5 Biggest Mistakes Sellers Make When Using Fulfillment by Amazon (FBA) with Ephraim Ausch

Jul 27, 2019

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[00:52] Please introduce yourself.

I am VP of Sales at Tactical Logistic Solutions. Tactical has locations in New Jersey and California, and I'm based in New Jersey.
Tactical is an end-to-end provider of supply chain logistics. We go from our client's overseas manufacturing location via air, sea, and land to their warehouse, our warehouse, or to Amazon's warehouse.

[01:36] Tell us a little bit about your background.

[02:10] What was your first job?

My first job was working as a customer service representative for a bulk candy company that had an online store and 4 retail locations in New York.
The candy company had previously sold candy on Amazon, but they were unhappy with the results
I was given to opportunity to relaunch candy sales on Amazon and after a few struggles, we reached $1,000,000 per year in sales.
After my success with selling candy on Amazon, I launched a gift basket company which has done very well.

[04:21] When did you join tactical?

Since my gift basket business was seasonal, I outsourced the fulfillment, which gave me a lot of free time.
I realized that I had the opportunity to help more people, so I joined Tactical in 2017.
I had two goals: 1.) share my Amazon knowledge and experience with Amazon sellers and 2.) open a new service offering, Fulfillment by Amazon within Tactical.

[06:41] Explain what Fulfillment by Amazon is.

When you buy something with Prime on Amazon, 99% of the time that's a product that has been shipped right from an Amazon warehouse instead of from the seller.
About two thirds of products on Amazon are FBA.
Using FBA allows you to offer quicker shipping to the whole country without destroying profitability.
It was a piece of cake to sell on Amazon in the early days, but now it's getting harder and harder.

[10:51] What is the first mistake you see from sellers who use Fulfillment by Amazon?

A lot of sellers don't realize that every single space in the warehouse is allocated.
I always tell FBA sellers to get their suppliers to do the labelling for them instead of doing it themselves in the US.
You can even get your freight forwarder to do it, because some sellers are afraid of their supplier becoming a competitor.

[14:53] What is the second mistake you see from sellers who use Fulfillment by Amazon?

When you use Amazon-partnered carriers, it's very appealing because they're crazy cheap.
When you do that, it takes two or three days for Amazon to pick it up from your warehouse.
They then schedule a drop off time that is chosen by Amazon.
The problem with that is Amazon will only accept deliveries during the daytime.
I recommend getting a 3PL or local trucker to deliver your shipment to Amazon.

[21:16] What is the third mistake you see from sellers who use Fulfillment by Amazon?

There's a lot of sellers that import product from China that have it palletized.
They think that if they don't have it palletized, it will get damaged.
In my experience, very few cartons get damaged because they make sure to fill the container to capacity.
You lose roughly 30% of space if you put your product on pallets.
It's a little bit more expensive to deliver, but it's still way cheaper than using pallets.

[24:21] What is the fourth mistake you see from sellers who use Fulfillment by Amazon?

In the last two years, Amazon has really decided they're not in the storage business. They're in the selling business.
If you don't sell, they make you get out by charging additional storage costs after certain periods of time.
Keep your stock in your own warehouse until it needs to go to Amazon. Replenishing monthly is a good approach.

[28:00] What is the fourth mistake you see from sellers who use Fulfillment by Amazon?

Amazon has a performance index that goes from 0 to 1000. Under 350 is in the red.
If you go below 350, you get limitations of what you can send to Amazon.
The factors that affect your score are excess inventory, sell through, stranded inventory, and in-stock inventory.
These affected me because I'm a seasonal seller, and my score would be red when Christmas came around. I went to Amazon to discuss alternatives.

[34:03] Any closing remarks on these topics?

If you're worried about damage from not palletizing in China, you can get insurance for very cheap that will cover you.
If you do everything correctly, you'll be on the fast track to sales.

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