Recent volatility has increased the importance of every sale that a brand makes, including on Amazon. Brands are focused on maintaining and increasing sales—as they should be—but beyond that, sellers on Amazon also need to invest time in ensuring that they are being charged accurately for Amazon’s various Fulfillment by Amazon (FBA) related fees, and seeking reimbursement when this is not the case. In my work at Stella Rising, I advise and work with clients daily, certifying that any fee overcharges or inventory discrepancies are identified and addressed quickly. In this post, I outline a handful of cost savings analyses that sellers should perform regularly.
INVENTORY RECONCILIATION
When considering the sheer volume of units entering and circulating throughout Amazon’s Fulfillment Centers (FCs) daily, it is no surprise that Amazon does not get it right 100% of the time. Sellers are likely all too familiar with the issue of shipments arriving at FCs with units missing, resulting in a discrepancy between the number of units shipped versus the quantity that Amazon reports as received. While this is certainly frustrating, it does create an opportunity for sellers to seek reimbursement from Amazon in the form of dollars or units. We have seen sellers receive monetary reimbursements totaling nearly $4K over a 90-day span as a result of inventory reconciliation. We recommend reconciling units sent versus received by Amazon on a weekly basis to identify any discrepancies and seek proper reimbursement.
FBA FULFILLMENT FEE AUDIT
Another cost savings opportunity for sellers corresponds to the FBA Fulfillment Fees that Amazon charges on every unit sold. The FBA Fulfillment Fee is “a flat fee per unit, based on the size and weight of the product.” Sellers can calculate their expected FBA Fulfillment Fee with relative ease based on product weights and dimensions. However, oftentimes those expected fees do not match up with the fees being charged by Amazon due to discrepancies between the actual product weights and dimensions and what Amazon is recording on their end. Due to these discrepancies, sellers may be overcharged the FBA Fulfillment Fee on each unit sold, resulting in lost funds and unnecessary negative margin impacts. Sellers can combat this by performing quarterly FBA Fulfillment Fee audits, ensuring that the fees charged by Amazon align with the seller’s calculated fees. The goal here is to identify and correct FBA Fulfillment Fee discrepancies and seek reimbursement for past overcharges resulting from fees based on incorrect product weights and dimensions.
STORAGE FEE AUDIT
The monthly storage fee incurred by FBA sellers presents yet another cost savings opportunity. Monthly storage fees are essentially rent paid to Amazon for storing products in their FCs and are based on “the daily average volume (measured in cubic feet) for the space your inventory occupies in fulfillment centers.” Amazon’s volume measurement is based on their recorded product dimensions which, as previously mentioned, are not always accurate and can result in monthly storage fee overcharges. Sellers should perform monthly storage fee audits to check storage fee charges from the previous month against their calculated storage fees based on accurate product weights and dimensions and daily average volume to identify any discrepancies and seek reimbursement for overcharges.
FBA NEW SELECTION PROGRAM
In addition to the actions outlined above, sellers can enroll in Amazon’s FBA New Selection Program to obtain temporary cost savings on new-to-FBA products via the following fee waivers:
- Monthly Storage: No monthly storage fees charged for the first 50 units of each new Parent ASIN for 90 days after the first unit is received at an Amazon FC
- Free Removals: Free removals for first 50 units within 180 days after the first inventory-received date
- Free Returns Processing: Return processing fees waived for up to 50 units per Parent ASIN for returns received at Amazon FCs within 120 days of the first inventory-received date. Limited to products in the following categories only: Apparel; Shoes, Handbags & Accessories; Jewelry; Luggage; and Watches
- $100 Inbound Transportation Charge Discount (new FBA Sellers only): First $100 in inbound transportation charges through the Amazon Partnered Carrier program waived
FBA sellers bear the somewhat daunting responsibility of auditing inventory received and fees incurred to identify any discrepancies—Amazon is not going to do that for you. However, performing the aforementioned audits regularly, in addition to enrolling in the FBA New Selection Program, allows sellers to seek reimbursement for past overcharges while minimizing the risk of future overcharges. Ensuring that inventory is properly accounted for and all fees are being accurately charged is crucial to the overall profitability of each seller’s account. At Stella Rising, we support brands in this aspect of their Amazon business, reclaiming lost dollars and adding to revenue. If you would like to learn more, please connect with us.
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