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Day 1: How to Execute a Profitable FBA Strategy

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FBA is considered one of the most influential levers third-party sellers can utilize to improve marketplace performance, but without a proper FBA analysis, many sellers will see their profitability fall short of projections.While some sellers are seeing profitable returns through FBA, many are still looking for new revenue channels to drive bottom line growth.

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Day 1: How to Execute a Profitable FBA Strategy

  1. 1. How to Execute a Profitable Amazon Fulfillment Strategy Day 1
  2. 2. 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 Petriello Senior Marketplace Strategist CPC Strategy Jeff Coleman Director, Account Management CPC Strategy
  3. 3. 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
  4. 4. Register for the Event The 2016 Amazon Virtual Summit Advanced Strategies for Professional Marketplace Sellers to Drive Growth in 2016 cpcstrategy.com/2016-Amazon-Virtual-Summit
  5. 5. Facebook Group: Amazon Sales Acceleration Mastermind Ask to Join Group Facebook.com/groups/AmazonSalesMastermind
  6. 6. Pat Petriello Senior 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
  7. 7. Jeff Coleman Director 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)
  8. 8. 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
  9. 9. 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
  10. 10. Poll For The Audience… Are you currently using FBA? A. Yes B. No
  11. 11. FBA Goal Source: https://sellercentral.amazon.com/gp/help/201411300 Overstock Stockout ProfitabilityVolume
  12. 12. FBA Fulfillment Fee Update
  13. 13. 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
  14. 14. FBA Fulfillment Fee Update: Standard Size Source: https://sellercentral.amazon.com/gp/help/201411300
  15. 15. FBA Fulfillment Fee Update: Example Source: https://sellercentral.amazon.com/gp/help/201411300
  16. 16. FBA Fulfillment Fee Update: Oversize Source: https://sellercentral.amazon.com/gp/help/201411300
  17. 17. FBA Fulfillment Fee Update: Example Source: https://sellercentral.amazon.com/gp/help/201411300
  18. 18. FBA Monthly Inventory Storage Fee Update
  19. 19. FBA Monthly Inventory Storage Fee Update 6% - 7% increase in Monthly Inventory Storage Fee Example: 5,000 Cubic Feet of Standard Size Inventory During Q4 Monthly Fee Prior to March 1, 2016: 5,000 * $0.68 = $3,400 Monthly Fee Effective March 1, 2016: 5,000 * $0.72 = $3,600 Monthly Incremental Storage Cost: $200 Q4 Incremental Storage Cost: $200 * 3 months = $600 % Increase: 6%
  20. 20. FBA Monthly Inventory Storage Fee Update - ASIN Level fee change comparisons are available through the fee preview report - Profitability is not “set it and forget it”
  21. 21. Long Term Storage Fees
  22. 22. 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
  23. 23. Long Term Storage Fees 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
  24. 24. Long Term Storage Fees 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
  25. 25. How to Decide Which Products & How Many to Send into FBA
  26. 26. 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
  27. 27. How to Decide Which Products & How Many to Send into FBA 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.
  28. 28. How to Decide Which Products & How Many to Send into FBA - 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.
  29. 29. How to Decide Which Products & How Many to Send into FBA 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) COGS b) Sponsored Products c) Fee % > 30% is worth investigating further d) Margin determines what is ultimately acceptable
  30. 30. Live Q&A Submit your questions in the chat box on the right cpcstrategy.com/amazon-evaluation www.CPCStrategy.com | 619.501.6138 | contact@cpcstrategy.com Apply For A Free 60 min. Channel Evaluation Pat Petriello Senior Marketplace Strategist CPC Strategy Jeff Coleman Director, Account Management CPC Strategy

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