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Originally published on June 20, 2024, updated November 20, 2024
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Selling on Amazon is not for the faint of heart. It’s a competitive space with many challenges, from increasing FBA fees to listing hijackers.
To be a top seller you’ve got to have an excellent team or constantly shift between several roles. Outranking your competitors, effectively managing your inventory, maximizing your profits, optimizing listings, and protecting your account health are essential to your success.
Unfortunately, there are numerous Amazon fees and potential pitfalls that can result in a lower return on your investment. Keep reading to learn how to avoid or mitigate these challenges to stay on top!
Amazon’s FBA platform provides many benefits for sellers. Outsourcing the order fulfillment process saves serious time so you and your team can focus on other tasks, like developing new products or working with influencers. After all, there’s no shortage of things to do to keep your Amazon business running effectively!
Although participating in FBA allows you to skip many of the costs associated with picking, packing, and shipping individual orders, it does come at a cost. Amazon recently rolled out more granular size tiers and reduced standard FBA fees, but it also introduced a few new fees you need to be on the lookout for.
Effective inventory management helps you avoid these fees, so having a good process for forecasting and managing your FBA inventory is critical. Amazon doesn’t want to store your inventory indefinitely, and the longer it’s there, the more it costs. In addition to the standard monthly storage fees, Amazon charges an FBA aged inventory surcharge for units stored in fulfillment centers for more than 181 days.
Analyzing your FBA fees regularly can help you identify ways to reduce fees. SellerPulse by eComEngine offers fee insights by product, fee type, and week over the past 12 weeks so you can instantly see trends and understand where you're spending the most money on fees.
Related reading: Guide to Amazon FBA Fees
Meanwhile, you also need to keep enough inventory in stock to avoid the new low-inventory-level fee. Amazon uses the FBA Minimum Inventory Level metric to recommend the lowest number of units per product you should have available at FBA to meet customer demand. You can view the metric on the FBA Inventory page in Seller Central.
The low-inventory-level fee applies to standard-sized products with consistently low inventory relative to customer demand. Amazon uses historical days of supply at the parent-product level to determine how many days of supply are left at FBA. When that number is below 28 days for both long-term (last 90 days) and short-term (last 30 days) historical sales, you’ll be charged the low-inventory level fee.
The fee is not charged when a product is out of stock. It also doesn’t apply to products that have sold fewer than 20 units over the past seven days, products enrolled in FBA New Selection, products that are automatically replenished by Amazon Warehousing & Distribution, and new Professional sellers for the first 365 days after the first inventory-received date.
Staying in stock without under or overstocking is tough, but it’s the best way to avoid both the low-inventory-level and aged inventory fees. RestockPro by eComEngine is one of the first tools on the market that can help with this. It analyzes hundreds of data points to give you up-to-date restocking suggestions so you know what to restock and when to place the order.
Amazon is committed to delivering products faster and at lower costs. The FBA inbound placement service fee, which is charged based on how your inbound inventory is sent to fulfillment centers, went into effect in March 2024. You can pay reduced or no fees depending on the inbound placement option. However, many sellers have seen an increase in their inbound shipping costs or been unable to qualify for no fees due to the available placements, so your mileage may vary depending on the products you’re placing and where you’re sending them.
Related reading: What Does Amazon FBA Cost in 2024?
Products with a high return rate are subject to a returns processing fee. It applies to products with a return rate higher than the category-specific threshold. The FBA returns processing fee is calculated based on your product’s size tier, weight, return rate, and return rate threshold. The threshold varies by category. Categories like beauty, groceries, and office products have low return rate thresholds, which means there is more risk of this fee being charged if you get a lot of returns.
FBA fees are assessed based on product size tiers. If the dimensions of your product change, you may be charged additional fees. However, your product might have been measured incorrectly, resulting in unnecessary fees. Keeping an eye on your product dimensions can help you save money.
SellerPulse includes a dimension change alert to prevent this from happening to your products. When you receive the alert, simply request remeasurement to determine whether the new size tier applies to your product.
You can help reduce FBA storage costs by changing your packaging. Smaller boxes can help prevent items from shifting too much in transit, possibly reducing damage and saving you on storage fees at the same time. Also, the Amazon Ships in Product Packaging (SIPP) program can help you save, but it’s important to have product packaging ready to ship. After all, you don’t want to rack up negative seller feedback and reviews due to packaging issues that result in product damage or other problems!
Advertising your Amazon products can boost your sales, but the costs can add up fast. Keep a close eye on your budget and avoid sinking too much money into advertising products that aren't converting. Working with an Amazon agency or advertising software is a great way to prevent unnecessary advertising costs. Focus on spending your ad budget where it matters most to protect your profits!
Instantly view your total ad spend and TACoS (Total Advertising Cost of Sale) with the SKU Economics report in SellerPulse. See weekly changes in order of ASINs with the most ad spend to identify what's working and where you might want to make budget updates.
Losing the Buy Box can result in lost sales. Amazon will suppress the Buy Box due to the competitive pricing threshold if your product's price is lower on other platforms. If you're competing with Amazon as a seller of the same product you're selling, you'll be sharing the Buy Box (and sales) with Amazon. If reselling is part of your Amazon sales strategy, you need to monitor the Buy Box.
SellerPulse includes detailed alerts that notify you when you win or lose the Buy Box. You can see the competing seller's name and whether the seller has been identified as a scammer. The Buy Box report gives you losing offer details so you can decide when and how to compete.
Keeping your pricing on Amazon competitive is essential, but it's also important to protect your profitability. Automated pricing wars can quickly get out of hand and end up in a "race to the bottom" where neither you nor your competitor makes any money! Be sure to set minimum and maximum prices when working with an Amazon repricer or Amazon's own pricing rules. Do the math and ensure you can profit when selling at your minimum price.
Running an Amazon business requires you to focus on many tasks each day. eComEngine has been creating software solutions for Amazon sellers since 2007. Our software streamlines everything from Buy Box tracking to FBA inventory management so you can focus on finding new opportunities to grow your business.
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