1. Commodity cost
Commodity cost includes procurement cost, domestic logistics fee, first-leg logistics fee, FBA delivery fee and FBA monthly storage fee. When the purchase volume increases, the procurement cost will be slightly reduced, and the logistics fee can also be obtained at a more favorable price.
FBA delivery fee is relatively fixed, and Amazon standard size products are segmented and FBA delivery fee.
It is relatively difficult to control FBA delivery fee. If it is within two size ranges, you need to pay special attention to the weight and size of the product packaging to avoid being charged a higher delivery fee. Secondly, FBA monthly storage fee is related to inventory. In order to ensure that there is no out-of-stock, more than 30 days of inventory are required.
In addition, the storage fee from October to December is 3.2 times that of the storage fee from January to September, but the second half of the year is the peak season for most products, so it is necessary to balance between stocking and warehousing.
First-leg logistics can be divided into air delivery, sea delivery and international express.
Generally, in order to reduce costs, you can use air delivery + sea delivery for replenishment. However, due to the impact of the epidemic, the price of some air delivery first-leg logistics even rose to more than 100 yuan/kg in 2020. Factors such as difficulty in arranging warehouses and slow warehousing and shelving have also become factors restricting sales. In addition, Amazon has also introduced measures to increase IPI, and each site has begun to restrict warehousing. For mature products, you can prepare goods in overseas warehouses in advance. Whether it is shipped from overseas warehouses to FBA in batches or in batches, or using sellers to deliver by themselves, you can improve delivery timeliness and ultimately increase profits.
2. Operating costs
Operating costs include labor costs, management costs, marketing costs, etc. Considering that the labor and management costs in operating costs are fixed costs, and the marketing costs are composed of advertising costs, product evaluation, off-site marketing, etc., it is difficult to reduce this cost. If operators want to increase product profit margins, they need to consider reducing other variable costs.
3. Additional losses
Additional losses include product return fees, exchange losses and other expenses. Due to the uncertainty of exchange rate fluctuations and the fixed service fees of third-party payment platforms, only the product refund fees can be actively controlled among the additional losses. For related operations, please refer to the refund rate calculation in the previous section.
In addition to returns, losses are sometimes caused by improper operations of Amazon warehouses, including shipping weight/size errors; damage/loss during transportation; buyers receiving refunds but not returning the goods; receiving exchanges but not returning the original products; refunding buyers too much; returning goods more than 30 days later, etc. There are also cases such as excessive storage fees, warehouse data not matching the quantity lost but not compensated for weight/size errors, incorrect product category classification, destruction of products without the seller’s permission, and actual compensation quantity being less than the amount that should be compensated. Operators can analyze inventory files and file claims with the platform as long as they find these situations.