How to Deal With FBA Fee Increases
Do they *really* matter?
Welcome back!
If you’ve been paying attention to the Amazon space over this past year, it’s very likely that you’ve seen FBA fees increasing over time. While it’s not exactly a good thing, people on Twitter make it seem like their business is going under because they need to pay an extra 20 cents in fees on a sale.
You’ve never seen me complain about fee increases, and you never will - my philosophy has always been to adapt to the new rules, because that’s really the only thing that you can do.
In my teenage years, I played a game called Counter-Strike at a very competitive level. A few times per year, the developers would make changes to the game in order to make it more “balanced”. This could mean making certain weapons stronger / weaker, changing how the economy works, or replacing one of the maps in rotation for competitive play. Some of these changes were very controversial, but at the end of the day nobody would quit because of them - they would learn to adapt.
If we’re being honest, I don’t think these fee increases have had much impact on my business this year. However, that may not be the case for everyone depending on what types of items you sell. Instead of telling you how Amazon is evil and they should burn for charging more fees, I’m going to give you some actionable advice on how you can adapt.
Selling More Items
I mostly say it as a joke, but it’s true - to grow as an arbitrage seller, you have to sell more items. You need to identify what’s preventing you from selling more items and address that problem:
Do you lack sourcing skill?
Do you lack time?
Do you lack capital?
Do you go deep enough on good inventory?
Take a close look at how you run your business and see which of these applies to you the most, and take action - nobody is going to do it for you.
Manufacturing Your Own Margin
This is a topic I’ve covered before, but if you’re hurting from fee increases this is something you can do to offset those small changes.
Use extensions like Rakuten, Topcashback, and CNET shopping to find discount codes that can get you an extra 10-15% off of your purchase - you’d be surprised how many large retailers have codes that have been active for several months.
Another approach you can take is to buy discounted gift cards. By using websites like Raise.com, you can purchase gift cards at a slightly lower rate to offset those 20-50 cent fee increases. One thing to note with discounted gift cards is that the discount you’ll get varies depending on how popular the retailer is. You might be only able to get 1-3% on websites like Target and Walmart, but for slightly less popular stores like Kohl’s and Bed Bath & Beyond you may be able to get somewhere between 5-10%.
Do More FBM
The main appeal of selling on Amazon is that you can build systems which allow you to sell thousands of units per month without ever touching them. However, by not doing any FBM you’re leaving a lot of money on the table - especially when it comes to FBA fee increases.
FBA fee increases don’t affect FBM at all - the bulk of the fees that you’re paying is the cost of shipping your item to the customer. With the right types of items, you can print stacks with FBM. I recommend items that are smaller and can fit inside of a bubble mailer. Some good examples of this are:
Makeup
Toiletries
Plush Toys
Skincare Items
Put it in the mailer, slap a label on it, done - you just made $5 with 10 seconds of labor.
Sell High Ticket Items
The last thing I’d recommend to combat fee increases is selling high ticket items. If fees go up by 30 cents per sale, you won’t really care if you’re selling an item for $250 and making $65 in profit.
Another good reason to sell high ticket items is the lack of potential competition. Newer sellers are less likely to pursue a $200 item because they’re putting most of their capital into a single ASIN, which is not a good strategy (unless you know the item is really good, but new sellers usually can’t tell).
It can be difficult to get into high ticket items because they tend to be in categories that aren’t as beginner friendly (shoes & clothing comes to mind), but I’ve managed to find a few beauty / kitchen items that fill this niche.
Hopefully you found value in this post that will help change the way you approach selling on Amazon. If you’re interested in taking your Amazon business to the next level and earn full-time income, check out my newly released course Arbitrage Tactics.