Keeping Your Amazon FBA Business Profitable Amidst Shipping Cost Increases From China

China is the top destination for Amazon sellers when it comes to product sourcing. The majority of third-party merchants like Amazon FBA sellers rely on the goods coming from Chinese manufacturers to diversify their inventory. 

In fact, in 2020 alone, trade goods to the United States from China amounted to about $435.45 billion. Thus, affirming the enormous influence of Chinese goods on U.S. commerce. 

That is why numerous sellers were uneasy when shipping costs from China increased due to various factors. 

The Reason Behind Shipping Cost Increases

The increase in shipping costs from China has undeniably affected various online sellers, Amazon FBA sellers included. The reason behind the increase is multi-faceted. 

A combination of factors including but not limited to saturated ports, limited ships, dockworkers, and truckers, the soaring demand amid stimulus checks, the recent tariff exclusions, as well as other pandemic-related reasons.

The global shipping industry was among the worst-hit sectors during the COVID-19 pandemic. Freight rates have significantly risen due to the surging demand for goods and shortage of empty containers. 

With the aviation industry likewise disrupted by the ongoing global crisis, pandemic-related restrictions have placed enormous pressure on ocean shipping to deliver goods. 

In turn, this contributed to the increase in shipping costs, including those coming from China. Bloomberg has reported that the price for container goods from China bound to the United States and some European ports has approached near record highs for months now. 

There is no indication that such an increase in shipping costs will soon decline. Therefore, forcing some companies and entrepreneurs to pass the extra costs to shoppers. 

Ways to Reduce Shipping Costs

Although experts mentioned that this increase in shipping costs is not a short-term event, there are still some ways for sellers to reduce the cost when importing from China. Here are some tips to help Amazon sellers reduce shipping expenses.

  • Prepare Product Shipping Plan

If you do not want to incur unnecessary additional shipping expenses, you need to plan your shipping. This means that you should consider the quantities involved, the frequency, and the route to take.

A well-planned product shipping can help you negotiate with freight forwarders and choose the best and most direct transportation route for more cost-efficient and time-saving transport. 

  • Select the Right Shipping Provider 

One of the critical factors that contributes to shipping expenses is your choice of shipping provider. Try to identify shipping companies or providers that offer reliable services for your transportation needs.

Choose a shipping company for FBA that offers lots of regular shipping discounts or promotional offers to help reduce shipping costs. 

Therefore,  review relevant shipping providers one by one in relation to key data such as shipping destination, order size, tracking service, insurance, shipping price, and more. 

If you cannot afford to send large shipments all at once, you should find freight forwarders that provide one-stop international transportation services for all kinds of small loads. These types of shipping companies typically deal with small quantity shipments in parcels, cartons, or pallets. 

  • Negotiate for the Lowest Price  

The majority of shipping companies are open for negotiation, especially if you express your intention of becoming a regular customer. Never settle for the initial asking price.

Always negotiate for a reasonable and lower price point based on your research. Remember that when it comes to international business transactions, your negotiating skills will come in handy. 

  • Optimize Shipment Packing  

In general, the shipping fee is primarily based on the weight or volume of your product. Any extra space in your package means that you will incur an unnecessary cost for additional packing materials and the loss of cargo space. See to it that there is no extra space in your package.

Additionally, when communicating with your shipping provider, ensure that you instruct them to properly pack items to avoid damages. By doing so, you can avoid issues with your items and also avoid incurring additional FBA prep service fees, including bagging, bubble wrap, and even labeling. 

Maximizing ROI Amidst Shipping Cost Increases 

  • Purchase Best Selling Items

If you wish to maximize your FBA investment return amidst the increasing shipping cost from China, you should focus on importing best-selling products. With the help of Amazon seller tools like product research tools, you can identify inventory items that are highly sought after and trending. 

  • Prepare for the Holiday Seasons

Suppose you intend to drive conversions for your Amazon business during the peak season. In that case, you should pump up your imports for upcoming Amazon events, like summer promotions, Prime Day, Black Friday Christmas, and New Year’s shopping sales. 

Always see to it that you supplement your import transactions with data and analytics to identify highly saleable items during the peak season. 

  • Optimize Pricing

In order to increase the profitability of imported products, you should employ a reliable pricing strategy. With the help of an Amazon repricer like Seller Snap, you can avoid price wars while maximizing profit through an increased Amazon Buy Box win rate. 

  • Check for Alternative Product Sources

Another way of maximizing profitability during this increased shipping cost from China is to introduce more items manufactured within your region. You may check alternative product sources from nearby countries such as Mexico and Brazil for the US marketplace. 

Accepting the Current Situation

The uncertainty brought about by the COVID-19 pandemic has affected various markets and industries. Instead of simply reacting to the situation, you should respond to it with proper planning and openness for change. 

Choose a more proactive approach as you deal with the increase of shipping costs from suppliers. With the use of Amazon seller tools, navigate your way out of the adverse effects of the COVID-19 pandemic by applying the suggestions mentioned above. 

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