day1: how to execute a profitable fba strategy

How to Execute a Profitable Amazon Fulfillment Strategy

Day 1

Logistics

• Submit Questions In the Chat Box to the Right

• Session Recording Will Be Sent Next Week

• More Resources In the Handouts Section to the

Right

TODAY’S SPEAKERS

Pat PetrielloSenior Marketplace StrategistCPC Strategy

Jeff ColemanDirector, Account ManagementCPC Strategy

OVERVIEW

•Founded in 2007

•Recognized as an Official Google Shopping Partner

•300+ Active Retail Clients

•Top 50 fastest growing company in San Diego 3 years

CLIENTS

About CPC Strategy

SOLUTIONS

• Retail-focused Paid Search (PPC)

• Google Shopping Management

• Shopping Channel Management

• Amazon Sales Acceleration

Register for the Eventwww.cpcstrategy.com/2016-amazon-virtual-summit

Facebook Group:Amazon Sales Acceleration

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Facebook.com/groups/AmazonSalesMastermind

Pat PetrielloSenior Marketplace Strategist

✓ Former member of Amazon Seller Services Team✓ Former professional seller on Amazon.co.uk, eBay, Buy.com✓ Lead architect for CPC Strategy’s Amazon Sales Acceleration Program✓ Engineered & directed million dollar revenue stream on Amazon

Jeff ColemanDirector of Account Management

✓ 7+ years experience in retail search space✓ Oversees the Structured Data Department at CPC Strategy✓ Oversees the CPC Training Program✓ Founded CPC University

(An advanced program dedicated to the education of retail search strategies)

Poll For The Audience…Which describes you best?

A. Third Party Reseller

B. Third Party Brand Manufacturer

C. Vendor to Amazon (Access to Vendor Premium Services)

D. Not currently selling on Amazon

Overview

• FBA Fulfillment Fee Update

• FBA Monthly Inventory Storage Fee Update

• Long Term Storage Fees

• How to Decide Which Products & How Many to Send into FBA

• ASIN Level Profitability of Your FBA Strategy

• Live Q&A

Poll For The Audience…Are you currently using FBA?

A. Yes

B. No

FBA Fulfillment Fee Update

FBA Fulfillment Fee Update

Fulfillment Fees: Effective February 18, 2016, [Amazon] will increase their Pick & Pack and Weight Handling fees for most products' sizes and weights.

Monthly Inventory Storage Fee: Effective March 1, 2016, the monthly fee for inventory storage will increase for Standard-Size and Oversize units. This change will first be reflected in April 2016 charges for storage that occurs in March 2016.

Source: https://sellercentral.amazon.com/gp/help/201411300

FBA Fulfillment Fee Update: Standard Size


FBA Fulfillment Fee Update: Example


FBA Fulfillment Fee Update: Oversize


FBA Fulfillment Fee Update: Example


FBA Monthly Inventory Storage Fee Update


6% - 7% increase in Monthly Inventory Storage Fee

Example: 5,000 Cubic Feet of Standard Size Inventory During Q4Monthly Fee Prior to March 1, 2016: 5,000 * $0.68 = $3,400Monthly Fee Effective March 1, 2016: 5,000 * $0.72 = $3,600Monthly Incremental Storage Cost: $200Q4 Incremental Storage Cost: $200 * 3 months = $600% Increase: 6%


- ASIN Level fee change comparisons are available through the fee preview report

- Profitability is not “set it and forget it”

Long Term Storage Fees


FBA Long Term Storage Fees

The Long-Term Storage Fee is assessed based on the total volume in cubic feet of units that have been stored in Amazon fulfillment centers for six to 12 months or 12 months or more as part of Amazon’s semi-annual Inventory Cleanup date.

Source: https://sellercentral.amazon.com/gp/help/help.html/?itemID=200725880


You can use the Inventory Health report to identify which of your ASINs are at risk of being charged the Long-Term Storage Fee for each of long-term storage periods:

- 6 Month- 12 Month


FBA Removal Order Fees

Preventing Long-Term Storage Fees

- Identify at-risk ASINs

- Removal Orders- Return- Disposal

- Sponsored Products

- Review Giveaways (ex: Snagshout)

- Sales

- FBA Allocation strategy designed to prevent overstocking

How to Decide Which Products & How Many to Send into FBA


Factors Influencing FBA Allocation:

- FBA Fees

- Margin

- Current FBA Inventory

- Sales Velocity

- Seasonality Multiplier

- Inbound Inventory

- Lead Time

- Advertising

- Stockouts


The In Stock report provides inventory metrics on your active listings with two or more sales in the past 60 days. This report provides information on Estimated Lost Sales, Estimated Days of Cover and Average Unit Sales per Week.

This report can be found within Seller Central under Business Reports -> Inventory In Stock.


- A seasonality multiplier is used to account for demand fluctuations due to seasonality.

- A 60 day sales velocity helps to determine how many units will need to be in stock to have full coverage for that period.

- Days until stock out is used to determine how many days of current inventory coverage are remaining.


1) Start with trailing 60 day sales performance

2) Take into account inventory already in stock

3) Apply a seasonality multiplier, if applicable

4) Consider inventory en route inbound to Amazon FC’s

5) Consider stockouts using in stock report data

6) Use ASIN level profitability data to determine your FBA fee %a) COGSb) Sponsored Productsc) Fee % > 30% is worth investigating furtherd) Margin determines what is ultimately acceptable

Live Q&ASubmit your questions in the chat box on the right

cpcstrategy.com/amazon-evaluation

www.CPCStrategy.com | 619.501.6138 | [email protected]

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Pat PetrielloSenior Marketplace StrategistCPC Strategy

Jeff ColemanDirector, Account ManagementCPC Strategy