048: Tactic Tuesdays: How To Beat Ridiculous FBA Fees

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Welcome everyone to a Brand Fortress HQ podcast.

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On this Tactics Tuesday episode, we're going to be discussing how to beat the ridiculous FBA fees that we've been getting from Amazon.

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This is something that sellers are really struggling with as FBA fees continue to go up, and so today, what we're going to talk about is, a lot of times, we feel like we don't have a lot of control over those fees, and so today we're really going to talk about what we can control and what we can do about those fees, both on Amazon and also looking at some of the other strategies and options that are out there.

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So with that, I think, the first thing that I want to pass over to you, mike, and talk a little bit about how you guys are tackling this with one of your products as far as making it more modular in order to reduce some of your FBA fees.

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Yeah for sure.

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So one of the things that most sellers should know this.

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But with Amazon, in terms of FBA and their pricing tiers, in terms of fulfillment, when you jump from large standard size to oversize, there is a significant jump in fulfillment costs.

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And you know, obviously back in 15, 16, 17, you know fulfillment costs really weren't that bad.

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Amazon was pretty reasonable.

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So you don't really worry about it a whole lot oftentimes because your margins were good.

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But now, as our margins are getting squeezed, we have to pay a lot more attention to that.

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And as FBA fees are so much higher, now we started looking at, you know, what can we do?

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Because we're getting eaten on two ends.

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So because we offer this unlimited free replacement warranty on all of our pool tools, we not only have the fulfillment expense on the front end when we ship the product out to the customer, but we have this fulfillment expense on the back end when we're shipping out replacements.

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And in the past, on all of our pool nets, when somebody would request a replacement, we would send out an entirely new pool net.

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We wouldn't send out parts, it was always the full unit which, again, early on, we could do that.

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The fulfillment fees were reasonable and our margins were pretty hefty and our margins were pretty hefty.

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We're moving into territory now where that is just not any longer sustainable, not only on the front end but also on those back end warranty replacements.

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So we kind of went back to the drawing board and said, okay, how can we turn?

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And this is specifically on our Hero products.

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So some of our nets are already in the standard size, but one of them that was on the bubble was our 19 inch.

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We were a little bit over on the length and width dimensions that we could have.

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So 18 inches by 14 inches is the largest that your product can be the packaging and still stay within the large standard size, which are still fairly reasonable.

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Fulfillment Our product was over that it was over 18 inches.

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It was more like 19 and some change, I think.

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And so we went to the manufacturer and just said we need to get this into a package that's under 18 inches by 14 inches.

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How can we do it?

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You know, like, can we take the handle off?

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Can we?

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You know what's the possibility here?

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And so one of the things that's interesting is that the first manufacturer essentially told us we can't do that.

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We had two different manufacturers that we receive pool rakes from, or nets same difference in the pool category and so we went to the other manufacturer and said, okay, how do we do this?

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Like we, we need this to happen.

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And so they, you know, kind of put their heads together and they came out with a different design that would allow us to get into that packaging.

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But in that process we actually decided all right, if we're going to redesign the product anyways, let's just redesign it so that the entire thing is modular.

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So it wasn't just removing the handle and changing how we packaged it.

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We took it to that next level to say, okay, how can we create a product where now we can do warranty replacements in parts instead of in full units, so now we can send out just a net or just a plastic rim or just a handle, and so our warranty replacement costs not only will be less because we don't have to send out the whole unit so the fulfillment is way less and the cost of the warranty replacement is less but also just that fulfillment fee is way less.

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We're going to save almost half of the fulfillment cost on the initial shipment of that unit by moving it to large standard size, but we're also going to save more than half of our fees that we pay for warranty replacements by doing the same.

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And so I guess that the two keys.

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There is one how could you potentially redesign your product to get it under that next threshold in terms of the shipping tier levels at Amazon?

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But also, if you're going to be in that process, what other design changes might you want to make if you're going to redesign it anyways?

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And then, beyond that, if you have a manufacturer that says that's not possible, then I would find another manufacturer who can do it, or look to find a designer, you know, on Upwork or something like that, and say, hey, these are the current.

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You know, this is currently what we have.

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How can we redesign this Because there probably is a way I can almost guarantee you, there's probably a way for most products that you could do a redesign and get into a smaller package.

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Yeah, I think that's a great point of just really looking at those dimensions and then thinking outside the box as far as hey, can we make this more modular?

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Is there a way that we can make it under those dimensions?

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Matt, I know that recently you're working with a couple of different brands that are working on really setting a lot of this stuff up.

