3 Ways to Minimize Amazon Pick and Pack Fees

Guest writer Yoni Mazor of GETIDA explains how to minimize Amazon pick and pack fees in this helpful post.

2024 Update: Amazon recently announced changes to the eligibility window to file FBA claims. 

One thing is certain, selling on Amazon is not becoming any cheaper. Fees are rising every year and the stakes of running an Amazon business keep on getting higher. A prudent Amazon seller always keeps a close eye on the everlasting changes that Amazon makes. The three strategies illustrated in this article will help you get some clarity on what can be done to improve your bottom line profit.

How to Lower Amazon Pick and Pack Fees

1) Package Smaller, Lighter, and Smarter

Whether you are a private label seller on Amazon or a reseller, you need to pay close attention to how you are packing and shipping your products to FBA. Amazon charges a pick and pack fee for every FBA order that gets fulfilled from its centers, based on the weight and dimensions of an ASIN (Amazon Standard Identification Number).

Therefore, the larger the weight tier, or the dimension tier, of your ASIN, the higher the FBA pick and pack fee will be. For example, Amazon will charge you a fee of about $2.50 if your product weight and dimensions are lower than one pound and narrower than 10 inches. But if your product is over 10 pounds and wider than 100 inches, they will charge you about $10.00.

Pick and pack fees can often account for more than 20% of your overall selling fees.

If you can control the weight and dimensions of your Amazon product and keep its weight and dimension in the lowest tier possible, you will save a fortune in Amazon pick and pack fees and ensure healthy profit margins. If you are the product manufacturer, always try to keep in mind that selling on Amazon is a different game than traditional brick-and-mortar retailing. There is no need for any large, shiny, or heavy packaging to help your product stand out on the shelf.

Stop to think about how much air you usually find in a shiny potato chip bag. The brutal battle for attention in the retail shelf space is one of the reasons for this additional packaging.

The strategy of packaging your product to be placed on shelves, so it can scream and shout to consumers to touch it, hold it, and place it in a shopping cart does not apply the same way when you are selling on Amazon.

The ASIN product listing page is your Amazon visibility shelf when selling online. Your marketing strategy should drive traffic to your Amazon products and present them in the most alluring way possible in order for consumers to add your product to cart and purchase.

Setting up great A+ content on your Amazon listing is a major key in properly presenting your products in the online shopping medium. Make sure to use it and optimize your Amazon listings as much as possible, which can also benefit your review strategy.

Consider ways to decrease the weight and dimensions of your packaging. For example, if you sell sporting equipment you might ship a deflated soccer ball with a small pump, which takes less packaging space than an inflated soccer ball.

However, once your Amazon buyers receive their FBA order, no matter what, they will get it packaged with an Amazon-branded box or envelope. Don’t forget that you have already made a sale, and at this point, the customer only expects to interact with the product mostly for its utility. Therefore, simple and elegant packaging will do the trick. There's no need to use large, cumbersome packaging that a customer will probably toss a few seconds later.

2) Track and Monitor FBA Weight and Dimensions

Now that you are familiar with the cost fundamentals of selling on FBA versus in a physical store, you know that you need to ship your products to Amazon in the smallest and the lightest way possible.

So, the next step is to keep an FBA tracking and monitoring chart to make sure that there is no change or discrepancy in the weight and dimensions data for your ASINs. Making sure to ship smart and light is not enough; there is also a need to keep track of the weight and dimensions on a constant basis.

If Amazon overcharges a seller with FBA pick and pack fees due to an incorrect measurement of weight and dimensions, there is a time limit of 90 days to request reimbursement for the overcharged fees.

Therefore, FBA sellers need to make sure to audit and track the FBA weight and dimensions measurements and related fees of every single ASIN on a frequent basis both for your own records and to provide as proof to Amazon.

There are at least two main reasons why the weight and dimensions of your FBA inventory might change over time:

1. The first reason is that Amazon periodically will scan your FBA item in a large cubic scan machine in the FBA warehouse. They do this to keep track of the weight and dimensions of each ASIN as manufacturer packaging can change over time. Now, if during this periodic scan your item was scanned incorrectly (a handbag might be scanned with a loose strap, or there is a loose plastic bag wrapping your product) as a larger or heavier item, Amazon will use the new incorrectly updated data and begin charging you higher FBA pick and pack fees.
2. The second reason can be malicious, with a competitor targeting your ASIN in an effort to increase your FBA fees and drain you out of the game. This can be done by a competitor simply listing your ASIN on their Amazon Seller Central account and never actually offering it for sale, but making sure to increase and inflate the weight and dimensions of your products. Ouch, this kind of foul play has been reported as another way for sellers to attack one another in stealth and silent mode. Very sneaky and sophisticated, but now you are at least aware of it and can make sure to always be prepared.

