Here's How to Find Growth Opportunities Within Your Amazon-FBA Business
Not paying close attention to the new policy updates could mean getting banned or even fined by Amazon.
By Thomas Smale
We’ve seen Amazon make some significant changes to its Fulfillment by Amazon (FBA) platform and policies as of late. All third-party sellers either will be -- or already have been -- affected by these updates.
The changes? They include a reduction in the time required to respond to an A-to-z claim, the implementation of a free return program, a new manual process fee and more.
Not paying close attention to these policy updates could mean getting banned or even fined by Amazon. It could also mean missing out on some significant opportunities as a seller. If you want to continue to leverage Amazon in your own business, you have little choice but to adapt and adjust your strategies to meet the new requirements.
Here are several ways to find growth opportunities within your FBA business, even as policies and best practices continue to change.
Take advantage of Amazon’s Subscribe & Save program.
Since October 31, 2016, eligible FBA sellers have enjoyed the opportunity to join the Subscribe & Save program to reach more customers and generate more sales. Previously, this program was available only for products shipped and sold directly through Amazon.
Are you selling consumer products, like toothpaste, hair dye or dish soap? Then you’ll love the Subscribe & Save program, as it allows your customers to select the number they want of any item, as well as how often they want to receive it. You benefit when users subscribe to your product, as you gain them as long-term customers. These customers benefit because they can save on the cost of the products and not have to think about re-ordering when they run out.
For better or for worse, you will not be able to join this program without meeting certain criteria, which have to do with your sales history and performance metrics. Furthermore, your account must be in good standing and active for three months or more, have a feedback rating of 4.7 or higher and maintain an in-stock percentage of 85 percent or higher; you also must be selling your products through FBA.
There is no application process. This feature is already available to you if you meet the requirements.
Triage your product selection.
Effective October 1, Amazon also changed its monthly inventory-storage fees and weight-handling fees for sellers.
For storage fees between January and September, there will be no changes to existing fees and, interestingly, the fees for October have come down. For the last two months of the largest retail quarter of the year, however -- November and December -- the fees have been hiked significantly for standard and oversized products.
This is an attempt on Amazon’s part to mitigate warehouse burdens and excess inventory that doesn’t sell. Fortunately, weight-handling fees have either stayed the same or have decreased.
These changes are mostly advantageous to FBA sellers. The basics of choosing the right products, appealing to your target audience, getting the pricing right and so on should not be overlooked, especially as you consider the increase in fees for the holiday season.
On that note, this would be a good time to review your product selection and determine which products are selling best. If there are any that are not performing as expected and you’ve been monitoring them for several months, you should start thinking about eliminating listings that aren’t profitable enough to be worthwhile. There are likely better opportunities to pursue.
Keep the winners and discontinue the losers to reclaim your focus and avoid unnecessary fees. This will help you to stay agile as a business owner and reduce costs.
Simplifying your product selection and refocusing on the right things will also make it easier to deal with A-to-z claims. Effective this month, November 14th, sellers must respond to A-to-z claims in three days instead of the usual seven. Refunds will be debited from your account automatically if you don’t respond within that time frame.
Finally, the brand-gating policy, which took effect last August 29th, prevents sellers from selling counterfeit items. If you want to sell a product that’s owned by a specific brand, you must send an application to the owner of the brand, be accepted and pay a $1,000 fee. This new policy change effectively makes retail arbitrage and reselling unfeasible, or expensive at best.
That gives you all the more reason to audit your current product selection, in case you’re selling anything that could get you into trouble.
Build and grow your brand.
This should not be a foreign concept to FBA sellers, but is extensive in scope and something that needs to be addressed if you haven’t already.
With the brand-gating policy, retail arbitrage is effectively a moot point. If you are a private-label seller selling your own products, you shouldn’t run into any problems. If you’ve created your brand and been approved by Amazon’s brand registry, this status will prevent other sellers from selling your product without prior approval.
So, that means you have the opportunity to protect your products. It doesn't mean, however, that you won’t have competition, nor will it stop other sellers from developing replica products, either.
Growing your brand can be achieved by developing your website, capturing email addresses, growing your social media following and becoming an Amazon Associate to earn commissions on affiliate sales. This gives you an additional channel through which you can sell and generate revenue, and to an extent, safeguard your business from future changes to Amazon and your standing with the company.
By capturing emails, you can also learn more about your audience and then begin to target additional similar people with your marketing and advertising efforts. This will make it easier for you to grow and scale your business when the time is right.
Final thoughts
In some ways, selling on Amazon as a third-party seller has become more difficult. In other ways, it has become better and easier.
First and foremost, you’ll want to become acquainted with recent changes and consider how they are going to affect your business, if at all. Then you’ll want to pour your resources into the right place, whether that be inventory management or marketing.
Take advantage of tools like Amazon Selling Coach to familiarize yourself with best practices. Since the information is coming directly from the source, you can trust that it’s accurate and up to date. Making changes to your business without correct information could be a dangerous gamble.