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What are, or do you have, a couple of things you know really setting a lot of this stuff up?

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What are, or do you have, a couple of things that you look at or considerations when you're thinking about setting a product up to be as efficient as possible when it comes to FBA fees?

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Yeah, so you mentioned thinking out of the box and I love Mike's how he made his product more modular.

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But also it's not just the product itself but also the packaging you know we had.

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I worked with the brand and one of their products is in a poly bag and the poly bag the way that they calculate FBA fees and we found this out actually at a conference that we were at they will hold the poly bag up and they'll measure the poly bag, not the product.

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So if you have extra space in your on your poly bag, if it's vacuum sealed, that extra space in that poly bag is getting measured as dimensions on of your product.

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And when we realized this and actually I got back from this conference and I was like, well, wait a second, well, I wonder if that's what's happening here and that's why our our FBA fees are so much higher than what it's saying our competitors are.

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And sure enough, I mean there was about 12 inches of extra space on that poly bag that were being calculated as the size of the product.

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So it's not just the product itself but it's also the packaging that the product goes into that plays a really, really big part in what your FBA fees are.

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I can attest to that.

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I'll second that because we ran into the same issue and this is well.

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It's not exactly the same issue but essentially results in the same thing.

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We were packing in poly bags for quite a while and because of the way that, first of all, Amazon's not consistent about how they measure it, so they don't always measure it that way.

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Some employees will, some employees don't.

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So if you ask for a remeasure, sometimes you can get that smaller size because they'll measure it in kind of the smallest dimension.

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But the interesting thing here is that if it's kind of hard to describe, but if you were looking at our rake, like you've got the mouth of the rake and then you've got the handle, that comes up like this.

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So if you were to measure this way on, this was the smaller version of our rake, the 18 inch If you measured it straight across and you measured it this way, you would be under that 18 by 14, because it was like 17 and a half by 13 and a half or something like that.

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So for those that are listening, mike's talking about kind of vertically the dimensions on the rake, versus horizontally.

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Right.

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So, but what's interesting is that, or actually I should, is that?

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Or actually I should restate that we actually we weren't, we were a little bit over.

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But if you put this into a box the right way, you can place it into a box because it goes diagonal, which is really odd.

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But as soon as you change that orientation and you put it inside of a box, now all of a sudden we were under the 18 by 14, same product.

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We didn't actually change the product at all, we just put it into a box and we changed how we put it in there and we could get under the 18 by 14.

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So the packaging does matter and sometimes just having it in an actual package versus a poly bag can make that difference.

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Yeah, the same thing happened with I give another example heat resistant gloves.

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The heat resistant gloves were packed in a way where, if they were hanging on a retail shelf, you could see the whole glove, and the differentiator of the glove was that it had longer sleeves than the typical ones that you find on Amazon.

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But when we started going through and optimizing our FBA fees and looking to see how we could minimize those, it was the simplest fix.

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The only thing that we did is we folded the gloves.

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The gloves, we put them in a box that without I mean, who cares really about seeing the glove through the box?

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It's not that big of a deal, because they know what they're going to get when they see your listing images.

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We folded that those gloves, put them inside of a smaller box and instantly lowered our fba fees yeah, and I think so.

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You guys brought up some great examples I do want to just kind of circle back to, because I think that this is a topic, even among sellers that have been on Amazon for years, of really understanding how these things are calculated and, quite frankly, how those are calculated has changed over the last few years as well.

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So I think one of the most important things to understand that's already been brought up is what tier your product falls into, based on the dimensions, and so, falling into the small standard versus the large standard versus oversize, the heavyweights, whatever it happens to be, those categories make a huge difference.

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In addition to that, understanding dimensional weight.

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So essentially, amazon used to just charge based off of what your actual weight of your product is.

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The problem with that is somebody gave me this example of okay, well, if you have, let's say, you sell, you know, like plastic forks, well, you could fill up an entire truckload of plastic forks that may only be 100 pounds, where if you put regular products in that, it would be 10,000 or 50,000 pounds or whatever it happens to be.

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And so if you're a shipping company, if you're only charging by weight, well, you're now shipping that product in a semi for, let's call it 500 bucks or $1,000 or whatever it happens to be, and that's a huge loss.

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And so that's why they've gone to this dimensional weight, where they're looking at all three of those different dimensions, and then I think it depends a little.

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There's different calculations that are slightly different, for, like UPS versus FedEx versus Amazon, every company has a little bit different variation on it.

