Learn how to increase your profit margin by reducing FBA Fees

When it comes to business, profit margins are very important. This is because they show how much profit a company makes after all its expenses have been paid. The higher the margin, the more profit the company is making. 

In this article, you will learn, how an Amazon Seller managed to save thousands of dollars and increased their profit margin by reducing the FBA Fee by $3.91.

FBA Fee is a very important factor in Amazon Business. Some private label Amazon Sellers just blindly copy their competitor’s packaging without doing valuable research. This can lead to unreasonable expenses caused by excessive packaging or unpractical design.

Before couple of months, an Amazon Seller noticed they are paying very high FBA Fees, which were $10.98 / Unit. This was a bulky product (having higher dimensions but low in weight) and Amazon was charging them on dimensional weight, so they decided to review it.

The dimensional weight ended up being 4.975 Lb which is unchangeable due to already tight packaging. After going through several factors, they noticed their product was falling in Small oversized tier, just due to their 2 dimensions (Longest side and medium side, longest size was 18.35 inch and medium size was 14.72 inch), so they decided to review the product packaging to reduce these two dimensions by a few or half inches. After several re-arrangements, they managed to change the position of their complimentary products and reduced both dimensions by 0.41 and 0.75 inch, while the shortest side was increased by 0.20 inches.

After finalizing box sizes, they asked their supplier to order a similarly sized box and try packing the product. The supplier did this successfully and then they redesigned the product box and asked the supplier to get the same boxes for their next shipment.

They waited a lot, because it is a highly demanded product and the seller keeps huge inventory in his own warehouse and in FBA too.

Their new inventory arrived to FBA and the FBA Fee automatically dropped to 7.07 (as they calculated before 5 months and Amazon itself does cubic scan when FBA Shipments are sent).

They didn’t celebrate too early and waited further 10 days to open a case and request a re-measurement of their SKU. The results were identical.

Now, the product is falling under the large standard-size size tier and they are paying a $7.07 FBA fee instead of $10.98 (-$3.91 flat) while their unit weight and dimensional weight remains the same.

They sell 800 ~ 950 units average per month and this month their projected sales are 867 units, which means they would straightly save $3390 during the month.

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