Let’s talk about how to reduce Amazon FBA fees, especially the freight forwarding cost. According to our survey, freight forwarding cost accounts for roughly 3% – 8% of FBA sales revenue for most sellers. It is the third largest variable cost after product cost and PPC that you have influence over. We have summarized 6 steps that might help you to improve your profit margin.
1. How to reduce amazon FBA fees. Tip 1. Take freight forwarding cost into consideration when choosing products to sell
Many sellers often make mistakes in product selection because they fail to take freight forwarding costs into account. This might lead to serious budget overruns. When you do product screening, ask the supplier the product package information. Then you can get an estimate of the freight forwarding cost. Pay special attention to oversized product and to very light product. ForwarderOne implemented a simple tool for you to use. If you are not sure about the freight forwarding cost, feel free to send us an email.
2. How to reduce amazon FBA fees. Tip 2. Choose a freight forwarder with good price and, more importantly, transparent servicing fee
Freight forwarding only account for 3% – 8% of the total FBA revenue. So a lot of sellers do not pay so much attention to the product shipping. As your sales go up, freight forwarding cost will accumulate increase. However, we do not recommend the cheapest one. However, our definition of freight forwarding with price advantage is: transparent pricing, honest measurements and flexible service.
Transparent pricing means that freight forwarding should be able to provide an upfront quotation. When receiving the product, the final invoice should not be different and surprise the customer.
Honest measurement is also important, especially when your product is light. The freight forwarder will need to apply volume weight. Wrong measurements will dramatically affect the final invoice.
Freight forwarder should also be able to provide customizable shipping plan. For FBA or D2C sellers, ability to speed up to prevent stock out is important. It requires freight forwarder to be able to provide different shipping methods and adjust the shipping plan according to customers’ need.
3. How to reduce amazon FBA fees. Tip 3. Reduce the weight and volume of the package
When sending heavy goods, find ways to reduce the weight of heavy goods. Reduce unnecessary packaging. Use low-weight shatter-resistant packaging.
When sending light goods, reduce the volume of the goods. Pack the product as tight as possible in side the carton. It not only save space but also prevent product being broken during delivery.
4. Pick the right FBA / 3PL warehouse
Depending on the warehouse the seller sends, the shipping cost might vary. The time it takes for cargo to arrive the warehouse also differs. Both of these factors have an impact on the working capital of the business.
5. Stagger Shipping Peak Season
Air freight and ocean freight often increase freight rates during peak seasons. In the off-season, the price tends to be lower in order to attract customers. Therefore, we recommend Amazon sellers to prepare the cargo 3-4 weeks before the peak season when everyone tries to cram in their cargo to the FBA warehouse.
6.Chose the right logistic channel
Express air shipping
Express air shipping is a shipping method that deliver product through network such as UPS, DHL or Fedex. It can normally delivers product within 3-6 days globally. It is the most expensive, but with good service. This shipping method commonly used to test new product or small batch shipment. It is also good for product with small size high value.
Regular air shipping
Regular air shipping is a lot more affordable than express air shipping. It normally takes 10-15 days from China to the US. It suits product with good sales velocity while climbing the sales rank.
Ocean shipping has 2 ways: ocean fast line and ocean regular line. The fast line takes 15-20 days while the regular line takes 20-30 days depending on the destination. When the product sale is stable, ocean shipping is the most cost effective.