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Amazon does not do a great job of showing you how to do that.

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You really have to dig into the details in order to find their formula, but it is on their website, I believe.

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It's like the three dimensions multiplied together, divided by like 139 or something like that.

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Then I'll tell you kind of what the dimensional weight is for your product, and then, of course, they take the best of which one.

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Everyone is higher.

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So if you have a product that is very dense, and let's say that the dimensional weight for your product is, you know, five pounds, but if you put in, you know, but it's heavy, so it actually weighs seven pounds, well, they're going to charge you for the seven pounds.

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So just understand that they're going to charge you for the seven pounds.

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So just understand that they're going to charge you whichever one is more in their favor.

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So I think it's important to understand, kind of, how those calculations are made, to understand, so that way you can look at it and say, okay, how can I optimize my product?

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And then look at, am I close to that next weight threshold, like, if your product is, you know, 3.1 pounds, is there a way you can get it down to 2.9?

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So that way you don't get charged for that extra pound.

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And depending on what category you're in, that might be, you know, an extra pound, might be, you know, 30 cents, or it could be a couple of dollars difference per item.

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So it it a big difference, especially if you're going from certain categories to others, in how much you're paying for fulfillment through FBA.

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Yeah, it's not just dimensional adjustment.

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Also, weight adjustment is definitely something to pay attention to, for sure, and I think it's also critical to recognize that the effects of a change like that work their way all the way downstream.

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So, like we talk about fulfillment because that's one of our biggest expenses these days, but recognize that up the chain there are other expenses that are related to the dimensional aspects and the weight aspects of your product.

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So what's it going to cost to ship it here Again, dimensionally, if you can shrink your package by two inches?

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Well, that could be the you know.

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Here's the thing that oftentimes I think is forgotten.

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Sometimes sellers look at it and they think, well, that little change in my packaging size isn't really that significant.

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I wouldn't really be able to fit that much more in a container.

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Because they're thinking of it by percentages right, Like that's only a 5% reduction or maybe a 3% reduction in the size of the package.

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But the problem is, depending on that configuration, how you're able to actually pack the pallets and then pack the actual container might change significantly.

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So it's possible possible that a two or 3% change in your packaging dimension in one way or another could add 10 or 15% to the number of units you can actually get into a container just simply because of how it can now be stacked on a pallet or how the pallets can be put into the container.

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So don't underestimate how much difference there could be in your overall costs by a very small change in your packaging and or in the product itself.

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Yeah, and I would add to that I mean you can go back and listen to the episode that we did with Gatita.

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They did a good job of explaining it in the sense that Amazon remeasures your packaging on a regular interval and so if they decide, essentially if they get a bad measurement where they add, you know, additional inches for a wide variety you've, you're aware of that change and then also to get re to submit for reimbursement for that.

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So once you get it corrected, you can have Amazon actually reimburse you for that.

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So that's the other important thing is is that you want to make sure that you're also have some sort of system in place in order to monitor the Amazon is continuing to measure your product correctly.

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And making sure that you're in packaging that's easy to know how to measure.

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Yeah, because that differential between the poly bag and the box for us even though you know in this particular case it changed the angle and so we were but it also gives them actual, very concrete dimensions to measure when you have it in a box versus in a poly bag.

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So if you're anywhere near the dimensional requirements of one tier versus another, even though it might be more expensive to put it in a box, you might actually save money that way and save hassle, because when we were in poly bags we were requesting remeasures by Amazon all the time.

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I mean, it was literally weekly we were having to request remeasures and of course you have to do that multiple times before you actually get the right measurement.

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And so just put it in a box and make it easy to measure.

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Yeah, and a couple of tools that I'd recommend too.

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Is that?

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So Amazon does offer and I'm going to put it in quotes here their revenue tool.

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It does actually give you a pretty good, accurate reading on how much your FBA should be costing you, based on your dimensions and the weight of your product, and if the product's live, you can already put it in ASIN.

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That's probably the most basic tool.

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And then, of course, you can kind of test some different dimensions and say, okay, well, if I made it a little bit shorter here, you know whatever.

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And then you can look at the kind of the size categories.

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And then there's other tools out there.

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They don't do anything in the oversized category, but I think they do.

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I know they do large standard size and small standard size.

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I think they do small standard size as well.

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But there's tools out there like SoStocked, where they actually have free calculators where you can plug in like okay, here's my, you know current size of my product, and then they'll make some recommendations as far as you know here if you can adjust your size to this.

