Guest Post by James Rugg – Online Sourcing Tools
Paying Amazon for Premium Inventory Shipping is killing your FBA Biz
If you don’t ship well, your product wont sell well.
As FBA sellers to win, we have to ship well. That means getting SKUs registered with Amazon and available for that Buy Box in as short time as possible and at lowest possible cost.
There are ways we can trip this processed up as we begin, and there are ways that we can potentially speed that up by using services like IPS Amazon Inventory Placement Service, which is a switch on switch off option within Settings page of your Seller Central Account.
For the most part, those far more experienced and with better understand me reckon that, Distributed Inventory – the standard method Amazon uses to offer shipping warehouse destinations, and therefore requires you to ship boxes to them accordingly, is the best way to go with your shipments. Simple is better.
Are they after your cash, or do they know better?
You pay a premium for IPS – and we’ll talk premiums in a moment but for the most part, Amazon knows what it’s doing and in your frustration it’s worth remembering that they want their customers to be served in the best possible way, and in the fastest possible ways.
What with all the algorithms, they are going to know how to get your stock to their customer fastest – they want their customer to be satisfied. If you can trust them with being able to get your inventory where it needs to go the fastest, you can probably guarantee that you can get sales quickest. Trust them!
Frustrations that make you seek IPS when you shouldn’t
One of the first things you can do you wrong when you’re putting together shipment which can wrongly lead to the conclusion that IPS is necessary to pay for is if say you have 30 skews that you’re putting into your shipment. If you build that shipment over two days – Amazon’s going to split you one day to another and automatically going to creates two warehouses that your inventory is going to have to be sent to. Try and complete all your shipment process in one day.
The next thing that can make this happen as well is that, in the process all entering products and creating your shipment, you can go too far down the road. You can put in an item create a shipping for that item and then go back and add another SKU. That’s going to cause for multiple small shipments to be created within your one order. The best thing to do is to stop and use the drop-down menu of ‘Add to the Existing Shipment‘ or, when you have added a product, go back to top navigation bar and another product. Then and you can go to Manage FBA Inventory and check the boxes of every item you want to send in.
When you have got all your items listed up there, click the Master button for send replenish inventory and Amazon will then break up all of those items into 2,3,4, or 5 different warehouse destinations. What they won’t have done is made you send in one or two items on their own in a box to a different warehouse. That’s what we’re looking to try to avoid doing and when it does happen is a major reason why people consider using IPS.
How to make sure IPS is off!
You can find that on the right setting at the bottom Fulfillment by Amazon inbound settings its option within Inbound Settings – your Inventory Placement option.
So, are you going to have Amazon distribute your inventory or are you going to choose for you the to pay for this IPS? It needs to be said that somebody will find the IPS good and most of you will not.
IPS Guarantees all my SKUs go to one Warehouse, right?
WRONG! IPS only guarantees that and a single SKU will be sent to the same warehouse. Many think that they are guarantees that ALL SKUs will go automatically! Not true.
Does Amazon want all units of one SKU in one warehouse? NO!
No – and this will cause you to lose the buy box. …Well, what happens if you’re sending in lot of that single SKU and Amazon redistributes those items because it doesn’t want two hundred of that same unit sitting in the same warehouse? Because it actually wants to have them spread out a different warehouses around the country, in accordance with where ever it sees the demand is coming from, what it may well do, having charged you for the privilege of sending in that item and paying $0.30 for each one of warehouse, is put the whole if your stock on reserve, so it’s not available to the bid for. You’re not going to win when the Buy Box during that time until Amazon redistribute your item across the country, during which time you’re losing sales.
But, if you insist that IPS is for you, then here’s what it says and the cost involved:
If we look at the IPS a little more, This is what it says: “it enables you to send all units a single merchant SKU, this is the guarantee to a single fulfillment center, determined by Amazon during the shipment creation process at a per unit cost.”
That per unit cost is generally thought to be $0.30, but actually is not true. It’s only $0.30 for items under 1lb in weight or less. 1-2lbs is $0.40 and over two pounds is and forty cents per item plus $0.10 pound over that first two pounds. 5 lbs or more, you’re going to be charged $1.30 over five pounds plus $0.20 a pound over the first 5 pounds.
These various categories mean your shipment will be split, REGARDLESS OF PAYING FOR IPS items in Apparel, Clothes, Jewelry, Shoes, Media, Over-size Products and products of special prep and handling requirements. Over-sized products are another reason why, even when paying for IPS, that shipments are split. You going to find probably that it’s an over-sized product size longer that maybe 18 inches.
Getting Lucky on IPS?
I have heard people say that sometimes when you are using IPS and your stock goes in, Amazon will still allow you to win the Buy Box even when you’re out its stock. This is because it has received your items into the warehouse and even though it’s redistributing them. Most often, however, this will cause that dreaded reserved stock, until they have redistributed.
Good for FBA Newbies. Why? Just because you get used to the shipment process because new sellers definitely say that there’s so much to do and so much to consider that putting everything in one box and using IPS is worth it.
Where else might it be beneficial? I guess and the heavier your shipments, the heavier items, the more likely it is that IPS is going to be cost-effective because obviously you pay less shipping the bigger the box. Now you can go up to 50lbs – that’s the maximum that your single box can be, but 30, 35, 40lbs – that’s getting pretty heavy – but if it is up in that weight bracket, it may well be cost-effective to keep all those license together in one big box, send them in via IPS and pay the cheaper shipping cost.
Don’t IPS-Kill your FBA Business. Hate those delayed charges!
Seems the majority of folk use Distributed Inventory by Amazon and that it is as WAY better than using the IPS. You are going to be charged per items, regardless whether the shipment is split, PLUS those fees can actually sting people bad when they arrive nearly 6 weeks AFTER the event.
“But I’m left with one item to ship separately…”
Sometimes people decide they are going to use IPS because they’re fed up with putting together shipment and being left with one item that has to go into a single box. “Wouldn’t it be better if all this could just go into the same delivery?” they say, but you know much better than that!
Instead, just delete that item and to keep it on hold and wait to the next shipment and add it to that and hopefully it won’t be left on its own. Amazon does allow you to change 5% and remove six items without contravening Amazon shipping policies. You probably don’t want to do that all the time, but as you’re starting out that’s definitely something you can do. Just keep that item back and then include it in your next shipment.
Check out all more of my stuff at www.dailysourcetools.com and then please tell me and tell us all the insight you have on IPS shipping, so that we can better understand it and better winning at our FBA businesses
[Note from Bob Willey: I have been personally using the DST sourcing list for many months now and have had good success with it, it is like any list, you need to do your own due diligence, don’t blindly buy. But definitely good money to be made, if you use the list regularly]