Whether you’re a new seller or an experienced seller, there are issues that you need to avoid to prevent incurring more Amazon FBA fees. Normally, these are common mistakes that new sellers make but some experienced sellers may also take these for granted.
With the excitement of finding a new product to sell or having a new target market comes the risks and issues that an Amazon seller has to face. If you are not careful, it may cause you a lot of money. However, these mistakes can be inevitable. Make sure to learn from these mistakes and avoid similar issues from happening.
Amazon FBA Issues – Common Seller Mistakes
- Taking refunds and returns for granted – When a unit is returned or refunded, the Amazon FBA fees are not. For example, a unit costs $20. Customer requests for a full refund, so you give him back the $20. Amazon only reimburses you for the value of the product minus the FBA fees. So, if the FBA fees are $10, you only get $10 back. That’s a loss of $10.
On the other hand, if a customer returns the product and Amazon deems it as sellable. You still have to pay the Amazon FBA fees associated with the same product when you resell it. Thus, you pay for 2 items with an actual sale of just 1 product.
What to do about it? Evaluate product reviews and feedback and check for the main reasons for returns and refunds. You may need to revamp your packaging to include instructions, update your listings, or improve your product.
It is also best to use a refund calculator so you can adjust your prices and spending accordingly.
- Inaccurate computation of shipping costs – Amazon’s shipping algorithm sends your products to the fulfillment center where most of the customers are, so it will reach them faster. Some sellers make the mistake of computing only the fulfillment costs to the nearest fulfillment center. What happens is that Amazon may send your products to a fulfillment center 100 miles away from you. Thus, if you are not aware of this and have set aside a budget for the products to be shipped to a fulfillment center that’s 10 miles away from you, it’s going to hurt your wallet.
- Deducting ad spend from the Amazon payout – If you let Amazon deduct your ad spend from your payout, you are just letting them use it and it reduces your payout.
What you can do is to use your credit card that’s registered with miles, points, cashback, or rewards. This way, you spend for your ads and you earn cashback from your credit card provider.
- Relying too much on competitor’s margins – Perhaps the top issue that sellers commit is wanting to outsell a competitor. When this happens, you sell a product that’s similar to your competitor’s. The common mistake is that the seller fails to factor the dimensions of the product, including the packaging. Remember that Amazon FBA storage and fulfillment fees consider the dimensions and weight of your products and how much space it will consume. Thus, if you are not aware of the correct dimensions, you may have failed to compute the accurate fees and may end up shelling out more than you planned for.
Use Helium’s profitability calculator to get the exact dimensions of your competitor’s products and compute the fees. This will save you from future surprises on additional fees.
Most sellers get so excited to sell on Amazon that they may take some small concerns for granted. This would result in mistakes that would incur additional fees that are way out of budget.
When you are a newbie seller on Amazon or an experienced seller who would like to venture into new products, make sure you are equipped with the proper tools. Avoid hasty decisions and copying competitors simply because you believe that you can do better.
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Forget the mistake, remember the lesson– Roald Dahl