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Here's how you save more on that palette and here's how you know you save more on on FBA fees.

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So I haven't used them actually for, you know, like inventory management, necessarily, the calculator that they have, that they offer for free, is very useful, so I'll give a tip of the hat for them for that piece of it as well.

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So there are some, some good tools out there and I really encourage, you know, listeners to this is one of those things that should probably be on your checklist, like every six months to look at.

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Hey, how can we adjust the size of our product in order to lower FBA fees, because they're just going to continue to go up.

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So you have to have some sort of plan in place in order to stay competitive.

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Yeah, it's important to not rest on your laurels and just complain about the rising FBA fees.

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In most cases, there's a way to combat them and, like you said, I think it's part.

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It's necessary to have that as part of your checklist.

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I mean, we had a student that, for whatever reason it was and it wasn't a mistake based on like they had a polybag that they were measuring wrong, like they got the weight of his product completely wrong and like they added six or seven pounds.

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It was a pillow, it was a flower shaped pillow that they added like six or seven pounds to the 20 pound pillow.

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Right and like and he wasn't paying attention to that.

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And then so at the end of the month he starts, you know, he puts his, puts everything in the QuickBooks and it was like, well, wait a second, why?

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Why are my FBA fees?

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But like, that's why it's important.

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And he learned that lesson the hard way.

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And now part of his checklist is every week going in to make sure are my FBA fees right?

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And if they're not, here's what I need to do.

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And it took him.

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I mean, it almost shut his business down and he was only, you know, two, three months into his launch, and that's when that happens.

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So it's super important to have that on your checklist.

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like, you said, john.

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Well, and that's a good point too is that one of the things that I learned in our interview that we did with Gatita or in that episode, was that Amazon changed the look back window now to where it's only 90 days.

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So had that, you know, he not caught that in those first couple of months, he could have been completely out of pocket for that money for a long time.

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The other thing that I wanted to bring up for this, too, is that sometimes I know in a lot of cases you might have somewhat limited options as far as changing the packaging size or making it, breaking it down to different components.

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But another thing you can look at is, especially if it's a product where you're selling it in some sort of pack size, is really looking at your pack sizes to say, okay, currently we offer this in a six and a 12 pack?

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What would happen if we offered it in a four pack or we offered it in an eight pack or something like that, in order to optimize that weight or dimensional size that we order to optimize, you know, kind of those that weight or dimensional size that we had talked about as well?

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Well, and this might not be obvious too, because when you think about that strategy, what you, what you immediately start to assume, is what would happen if I made the package smaller.

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Right, how much would I save?

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But you could also think of it in the reverse, like how much bigger could I make the package and still keep essentially the same fulfillment costs, or relatively the same fulfillment costs?

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So maybe I add two units to a six unit package and I make it an eight unit package and the fulfillment fee goes up by 20 cents, but I make an extra five bucks or whatever it is because I put two more units in there, so don't think about it only in one direction.

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Make sure you're thinking about it in both directions.

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Yeah, yeah, Well, and I think one other thing that I would add to that too is that another dimension that may or may not play, depending on your brand, is also thinking about price, because, weirdly enough, once you start getting down into the lower priced items, that also affects how much you pay for FBA, because there is a category of low priced items.

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Now, generally, that's not the space that we spend a lot of time in, because, quite frankly, it can be kind of a pain in the butt With that said, if we talk about tripwire products and those types of things in order to bring people into your brand, to do like samples and those you know and things that are kind of in that that realm, there are use cases for that and just being aware of like, hey, if we wanted to do this in a smaller size so somebody could try it out for you know 10 bucks before they buy.

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You know a 50, a hundred $200 version of it.

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Understanding what those FBA fees, that they're not.

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They may not be the same as what you think they are, because the price is the price also impacts it.

00:21:04.811 --> 00:21:09.310
So if it's a $10 product, you might have a lot lower FBA fees than what you would suspect.

00:21:09.871 --> 00:21:10.932
Yeah, yeah.

00:21:10.932 --> 00:21:20.145
So just watching, you know like if you're priced at $11 and you could get away with 10, maybe your FBA fee goes down by $2 with that dollar change.

00:21:20.145 --> 00:21:22.076
So certainly pay attention to it.

00:21:23.070 --> 00:21:35.074
Yeah, I work with a bottled water brand and we send the bottled water to influencers and we have currently how we launched, we have a 12 and a 24 pack and they're heavy.

00:21:35.074 --> 00:21:36.037
I mean it's bottled water.

