⚰️ Rest in peace: the death of an Amazon Seller

⚰️ AMAZON PUTS on the SQUEEZE - WILL YOU SURVIVE?

As Michael Patron wrote recently on X about Amazon’s new fees, ”these are gonna F*** some of ya’ll up.” Amazon raised all FBA fees Feb 5th and is recalculating them again on April 15th.

Michael says Amazon ain’t playing fair either. Over the last year, Amazon has allowed their own brands to take the #1 search result (a paid placement that Amazon locks their own item into). 3P sellers are not able to do this.

Fortune recently dove into the new fees issue and published an article highlighting the results of discussions with 20 longtime US-based Amazon sellers illuminating a critical juncture in the Amazon marketplace ecosystem.

The fees in question include an "inbound placement fee" and a "low inventory" fee, which complicate the logistics and financial planning for sellers.

The inbound placement fee mandates sellers distribute their inventory across multiple Amazon facilities, a task that introduces both complexity and increased costs, particularly for smaller sellers.

The low inventory fee, on the other hand, penalizes sellers for not maintaining adequate stock levels, adding another layer of financial pressure.

Sellers are voicing their frustrations, emphasizing the intricacies and variability of these fees, which seem to require advanced understanding to manage.

Despite Amazon's claims these changes could lead to reduced fees for some, the overall sentiment is one of apprehension and dissatisfaction.

The introduction of Amazon Warehousing and Distribution (AWD) is seen as a potential workaround, but it's not a viable solution for all sellers, especially those with oversized products or those already committed to other solutions.

The fear is that these changes could lead to a significant thinning of the ranks of Amazon sellers, impacting the diversity and richness of the marketplace.

As Abe Chomali recently wrote, “At most, 25% of sellers understand their fees, and the other 75% just get their batches, do business-y stuff, and get the next batch, not understanding their profitability at all.”

His predictions:

• for the next six months sellers who understand their costs will suffer as they try to remain competitive with sellers that are losing money.

• the six months after that will see all the clueless sellers crashing and potentially going out of business - this might look like prices crashing as sellers suddenly need cash, it might look like huge spikes in price, it might look like a lot fewer advertisers as sellers cut out costs.

• after those two phases, the sellers who have been carefully managing their businesses will be the last ones standing, and will be able to raise their prices and recoup their losses with appropriate price raises.

EcomCrew reported last month Amazon sellers are paying 30% more in fees since 2021:

Jon Derkits says US-based Amazon sellers have always been structurally disadvantaged relative to China-based sellers.

He says China-based sellers almost universally have:

• More capital

• Control over the factors of production (and lower costs because of it)

• Different views of acceptable marketplace conduct

But with the new FBA Inbound Placement fees, US-based sellers can add "Inbound Logistics Costs" to the list of structural disadvantages.

If you’d like to voice your concern, there is a petition on change.org.

📛  AMAZON’S CHOICE or BEST SELLER?

Amazon badges are crucial in creating a sense of trust and perceived value to help your products stand out in search.

Many different kinds of badges can help you with conversions on Amazon:

• Amazon’s Choice Badge 

• Best Seller Badge 

• Climate Pledge Friendly Badge 

• Coupons and Sales 

• Prime & Fresh Badges 

• Limited Inventory 

Check out this really good primer on all the badges and how to obtain them.

🏧 5 WAYS to GET MORE CASH FLOW on AMAZON TODAY

Izzy Benoliel says many businesses focus only on metrics like revenue, growth, net profit and ROI. While those are all important, cash flow is the most essential metric for any business.

If you don’t manage it correctly, your business won’t survive, regardless of how high your profits are.

MyAmazonGuy recently shared that a staggering 41% of its agency client cancellations came from growing brands that ran out of cash.

The top reason businesses fail is due to cash flow problems.

• 82% of small businesses that fail experience cash flow problems

• 42% find an insufficient need for their product or service

• 29% run out of cash

• 23% don’t have the right team

• 19% are out-competed.

Cash today is worth more than cash in a month. Always.

5 things you can do to improve your cashflow:

#1 Ask Amazon to increase your billing threshold for PPC spend

Most people don’t know that you can ask Amazon to increase the open balance limit up to $10,000 so you won’t have to pay until you reach $10K in spend.

#2 Not all credit cards are created equal – get more time to pay

At bankrate.com multiple business cards offered offer 0% interest on purchases for the first 12-15 months.

#3 Pay for anything with a credit card using a service like Melio

Melio Payments allows you to pay even suppliers in China for a fee (about 2.9%), which can be partially offset by your card rewards.

#4 Renegotiate better terms with your suppliers

Standard payment terms are 30% upfront and 70% on shipment. The key to improving those are a shared growth plan with your supplier and relationships.

#5 Convert returns into cash and use services like Getida

Use services like Buy My Sku, Returnaround or Returns Worldwide to get rid of returns and excess stock. Services like Getida can get you about 3% of your gross sales back that Amazon likely owes you.

LAST TWO BDSN ISSUES …
March 21 → 🔎 Amazon Sellers: Meet Billy
March 18 → 🌌 Amazon’s Omniscience Rivals the Divine

📖 UNDERSTANDING SELLER CENTRAL REPORTS

Helium 10 and Envision Horizons have released a nifty 43-page PDF on how to use all the first-party data Amazon has now made available to brand-registered sellers in Seller Central.

The free report includes how to use each report with actionable insights and highlights, plus an advanced use case for each.

Includes:

• Product research

• Listing Optimization

• Review Insights

• Competitor Analysis

• Top Search Terms

• Search Query Performance

• Customer Loyalty

• Product Opportunity Explorer

• Purchase Drivers

• Category Insights

Download it for FREE here

✌🏼 See you again on Thursday …

The answer to today’s STUMP BEZOS is
“Backrub”