Shipping expenses can be tough to get by when you’re a new Amazon seller with a tight budget for your business. You might be thinking, “Shipping companies charge too much.”
You’re not the only one thinking that. Luckily, the best solution to your shipping problems is free. All you need to do is understand how to save money under the Amazon FBA (Fulfillment by Amazon) and FBM (Fulfilled by Merchant) programs.
This article will discuss the general cost of shipping, what Amazon FBA and FBM are all about, and what our tips are for saving money via FBA and FBM shipping.
What Is the General Cost of Shipping?
Before we delve into the money-saving tricks in shipping, you need to understand what the most common pricing model is for shipping companies and where these charges come from. Typically, people work with shipping partners that charge for specific package quantities and sizes. However, that isn’t the only option.
When selecting your shipping partner, you need to keep in mind their payment models. They can charge either a flat rate, which calculates the cost depending on the size of your packaging, or the dimensional weight, which computes prices based on the total density of all packages for sending.
Below is a more detailed version of their differences:
- Flat-Rate Shipping
- More economical and practical for online businesses
- Guarantees businesses a fixed price for the package
- Offers a variety of packaging materials, from envelopes to boxes
- Costs are within the range of 7.15 to 18.30 USD for items up to 70 pounds.
- The best choice for businesses with goods weighing less than 16 ounces
- Dimensional Weight Shipping
- Used by most private carriers and can potentially cost more
- The shipping company computes the cost by multiplying the width, volume, and length and dividing the answer by a divisor determined by your carrier.
- Due to this system, larger and heavier items are generally more expensive; however, it saves money for e-tailers.
If you want to determine the general cost of your shipping fee before signing the agreement, you need to have a calculator near you to compute the baseline of your shipping cost per package. Afterward, you can check the breakdown and review other shipping options offered by the company.
To know the performance of your potential shipping partner, visit their website and take a look at their previous clients’ reviews. This way, you will also be ready for other issues you may encounter.
Amazon FBA/FBM: Saving Your Money On Shipping
Other than keeping track of your budget and negotiating for better deals with your desired shipping partner, you can consider the Amazon FBA or FBM setup. Each of them fits specific business models.
In a nutshell, companies that register for FBA hand off their physical inventory and sales automation to Amazon. Businesses either bring their products to the warehouse or have them picked up from their preferred locations.
What makes FBA fascinating is it covers hundreds of fulfillment centers that immediately package, ship, and track your customers’ orders. Many people also love Amazon FBA since it reinforces the online visibility of businesses by underlining the experiences of all satisfied buyers.
Check out the table below to see how the process (in chronological order) between FBM and FBA contrasts.
|Fulfillment by Amazon||Fulfilled by Merchant|
|Businesses send their products in bulk directly to Amazon or book a date to have them picked up.Amazon stores the products in one of their warehouses and then waits for a processed and paid order.Amazon receives an order and then immediately gets the product from the inventory, packages it, ships it, and provides a live location.||Businesses manually list their products on Amazon and update their inventory. Businesses sell and ship the products by themselves.Businesses replenish their stock, purchase packaging materials, and coordinate with partner carriers or delivery staff.Businesses receive an order and then immediately get the product from the inventory, package it, ship it, and provide a live location.|
At this point, you might think that FBM is impractical and extremely time-consuming. Before you jump to conclusions, step back and answer the following questions about your business:
- How much would it cost to ship units via Amazon FBA and FBM?
- Are the FBA discounts more profitable than the cheaper FBM shipping alternatives?
- How popular is my business, and how many customers are buying my products?
- Should I decide on only one fulfillment method, will there be additional long-term storage costs?
- If there were an increase in fees for FBM, can this still compete with the cost of FBA services?
Once you have answers to these questions, you will clear out any confusion regarding Amazon FBA and FBM. Just remember that price isn’t the only criteria for selecting one over the other; you need to take into account other factors such as the reputation of your shipping partner and price hikes.
Despite their seemingly demanding requirements and steep price, there are numerous advantages to choosing either FBA or FBM. To give you a better understanding of the main benefits of each, take a closer look at the list below.
|WHAT ARE THEIR MAIN BENEFITS AND DIFFERENCES?|
|Amazon FBM||Amazon FBA|
|Online sellers have more control over their shipping rates and can easily access their inventory. With that, they can formulate their shipping fees and manage their stock however they please.Shipping is relatively cheaper since the fees are simply based on the size of your products. It is highly recommended to choose Amazon FBM if all or most of your products are small in size.||It is easy and effortless. All your profitable products on Amazon are taken care of by Amazon itself, ensuring you follow all seller terms and conditions for shipping.Products under the FBA program get a Prime badge. When potential customers see this badge, they will know that they’re in for fast and free shipping with Amazon Prime.Amazon FBA handles the returns, customer service, and warehouse spaces, which are the most common issues among new sellers.Businesses on Amazon can enjoy decreased shipping rates since Amazon FBA only asks for a single fee in exchange for premium-quality services, unlimited storage capacity, and access to valuable business networks. If you aim to sell and deliver internationally, you ought to try out the Amazon FBA program.|
How to Save Money on Shipping
Whether you choose the Amazon FBA or the Amazon FBM program, budgeting is an important skill if you want your finances to successfully maintain and protect your brand on Amazon. Not many people realize this, but shipping responsibilities do not stop at partnering up with a shipping company. It is something you must regularly check, assess, and improve.
With these points in mind, we will provide you with a few money-saving tips which you can apply for your Amazon FBA or FBM shipping setup.
- You do not need expensive packaging materials to ship all of your products.
Simple, affordable, and lightweight options like bubble wraps, air pillows, and boxes can do the job. As long as it can protect your merchandise from damage during transit, then it is a good choice for your business. Not only that, but simpler and cheaper alternatives also tend to be easier for you and for Amazon to package before shipping.
Pro tip: Use recycled supplies to save money and the environment. Sometimes you might have large containers from your product manufacturer. Instead of purchasing too many storage boxes, reuse the large container and place the smaller products inside it for safekeeping. When you do this, just make sure to properly label the containers.
- Take advantage of flat-rate shipping if you are a new seller.
Doing most of the shipping job alone is extremely difficult and expensive since shipping demands major logistical movement. If you want to save yourself from all the hassles of shipping, research your options, pick the most economical choice, and make the flat rate option count. You’ll be surprised by the huge difference a single, smart decision can make.
- Keep your doors open to any negotiations with your desired shipping company.
Negotiation is inevitable, especially when you have a different stand on the proposed agreement or if you do not seem to profit from it. If this is the case, you can formally negotiate the terms, shipping rates, and e-commerce fulfillment.
Just discuss what your business goals are and how your proposal will benefit both parties in the long run. Once you have exhausted all means to obtain a discount, stick to the contract and let the shipping company know that you are satisfied with the arrangement.
While opening a store on Amazon may seem overwhelming to you and your pockets, it is possible to use the shipping money you saved from practical decisions for more relevant business matters, such as advertising and public relations. After all, making the smart choice is free.
Did you learn anything new from this article? As a profitable Amazon seller, what other tips do you have in mind that will help Amazon sellers save money on shipping? Let us know what you think in the comments section below. We would love to hear from you!