It is very important to measure and track all packaging dimensions. If you discover that you are being overcharged for FBA pick and pack fees, you need to take action in order to achieve two goals. First, stop the bleeding. Meaning, update the weight and dimensions information on your affected ASIN by opening a case in Seller Central and requesting that Amazon update the information and lower the FBA fees.

Next, calculate and tally up the amount of the overcharged fees in the past 90 days and ask for an FBA reimbursement. This way you will save big on fees going forward while also get paid back for the past overcharged transactions. This is an important way to keep a good handle on your business costs.

3) Handling Amazon FBA Discrepancies

The world of Amazon sellers is split about fifty-fifty when it comes to managing Amazon FBA reimbursements. About half of Amazon sellers simply do not do anything about it, as they are not even aware that there is an opportunity for them to get money back due to a myriad of FBA discrepancies on their Amazon account. In other words, plenty of Amazon sellers are clueless that they are owed money.

The other sellers are aware of the FBA discrepancies and actually take some limited action to manage FBA reimbursements, but they are often unaware of the entire scope and intensity of all the available claims and fail to realize that there are potentially more FBA reimbursements available for them. If this is all news to you, make sure to dive deeper into this matter by reading Amazon’s FBA reimbursement policy.

The main thing that FBA sellers need to understand is that FBA discrepancies and their available reimbursements must be claimed on time, as they do have an expiration date.

Amazon provides up to 18 months to look back and receive FBA reimbursements for most of the FBA inventory that got lost, damaged, destroyed, disposed of, or overcharged with fees.

However, lost units due to FBA inbound shipment receiving are limited to nine months in the US and six months in the UK.

If an Amazon seller does not fully audit and claim all that is available, there is a double loss. The first is the loss of the inventory unit (cost of goods), and the second is the loss of profit. Amazon is actually very fair and graciously pays a seller the full selling price of an item as if it sold on the marketplace when providing an FBA reimbursement. So, make sure not to miss out on a single dollar that is owed to you. It will surely be put to better use by being in your pocket instead of someone else’s.

The statistical data of the FBA discrepancy rate, according to Getida, can range from 1% to 3% of annual FBA sales revenue. This means that if you have $1 million in annual FBA sales, your FBA discrepancy rate can range from $10,000 to $30,000. This is essentially the opportunity level of what you can potentially recover on an annual basis from auditing and claiming all the FBA reimbursements that are available to you.

When opening cases for FBA reimbursements, be advised that some cases might get solved within a few hours, some within a few days, some a few months, and in rare cases, over a year. Therefore, it is important to note that opening a case with Amazon is just the beginning of the process and further handling will be required. You need to make sure to review Amazon's replies for each case, particularly if Amazon is requesting further information such as Proof of Delivery or Bill of Lading. Amazon usually asks for such information to approve a large value claim of a few hundred or thousands of dollars. Pay close attention to Amazon’s replies and cash out on each case properly.

By effectively auditing and claiming all available FBA reimbursements, Amazon sellers can significantly lower the cost of doing business using the Fulfillment By Amazon method as opposed to the Fulfilled By Merchant method. FBA reimbursement can tremendously help the bottom line profits of Amazon sellers. The newly recovered funds can also greatly help fuel the growth of an Amazon seller by being reinvested in a well-crafted Amazon PPC campaign, launching new products, and much more.

In Conclusion

We hope that you have found these three ways to minimize Amazon FBA fees to be a helpful contribution to your continued success on Amazon. Selling on Amazon involves paying close attention to many moving parts. We hope that this article helps you in keeping a good handle on at least a few of them as you move forward in navigating the challenging terrain of the most powerful online marketplace in the world.

If you have any questions or would like to learn more about how you can maximize your available Amazon FBA reimbursements, feel free to contact GETIDA at support@getida.com. In addition, GETIDA has partnered with eComEngine to help FBA sellers recover more funds they may be owed. Simply click Activate Offer to get started with your FBA reimbursement process. We hope you find these recovered funds helpful in fueling your growth.