While Amazon is an incredible gateway for sellers and brands in terms of sheer volume of sales and brand exposure, the logistics of selling successfully can often become a drain on any company.
Many of the companies that are most successful have a strong supply chain organizational structure that ensures that if something falls between the cracks, it is easily retrieved. However, not all sellers are able to create a massive infrastructure in which they won’t be exposed to human or technological errors.
Amazon FBA Isn’t Perfect
Amazon FBA services have been a phenomenal way to boost sales, ease the logistical pressure, and benefit from the supply chain that Amazon has already built. In fact, many sellers will choose to sell on FBA because it allows easy fulfillment of Prime orders, customer refunds, and returns are managed by Amazon. FBA services intend to provide the seller with an all-encompassing experience, taking on the role of customer service and providing multi-channel Amazon fulfillment.
Amazon, however, is not immune to mistakes. Today, Amazon is able to identify and reimburse sellers for discrepancies in fulfillment and fees. However, Amazon’s reimbursement rate is usually about 33%. They even created a system of detailed reports, a claims department, and an 18-month retroactive window to identify the other ~66% of discrepancies that they do not reimburse.
As an Amazon FBA Seller, there are several proactive steps you can make that will ultimately benefit you. By simply doing the three things described in this article, you may very well be preventing profit loss, as well as reducing the number of discrepancies that can appear in your inventory.
As long as you are informed and organized, your relationship with Amazon and the process of using FBA services can be easier and more efficient. Here are three things you can be doing now that will help you assist Amazon during the reimbursement process.
1.Track Shipment Weights and PO Slips
The first step to ensuring that you protect yourself in the event of a discrepancy with Amazon’s fulfillment fees or lost inventory is to track and keep records of your shipments’ weights and keep copies of all of your PO slips.
When creating a shipment to send to Amazon FBA Centers, measure fees by utilizing category type and product size tiers within Seller Central. Using this tool within Seller Central helps ensure that sellers are able to determine which fees apply to their product size tier. Not only does this help make sure you know what you should be charged in case you are charged incorrectly, but it also helps make sure that the right amount of products get scanned into your inventory when received at an Amazon warehouse.
Inputting the correct weights and dimensions of the boxes and/or pallets being sent is essential for making sure you are getting charged the right fees. It is also necessary when trying to ensure that the correct amount of inventory was processed at the Amazon facility you sent your inventory to. One of the most common discrepancies GETIDA has discovered is in inbound shipping problems. If for whatever reason, Amazon’s receiving centers do not accurately scan in your inventory, your PO slips and shipping weight and dimensions will be key to helping you get the cost of that inventory reimbursed quickly and efficiently.
Tracking accurate shipment weights and keeping PO Slips in order can really prevent what could be an incredible struggle for you if you do not keep these records. If your shipment is sent to an Amazon warehouse with proper labeling and preparation, Amazon will be able to reimburse any overage fees and discrepancies in the management of your inventory.
2.Track the Dimensions of your INDIVIDUAL Products
Another way to eliminate potential loss is by measuring your products accurately. The best way to do this to date is simply by taking photos of your products with a ruler or utilizing something to scale next to the item. This is a good practice to ensure you, as a seller, can prove the products’ size.
The reason the size of your product matters is because of the sales referral fee and other fees that are based on the dimensions of your individual products.
For instance, if you initially set your product to be shipped as a small standard size product for a fee of $2.41, and they happen to change the box the units are being shipped in, Amazon will measure it and may have a different outcome. Perhaps they begin charging you at $4.71 for a large standard package size, which tells you to revert back to a small standard size. Though many times Amazon will not remeasure these items and you are paying 95% more on every sale unless a claim is filed.
Amazon provides advice on how to avoid fees with smart packaging and they describe the process following the product after it is packed by the seller. After the package arrives at the fulfillment center, it is carefully weighed and measured by high-tech scanners and measurement tools. Amazon goes as far to mention that having tape hanging off the box could lead to the scanner counting that as a part of your package. Providing tips such as packing soft items more tightly, or ensuring that packing material or tape is not interfering with the packages total area.
In some cases, companies may be charged double in FBA fees because of incorrect measurements. Images providing correct measurements will allow sellers to have an easier time communicating with Amazon. FBA Sellers are able to contact Amazon and request them to remeasure the items. This can result in the seller receiving a reimbursement for the mistake.
3.Check your category and associated fees
There are over 20 categories open for selling through Amazon, and products do not need special permission from Amazon to be listed. Though some categories only allow listings for new products, and some categories have guidelines sellers must follow. Each product category has a referral fee, some larger than others, and product category fees are also constantly changing, making it difficult for sellers to keep track.
There is a tremendous difference in selling a product in the appropriate category that will bring the seller the most success. For instance, watches in the ‘Watches” product category have a 16% referral fee for the portion of the total sales price up to $1,500, as opposed to selling watches in the “Jewelry” category which has a 20% referral fee. These aforementioned “Jewelry” referral fees have changed for the dates between February 22, 2018 – February 22, 2019. Between these dates, referral fees will be 20% for the portion of the total sales price up to $250 and 5% for any portion of the total sales price greater than $250. What if another seller posts the same watch as you in the jewelry category unknowingly? Now you are paying an extra 4%+ on the product due to another seller’s choice.
Books are a lucrative category to utilize, as they have a large profit margin, with a referral fee of only 15%. Baby products, musical instruments, and outdoor equipment have lower referral fees of 15% as well. Possibly the lowest of Amazon’s referral fees is regarding electronics at only 8% for a referral fee, which is positive as new products in this category are consistently emerging.
Tracking the category you’re in will ensure that if a move does happen, you are aware of it quickly. The faster you know of a discrepancy, the easier it will be to remedy it. This ultimately means more money in your pocket.
Practicing these three logistical suggestions will not only increase profitability but ensure your processes are running more smoothly. Varying costs and fees can be difficult to track, let alone attempting to file claims to retrieve lost fees. Hiring a freelancer or a service like GETIDA can help you by keeping these records for you, being your eyes in identifying any discrepancies, and managing the claims process – which is key to ensuring that your profit margins are as high as possible.
Gina Soffian of Getida