00:21:36.037 --> 00:21:36.940
So it was expensive.

00:21:36.940 --> 00:21:38.737
It's expensive to ship these products to people.

00:21:38.737 --> 00:21:48.596
So what we did is we created a six pack specifically for the influencers, but in order to send it through multi-channel fulfillment on Amazon, it had to be a live ASIN.

00:21:49.076 --> 00:21:55.375
So now that six pack has actually turned into a bit of a loss leader for us because, I mean, it's a cheaper price point.

00:21:55.375 --> 00:21:57.057
We're just breaking even on that.

00:21:57.057 --> 00:22:07.275
So I don't, you know, there's hardly any markup, but like that gives people a chance to order it at a lower price point, a smaller fulfillment costs, and then the goal is to get them on subscribe and save anyways.

00:22:07.275 --> 00:22:11.991
So when they love the water, they love, you know, the everything that the water stands about.

00:22:11.991 --> 00:22:13.596
They're going to come back and order it again.

00:22:13.596 --> 00:22:19.327
And that's why that post-purchase process comes in, because someone, we're not going to make any money on the six pack.

00:22:19.327 --> 00:22:31.671
For us it was really just cheaper way to get the bottled water in the hands of influencers, but now we're able to use it as get someone's foot in the door, then get them on subscribe and save, and then that's where our that's where we'll make up the margins on the backend.

00:22:32.550 --> 00:22:32.771
Right.

00:22:33.632 --> 00:22:42.277
So one thing that Amazon has rolled out recently that I think has a lot of sellers upset is the low inventory fee.

00:22:42.277 --> 00:22:57.145
So I do want to, before we wrap up, spend a few minutes talking about some ways to also mitigate the impact of the things that we mentioned before we started recording with SkewDrop as a possible solution.

00:22:57.145 --> 00:23:05.417
Mike, can you talk a little bit about your experience so far with SkewDrop and kind of the principle behind or ideas behind what interested you in it?

00:23:06.000 --> 00:23:06.220
Sure.

00:23:06.220 --> 00:23:09.435
So first of all, our experience with SkewDrop has been terrific.

00:23:09.435 --> 00:23:12.652
Now we haven't been with them that long, but they've been very responsive.

00:23:12.652 --> 00:23:47.045
Their customer service is amazing and essentially the idea behind it is that, for whatever reason I don't know that I could say what the reason is or why they have it set it up this way, but there seems to be within Amazon's ecosystem you know, in terms of getting products into the warehouse and you know all of that sort of thing there seems to be some sort of preferential treatment that they're giving to Chinese sellers, in other words, product that's being shipped in directly from China as opposed to coming in from, say, a staging warehouse in the States someplace.

00:23:47.769 --> 00:24:01.721
So one of the benefits of using SKUdrop is that you get to take advantage of those very same incentives essentially Chinese sellers are getting by shipping it directly to the warehouse from Skewdrop.

00:24:01.721 --> 00:24:09.175
But also, because you get these kind of reduced shipping rates for smaller shipments, you can then spread them out.

00:24:09.175 --> 00:24:17.731
So instead of sending one large container that could get lost at sea, could be caught in the port, could get caught anywhere in that process, right?

00:24:17.731 --> 00:24:23.863
You instead send in LCL shipments and you just space them out.

00:24:23.863 --> 00:24:28.278
So maybe, whereas before maybe you sent one container a month or something like that.

00:24:28.278 --> 00:24:42.044
Now you could send a quarter of a container every week and you just kind of space them out and they just kind of run forward and so the value there is A there's a lot less risk.

00:24:42.044 --> 00:24:46.974
B you're getting a fairly reduced shipping rate on those smaller shipments.

00:24:47.396 --> 00:24:50.222
But it also allows you to control your inventory better.

00:24:50.222 --> 00:25:13.913
So on the Amazon side, one of the things that we've run into is that, for whatever reason, amazon's intake of our products is having, we're just having some major problems in that area and so if you send one large shipment to Amazon and it gets held up, you're stuck because Amazon is going to charge you low inventory fees because the inventory is not actually available for sale, even though it's in their ecosystem.

00:25:13.913 --> 00:25:15.700
I'm pretty certain that that's true.

00:25:15.700 --> 00:25:19.049
Somebody could correct me if I'm wrong, but I believe that's the way it would end up working.

00:25:19.049 --> 00:25:25.594
So they are holding your product hostage but it's not actually in inventory yet, so you can get charged those fees.

