While economists are far from certain, most agree that a recession will hit by 2023. Inflation and rising interest rates have slowed the US economy, prompting many consumers to be conservative with their purchases. Consumers are tightening their budgets, and competition is more cutthroat, which is why eCommerce businesses and brands must be savvy to survive the recession.
Amazon Supplier Costs & How to Lower Them
Amazon is constantly changing the game when it comes to e-commerce. While that can be a headache for sellers, it can also be beneficial. Amazon has done much work to make its marketplace more attractive and competitive than ever before. As a result, your options as a seller have never been better—or more complicated.
What are Amazon FBA Supplier Costs?
Amazon FBA stands for “Fulfillment by Amazon” and refers to a fulfillment strategy where Amazon warehouses your products and fulfills orders on your behalf. In short, when someone buys from you on Amazon, it is actually from Amazon. However, you need to consider the fees associated with using their service when calculating COGS (cost of goods sold). According to the latest US FBA fulfillment fees update, there’s a 5% fuel and inflation surcharge applicable to all product types and units.
How can you reduce supplier costs without hurting your business?
The first step is finding a dependable supplier. This will allow you to get your order shipped as soon as it’s complete without paying for weekends, holidays, or times when the factory is closed. Consider container shipping for lower per-unit costs and fewer wasted days on inventory stock in transit. Thirdly, buy directly from the factory, so you don’t have to pay any middlemen.
Additional Tips to Lower Supplier Costs:
- Get your order shipped as soon as it’s complete.
- Avoid paying for extra days of storage.
- Avoid paying for weekends, holidays, and times when the factory is closed.
- Plan to avoid last-minute freight costs.
- Have multiple shipments going out at once.
- Use less space on pallets (and fewer pallets).
- Buy directly from the factory.
- Negotiate costs for extra services like documentation and inspections.
How Exchange Rates Impact Amazon Businesses
Exchange rates are ever-changing, so it’s crucial to stay updated on current trends to maximize profits and minimize losses. When buying goods from international suppliers, you may need to convert prices into your local currency (USD), incurring fees and potential losses. Amazon converts your foreign currency earnings into dollars based on current exchange rates. When the rate is favorable, your products are cheaper for international customers; when it’s unfavorable, you’ll need to charge more.
Best Way to Lower Package Pricing for Products
Lowering your product costs is one of the best ways to increase revenue. However, it can be hard to find suppliers that will give you a discount on products and services without much negotiation. Fortunately, there are many tactics you can use to negotiate with suppliers and get better prices.
Tips for Lowering Package Pricing:
- Find suppliers that don’t impose minimum order quantities.
- Research and compare current prices with what you can find on the market.
- Negotiate with suppliers, Amazon, and customers.
- Consider working with a sourcing agent.
- Think about long-term contracts to secure better pricing and delivery terms.
Amazon PPC: Stop Wasting Money on Bad Ads
Selling on Amazon gives your eCommerce business a platform to sell to millions of people. This means you need to maximize your advertising dollars to reach out to potential leads. However, if you haven’t yet mastered the art of Amazon advertising, you are not alone. Pay attention to what you’re spending with Amazon and look for ways to boost conversion rates, reduce fulfillment costs, and make your products visible on the platform.
If you feel like you’re wasting advertising dollars month after month, losing sales to competitors, or missing out on potential revenue, Velocity Sellers has an expert team of Amazon seller consultants who can manage and grow your Amazon presence. We do all the hard work for you so you can focus on the things that matter most.
For a comprehensive deep dive into recession-proofing your Amazon business, check out my full original article: How to Recession-Proof Your Amazon Business in 2023.
Published by: Nelly Chavez
