If you sell on Amazon EU already, you might have got a shock last week (26 April) when the FBA fees suddenly increased.
I had known this was coming (there was a fair bit of notice), but always had it on my radar as something coming up. So when I went into Fetcher and checked my dashboard, I first of all thought something was wrong – as my profits weren’t as expected. I logged into Seller Central to check and then I remembered…
What does this mean?
These changes will affect us all differently, depending on what you sell, how large and heavy it is, etc. For someone (like me) who sells reasonably heavy products in big boxes, it’s not looking too good.
Where it’s hit me hardest is the European Fulfilment Network fees. This basically means, the cost of shipping products from the UK warehouse where they’re stored, to the EU marketplaces in which they are sold.
I chose to go down this route to avoid signing up to Pan-EU FBA. (I’ll do a separate post on this soon). It does seem however like Amazon is really pushing everyone into pan-EU, which worries me, because of the VAT implications.
The only silver lining here (there always has to be one!), is it’s made me sit down and think about what I (and the rest of us) can do right now to ensure we stay profitable.
Things to think about, if this affects you
The first thing you need to do is re-caculate your margins. Once you’ve done this (assuming you’ve just taken into account cost of goods Amazon’s fees), you can then see how much you have left for things like PPC (by which I mean Amazon Sponsored Products), or other advertising.
If you’re in the same situation, some things to think about are:
- Can you reduce your PPC spend to help your margins? In some marketplaces, you might be better off not using PPC at all and working on improving your listing so you rank organically. Of course, this might lead to a drop in sales, so all needs to be weighed up.
- Can you still afford to sell in all EU marketplaces and remain profitable? Do you need to pull out of some, so you can focus on the ones with the best margins / sales?
- Can you increase your prices in the EU marketplaces and still remain competitive?
- Can you reduce the size or weight of your product – i.e. by tweaking the packaging? (I’m not sure how much difference this would make, but it’s worth a shot.
- Can you get your COG down – either by negotiating a better price with the manufacturer (possibly by increasing your MOQ), or by trying a cheaper method of shipping?
Do you have any other ideas of things to look into, to protect your margins? If so, comment below as I’d love to hear them!