00:25:25.594 --> 00:25:33.114
So by sending it in smaller shipments you can control that better, because at least some of those shipments should come in, even if some of them kind of get held hostage.

00:25:33.695 --> 00:25:37.144
I believe that is true with the one exception of some of them kind of get held hostage.

00:25:37.144 --> 00:25:43.363
I believe that is true with the one exception and this is actually a good transition to this with the exception of Amazon warehouse and distribution.

00:25:43.363 --> 00:25:57.482
So, if you have your product in Amazon warehouse and distribution, amazon waives those low inventory fees, which there's at least what we've experienced with clients that are using this are kind of some pros and cons in the sense of it is nice that one.

00:25:57.482 --> 00:26:07.099
Now you don't really have to worry about the low inventory fees, and obviously Amazon warehouse and distribution, or AWD, is cheaper for storage than if you have it in FBA.

00:26:07.099 --> 00:26:26.125
However, you know and in fact I think, mike, you are the one that's talked the most about this is that, or I think you mentioned this that Amazon Warehouse and Distribution isn't incredibly smart about how it replenishes products.

00:26:26.125 --> 00:26:35.505
So by the time it says, oh, I need to send more inventory, you may have enough sales velocity to where you're going to end up running out at FBA.

00:26:37.692 --> 00:26:40.617
The algorithm is not very good at calculating that.

00:26:40.617 --> 00:26:45.353
If your product is a very consistent product, you probably would be fine.

00:26:45.353 --> 00:26:48.851
My guess is that it's not that big of a deal and so you can make use of that.

00:26:48.851 --> 00:26:56.726
But if you have a lot of variability in your sales, your seasonal or things of that nature, I would be very careful with AWD.

00:26:56.726 --> 00:26:59.097
I'm not saying don't use it, and I'll be perfectly frank.

00:26:59.097 --> 00:27:00.423
We have not used it.

00:27:00.423 --> 00:27:01.789
So I'm not speaking from experience.

00:27:01.789 --> 00:27:10.760
I'm speaking from the experience of a number of other sellers that I have spoken with who have used it, and this has been their experience that it's not very good at forecasting.

00:27:10.760 --> 00:27:16.501
So even though you're not going to get those low inventory fees, you're not like there are some benefits.

00:27:16.501 --> 00:27:18.958
Just be aware it's not a perfect system.

00:27:18.958 --> 00:27:20.596
I'm sure it's going to get better over time.

00:27:20.596 --> 00:27:26.719
Awd is still pretty new, so don't write it off, but it's not great right now.

00:27:26.719 --> 00:27:33.078
And also, they don't accept to the best of my knowledge, at least until last time we checked they don't accept oversized products.

00:27:41.269 --> 00:27:44.038
So that's only going to be an option for you if you're in that standard or smaller size tier On top of the low inventory fees.

00:27:44.057 --> 00:27:45.742
does it also remove the new inbound placement fees too, if you're using AWD?

00:27:45.742 --> 00:27:46.084
I think so.

00:27:46.084 --> 00:27:51.462
I think when we were talking to Jamie at Screwdrop, I think he said that that was something that it helps with.

00:27:51.462 --> 00:27:57.471
And just another thing on Screwdrop is that their system is really well integrated, like they're.

00:27:57.471 --> 00:28:14.799
They're integrating a lot of things on their end to make that process very seamless in terms of not only bringing product into their warehouses, but also in terms of shipping out and choosing the different shipping options and integrating with Amazon system, so they're really building out a really great system.

00:28:14.799 --> 00:28:21.481
I think if it's anything that sounds at all like something you might want to test, you know, like, definitely talk to them, because they're on the ball.

00:28:22.324 --> 00:28:33.258
Yeah, and I'll add to that just so that way the folks that are listening to this are aware, like, we don't have any connection with SKU Drop, other than you know, mike, being a user, we don't get any sort of affiliate or anything like that.

00:28:33.258 --> 00:28:40.986
Really, we just want, we're highlighting them because we think that they do a great job and offer a great service.

00:28:40.986 --> 00:28:41.869
Yeah, for sure.

00:28:41.869 --> 00:28:53.579
So the last thing before we wrap up here that I did want to just touch on real briefly and we were talking about it before we hit record was how Amazon FBA compares to Walmart fulfillment services.

00:28:54.059 --> 00:29:15.833
And well, you know, walmart definitely has some more maturity to go, especially in certain categories, and we're going to actually be bringing somebody on soon to talk about you know what is the opportunity on Walmart, what does that look like for different categories, different brands, and you know how can you tell if that's a good opportunity.

