment of goods from China to an Amazon FBA warehouse in the United States, it’s critical you select the most efficient and cost-effective transportation method. This depends on several factors, from the weight and bulk of your goods to when you need them to arrive.
Ocean freight or sea freight is the most suitable shipping method for goods with a volume of at least 2 m³ or a weight of 400 kg or more. While ocean freight is the least expensive shipping option, it also takes the longest to deliver your goods, up to a month in some cases. As a result, ocean freight is unsuitable for high-turnover inventory or rush orders.
Ocean freight is available in two options, depending on the dimensional weight of your inventory. These are Less than Container Load (LCL) and Full Container Load (FCL). While LCL is more expensive than FCL, it’s more appropriate for goods when the volume is less than 14 m³.
When your goods weigh more than 200 kg and have a volume of more than 2 m³, consider shipping to Amazon FBA warehouses using air freight. Air freight is more expensive than ocean freight. However, it also significantly reduces transit time. It’s also less expensive than air express.
Always check with your freight forwarding company whether the goods you need to ship can be transported by air. Air freight and air express are subject to more transportation restrictions than ocean freight. Toxic, flammable, and corrosive products are prohibited. For example, you can’t transport lithium batteries or aerosol cans by air.
If your goods are 1 m³ or less in volume and 200 kg or less, express shipping is a good option to consider. For express shipping, the chargeable weight is either the dimensional weight or the gross weight.
Air express is the fastest method to ship goods from China to an Amazon FBA warehouse. However, it’s also the most expensive.
Account for Customs Duties, Taxes, & Other Costs
Estimating the correct costs associated with your goods’ production, shipment, and importation is critical, especially for companies new to the business.
Customs and import fees
In addition to shipping costs, you need to take into account customs and import duties and anti-dumping fees. While you can estimate these costs, the United States Customs and Border Protection (CBP) has the authority to declare the value of the goods you import.
The CBP is the agency tasked with inspecting cargo for contraband, ensuring compliance with U.S. law, and determining the value of imported goods for the purpose of charging tariffs or import duties.
You can hire a customs broker from Asiana USA to issue a binding ruling, ensuring that you will know, in advance, what the costs of importation will be.
If the CBP selects your cargo to undergo a random inspection, such as an X-ray screening or examination by the Contraband Enforcement Team, the buyer will be charged any associated fees.
Time is a factor that all businesses have to take into account to remain profitable. If you’re unable to replenish your stock for weeks or months, you will lose sales and money.
However, the shipping method isn’t the only factor that affects your ability to deliver goods to customers. You also have to account for production lead times.
New products sometimes require longer production times due to a learning curve. You can also expect more complicated products to take longer to manufacture. As you add the time it takes for your goods to arrive at a seaport or airport and clear customs, you could be looking at several months to receive your order.
Source Reliable Suppliers
One of the common mistakes that Amazon FBA sellers make is assuming that all suppliers on Alibaba or other Chinese online marketplace are reputable. While there are reputable businesses, there are also frequent reports of scams.
You need to conduct your due diligence when you’re sourcing a Chinese manufacturer or supplier yourself, regardless of the platform. Alternatively, you can hire Asiana USA freight forwarding service to source reputable suppliers for you.
Supplier or manufacturer
The manufacturer is not necessarily the best supplier. If you place an order with a manufacturer that produces thousands of products for hundreds of different businesses, it may not be sufficiently responsive to your needs. You’ll need to determine whether a manufacturer or independent supplier is the more cost-effective option for your business.
Whether you source a supplier yourself or contract an agency, request product samples before placing a bulk order. If you plan on ordering 1,000 units of a product, for example, you need to verify the manufacturing and quality-control standards of the supplier.
If there is a language barrier, there may be miscommunication regarding materials, features, or specifications. By examining pre-production prototypes or samples, you can ensure miscommunication is resolved before it becomes costly.
Avoid paying upfront
If you place a bulk order with a Chinese supplier you have not conducted business with previously, it’s customary to pay a deposit, the balance payable on delivery, inspection, and approval. This deposit may be as low as 30% or as high as 50%, but you should not pay in full for an order in advance unless it is a sample or prototype.
Source alternative suppliers
If you’ve sourced a reputable supplier and have developed an ongoing business relationship, avoid switching suppliers because it can disrupt your inventory flow. However, you may need to consider sourcing alternative suppliers as a backup if the company you’re doing business with cannot fulfill its obligations. This may be due to factors outside your supplier’s control, such as political turmoil.
Don’t Ship Directly to Amazon FBA
Whether you should have your Chinese supplier ship your goods directly to an FBA warehouse or to an intermediary depends on your budget, your relationship with your supplier, and a general risk assessment. There are three FBA shipping methods:
Shipping directly to FBA
Some sellers have their Chinese suppliers ship goods to Amazon FBA warehouses in the United States. Shipping directly from China is simple, fast, and inexpensive. Unfortunately, you have no control over the quality of the goods received, including whether they are defective.
