How Amazon sellers can effectively control costs: from clothing categories to FBA strategies

Clothing Category Cost Control

For clothing category sellers, cost control is not only an important means of management, but also an important step in increasing profits. Amazon buyers are accustomed to buying clothing under $30 on the platform, while clothing with higher amounts tend to be purchased offline or in brand stores. Therefore, most sellers will adopt a pricing method that follows the market and lower the price in the early stage for promotion. However, if sellers cannot effectively control product costs, they cannot control the profit range. Effective cost control requires an in-depth understanding of the sources of costs, including fabric selection and specific processes in the production process, such as pocket design, authenticity of buttonholes, etc.

Clothes are non-standard products, and many details require strict control by the seller. The final problems with the product are often caused by poor communication, so it is crucial to have a merchandiser for real-time follow-up. Cost control is not only reflected in individual products, but also in the allocation of purchasing funds. Reasonable allocation of procurement funds can not only improve the cash turnover rate, but also effectively control risks, leaving room for late-stage procurement of potential funds. Ordinary clothing sellers can set up an OTB (Open-to-Buy) plan.

FBA cost control method

FBA (Fulfillment by Amazon) has become the most important logistics distribution model for Amazon Chinese sellers. The cost of FBA is divided into four parts: first-leg logistics cost, last-leg distribution cost, warehousing fee and other expenses. FBA first-leg logistics cost refers to the logistics cost of shipping from China to the FBA warehouse at the destination site. Sellers can control this part of the cost by negotiating with the logistics provider. FBA last-mile delivery costs are calculated based on product size and weight, and Amazon will divide products into six levels, including “standard size” and “large items.” FBA storage fees vary according to product size and seasonal changes, and storage fees are higher during peak seasons. In addition, Amazon charges long-term storage fees for products stored for more than 365 days.

Specific measures to control FBA costs

In order to control FBA costs, sellers can start from the following aspects:

Product size and packaging improvements

The first-leg logistics, warehousing and last-mile delivery costs of FBA products all depend on the product size and weight. Therefore, sellers should communicate with suppliers and try to optimize the size of the product and its outer packaging, reducing the size without affecting functionality and aesthetics.

Abnormal inventory monitoring

Amazon stipulates unconditional returns and exchanges within 30 days. Sellers need to monitor product refund rates in the background and analyze the reasons for refunds. Common reasons for refunds include inconsistent product descriptions, inconsistent parameters, difficulty in use, and quality issues.

FBA warehousing cost control

Once a product becomes unsaleable, Amazon will charge long-term storage fees. Sellers can avoid this fee through the Inventory Removal Service. There are two methods of removal: one is to send the inventory to the designated recipient, and the other is to request Amazon to recycle the inventory or dispose of it.

Optimize FBA shipping plan

The first shipment should be of multiple varieties and in small batches. After the payment test is completed, the best-selling products should be stocked with low frequency and large quantities. When large-volume shipments are involved, it is recommended to send the products to overseas warehouses first, and then send them to the FBA warehouse in batches.

FBA warehouse selection

The Amazon system divides warehouses into warehouses by default. Although warehousing can reduce delivery time, it will increase logistics costs. Sellers can choose to close or separate warehouses based on product conditions.

Export tax rebate

If you sell regular brand products, sellers can consider export tax rebates. In order to encourage the development of export cross-border e-commerce, the state has specially set up a customs supervision method code 9810.