00:29:15.833 --> 00:29:19.356
But with that said, mike, you talked about this a little bit.

00:29:19.356 --> 00:29:27.143
Can you talk a little bit about what Walmart Fulfillment Services looks like compared to FBA as far as the fee structure?

00:29:27.789 --> 00:29:30.859
Yeah, for sure, and I think Matt said that he's got some experience there too.

00:29:30.859 --> 00:29:34.317
But we tested Walmart a while back.

00:29:34.317 --> 00:29:37.442
To be honest, we never really gave it a super fair shake.

00:29:37.442 --> 00:29:44.695
You know, I never really expected it to be a good platform for us so we probably didn't invest as much in it as we should have to really see whether it could be.

00:29:44.695 --> 00:29:57.981
But I had a guy contact me recently from Walmart that I guess he's kind of running that side of their you know their business right now and they're looking to bring in more of these larger sellers from Amazon or bring them back to the platform.

00:29:57.981 --> 00:30:02.652
So we were talking a little bit and he was kind of giving me a rundown of things.

00:30:02.652 --> 00:30:09.720
So I went back in after talking to him because it sounded like they were going to maybe give us a little bit of preferential treatment to kind of bring us in the door.

00:30:09.720 --> 00:30:12.153
So I thought, okay, let's see what it's all about.

00:30:12.775 --> 00:30:27.625
So I started doing some calculations with their WFS calculator, the Walmart fulfillment services calculator, to see what it would cost to ship our products to customers if they bought it on Walmart and honestly I was absolutely shocked.

00:30:27.865 --> 00:30:46.503
The price for every single product in our entire catalog was at least half the price of what Amazon FBA is charging us, and on one of our products it's like a third of what we pay Amazon for FBA services to get this to a customer.

00:30:46.503 --> 00:31:25.942
So if you look at that and you think about what percentage of your expense on a sale is FBA and for some products it's exceptionally high you know, using Walmart's fulfillment service could be one way that you can sell much more profitably there than you can on Amazon, and so I would argue that for some products, even if your sales on Walmart only amounted to 10% of your overall revenue, they could be realistically 15% or more of your overall profit, because the profit margin on the Walmart platform could potentially be so much higher.

00:31:25.942 --> 00:31:28.763
Again, we're not back on the platform yet.

00:31:28.763 --> 00:31:39.965
I can't speak from experience in terms of what kind of sales volume we're going to get there That'll be a future episode but I can tell you for a fact that our fulfillment costs are going to be way low on the platform.

00:31:40.555 --> 00:31:48.900
Yeah, I work with a brand that we recorded by Walmart as well, and they are rolling out the red carpet for us in terms of onboarding.

00:31:48.900 --> 00:31:59.221
And when I was having that conversation with the onboarding specialist and she showed me that calculator, I was also floored and it was more than 50% cheaper.

00:31:59.221 --> 00:32:05.224
And for this particular product, I mean I believe that it's it's a good product for Walmart.

00:32:05.224 --> 00:32:17.282
You know, mike, I'm not sure you you sell a premium pool tools, so it might not be as as good, but for this particular product, I mean it's more of a commodity and I think it's the perfect place for Walmart.

00:32:17.282 --> 00:32:19.145
And I mean I was floored.

00:32:19.145 --> 00:32:33.576
And as soon as she told me that we started doing some calculations, I just wished that they would allow you to do the multi-channel fulfillment like they do on Amazon, because I'm telling you, a lot of operations in our business would change tomorrow if that were the case.

00:32:34.238 --> 00:33:00.669
And I'll say something as kind of a side note if you are using Amazon and you're using it the FBA services for MCF fulfillment you need to look for a 3PL, because right now we are like our MCF cost is generally 60% higher than our actual FBA fee to ship that same product to a customer and right now we found multiple 3PLs that we can use that the cost is way less to ship that product to a customer.

00:33:00.669 --> 00:33:03.039
So if you're using them for MCF, stop.

00:33:03.039 --> 00:33:04.583
Find a three PL.

00:33:05.064 --> 00:33:15.076
So, mike, just out of curiosity is do you feel like that's because your product is oversized, or does that apply for your standard size?

00:33:15.096 --> 00:33:19.227
We have some standard size products too, and the MCF cost is still way higher than FBA.

00:33:19.227 --> 00:33:24.244
And going back to the previous conversation, the WFS cost was about half.