If you ship your products to FBA warehouses, you can’t inspect the goods to determine whether they are compliant with Amazon’s packaging and labeling requirements. This can prove costly, potentially leading to the loss of your FBA eligibility.
Shipping to your home or place of business
Having your supplier ship to your home or company increases shipping costs and delivery times. However, it also allows you to physically inspect your goods yourself, ensuring the defect rate is kept to a minimum. You can personally verify the goods meet the required quality standards and that FBA shipping labels are correctly applied.
However, this may not be the best option if you have limited storage space.
Shipping to a third party
The third option allows you to ship your goods to a third party for inspection and proper labeling, if necessary. This business may be located in China or the United States and acts as an intermediary.
Although more expensive than either of the other options, shipping to a third party reduces your risk while also allowing you to focus on the other parts of your business. You can expect to pay higher labor costs in the U.S. than in China.
Verify the legality of your goods
Regardless of whether you choose to have your goods shipped to you or a third party, you also need to ensure your order does not violate intellectual property laws. There’s always a risk that what you’re buying is protected.
For example, if the product is patented, you could receive a cease and desist order or injunction and face a lawsuit. Trademark infringement and the sale of counterfeit goods are also violations of Amazon’s FBA-specific product restrictions.
Learn How to Label & Package Products
To comply with Amazon FBA regulations and protect your goods, you must ensure you know how to correctly package and label your products. If you don’t package and label your products yourself, you must instruct your supplier on how to perform this task or inspect and verify that they’re correctly packaged and labeled before sending them to Amazon.
Some of these guidelines include the following:
Every box or pallet you ship to an Amazon FBA warehouse must have a unique box ID or pallet label. This ensures accurate identification. When labeling a package, avoid placing the label on a seam. When a worker opens the box, this will damage the label. The FBA box ID label and carrier label should be on a flat surface. Do not apply the barcode to a part of the package that may be folded or cut.
Don’t attempt to reuse or modify Amazon shipping labels because they’re unique to each package. All labels must be easily and quickly scannable, so don’t cover them. If you intend to ship multiple case packs in a box, the FBA box ID label should be on the box that contains the case packs for proper identification. The case packs don’t need to be individually labeled.
Every individual pallet you send to Amazon must have four pallet labels. Place one label on the top center of each side.
Amazon has strict packaging requirements that you must be aware of as an FBA seller. When you use an FNSKU (Fulfillment Network Stock Keeping Unit) on a unit, it must be unique, corresponding to that specific unit only.
For example, if two products are identical except for the color, they require different FNSKUs. Every individual product must also have a scannable barcode or label, including machine- and human-readable information.
If there are other barcodes on the package, you need to cover them with a blank label or masking tape to make them unscannable.
Shipping loose products
As part of the packaging requirements, you’ll need to ensure there are no loose parts or pieces that Amazon would be required to assemble. The company will not accept units in this condition. Always ensure that all products are securely packaged.
Sold as a set
If you plan to ship multiple units as a set, you need to seal the units and label the set accordingly. Don’t ship them to Amazon separately. Labels reading “Sold as a set” and “Do not separate” are required.
The boxes you use must have six sides and an opening or lid that remains closed. If necessary, you can glue, tape, or stable the opening to keep it closed. The box should also be durably constructed, not collapsing under medium pressure to the sides. In addition, if you want to use a perforated box, it will need to pass a drop test. This will determine whether your product should be placed in a polybag instead.
For some products, you may need to use a poly bag. When using a poly bag with an opening of 5” or more, Amazon guidelines require that you place a clear suffocation warning label on the bag unless a warning is already printed directly on it.
In addition to the warning, the poly bag must be transparent, have either a barcode scannable through the bag or on the outside (X00/ASIN), and be completely sealed. If you’re shipping adult products in a poly bag, you’ll need to use black or opaque bagging that hides its contents. Poly bags must also be completely sealed.
Keep Track of Chinese Holidays
Chinese cultural practices and holidays directly affect manufacturing lead times, shipping times, and local inspection procedures.
The Chinese population observes several holidays that Americans and Europeans do not. To avoid any confusion or miscommunication and to keep your inventory at a level that meets consumer demand, it’s important you are aware of local Chinese holidays. Find out when they take place and how long they typically last so you can place your orders accordingly.
Choose Asiana USA for Your Freight Forwarding Needs
At Asiana USA, we understand that importing goods from China to the United States can be costly, time-consuming, and confusing. We offer a variety of services to the Amazon FBA seller, from sourcing reputable local manufacturers to customs compliance and determining the best method of transportation good for last-mile delivery.
We also have our own customs brokers to simplify the importation process, saving you money and ensuring your goods arrive on time and in good condition. Contact us at (855) 500-1808 to request a free quote.