00:33:25.067 --> 00:33:34.736
Okay, so even your standard, like your large standard size, to have multi-channel fulfillment is more expensive than if you had it at a different 3PL.

00:33:34.736 --> 00:33:37.462
Okay, and I think that's important for the listeners.

00:33:38.045 --> 00:33:38.846
It used to be the case.

00:33:38.846 --> 00:33:42.942
I mean, like a lot of sellers are probably like yeah, I'm sure it's higher at some other 3PL.

00:33:42.942 --> 00:33:48.142
Of course, Amazon's got better prices is what the assumption often I think is, and it's not true anymore.

00:33:49.084 --> 00:33:49.384
Yeah.

00:33:49.384 --> 00:34:02.915
So then it just comes down to you know, doesn't make sense for you to have inventory at a 3PL and at Amazon FBA, because that's, you know, really the big advantage of, hey, I can have all my inventory in one place.

00:34:02.915 --> 00:34:11.547
But if I'm paying out the nose for multi-channel fulfillment, for orders off my website and those types of things, then, like you said, you really have to crunch the numbers.

00:34:12.195 --> 00:34:14.923
Well, and there's another side to that too, and we've talked about this before.

00:34:14.983 --> 00:34:19.891
But that's really just kind of having a backup source of inventory available for fulfillment.

00:34:19.891 --> 00:34:29.387
Because if you run into a problem with getting your inventory into Amazon and people can't buy your product on the platform, then you're kind of screwed because you're going to lose your BSR.

00:34:29.387 --> 00:34:36.288
If you at least have a 3PL that you can do FBM fulfillment for on the Amazon platform, then at least your listing stays up.

00:34:36.288 --> 00:34:44.202
You know, yes, you know, shipping times are going to be a little bit lower, you're not going to get as good a placement because it's FBM, but at least you're up.

00:34:44.202 --> 00:35:01.860
So from my perspective I still think having that 3PL makes sense because, a, you have that backup source that you can do FBM fulfillment on your Amazon orders, but then, b, you can replace your MCF shipments with shipments from that 3PL and I just think it's a no brainer for most brands.

00:35:01.860 --> 00:35:04.244
I'm sure there's some situations where maybe it doesn't make sense.

00:35:04.244 --> 00:35:06.478
I would be surprised if you're one of them.

00:35:06.478 --> 00:35:10.318
If you're listening, I think these days it doesn't make sense to not have a 3PL backup.

00:35:11.382 --> 00:35:15.701
Well, I think that's a great, as we kind of wrap up this episode, a great action items for our listeners.

00:35:15.701 --> 00:35:26.126
Out there is that if you're using MCF, you probably should compare the numbers and do the math and look at what would that look like if you were using a 3PL instead.

00:35:26.126 --> 00:35:34.007
If you haven't looked at those costs in a while, Matt, what would you say for listeners?

00:35:34.007 --> 00:35:37.880
Do you have an action item that you would give them?

00:35:37.920 --> 00:35:42.492
from this conversation we've had here today that you would give them from this conversation we've had here today.

00:35:42.492 --> 00:35:51.278
Yeah, it's super easy to complain about the rising Amazon FBA fees, and if there's one thing that we've all learned that's not going to change, they're going to figure out ways to get more fees out of us.

00:35:51.278 --> 00:36:10.396
So, instead of complaining about it, I think we've presented a lot of really good action items to take a look at, not only just paying attention to them on a regular basis and making that part of your checklist, but also take some of the things that we've talked about and look to see is are there ways that you can optimize those fees and pay less, as opposed to just griping about them getting bigger?

00:36:10.838 --> 00:36:35.583
Yeah, yeah, and and I'll kind of wrap up here with the action item of you know, take a look at those, especially those calculators that we've talked about, and do the mental exercise, either yourself or somebody on your team, to say what would it take in order to reduce the size of our product or our packaging by 10 or 20% in order to bring down those FBA fees, and you might be surprised that you can come up with some pretty creative solutions.

00:36:36.045 --> 00:36:50.885
That saves you some money and the most important thing is that that money that you save on those FBA fees, that goes right to the bottom line, so that goes right to your profit number and can have a big impact on whether you have a profitable year or you're in the red at the end of the year.

00:36:50.885 --> 00:37:01.748
So I think those are some great action items and a lot for listeners to take away on how they can really combat the FBA fees that we see increase on an ongoing basis.

00:37:01.748 --> 00:37:12.949
So, yeah, I would encourage anybody who's listening pick one of those, take some action and let us know how it goes, because we'd love to hear what you were able to accomplish.