This just happened. And if you negotiate great prices on a 3,000 unit order with your supplier, what on earth do you do with the remaining 2,800 units?
Don’t worry. We will help you make vital decisions that will maximize your profits and lower your stress.
But first, it’s really important you understand why this is happening. If you understand Amazon’s reasons, then you can better predict what Amazon will do in the future.
Here’s the problem: Amazon is getting so many orders, they are struggling to fulfill them. COVID-19 has not hurt Amazon sales but boosted the flood to online purchases.
With quarter four approaching (Sept-December), Amazon cannot afford to hold inventory that does not sell fast. This is why we (Just One Dime) go to extreme lengths to make sure every single FBA Mastery student understands exactly how to find products that sell fast.
If Amazon is already struggling to get orders out fast enough, when orders increase by over 25% during the fourth quarter, holding slow-moving inventory would be the death of customer satisfaction.
How can you adapt to this new Amazon FBA 200 unit limit?
Today, I’m going to give you four different options you can choose from to address this challenge:
Option 1: Fulfill your own orders.
Yes, I’m talking about fulfilled by merchant (FBM). If you fulfill the orders yourself, there’s no limit to your inventory other than what you can personally handle.
You can also do FBM merely as a backup to FBA.
In that case, you would hold the majority of your inventory in a local warehouse or your home and send 200 units into Amazon's fulfillment center. If you haven't shipped more stock into the fulfillment center by the time the 200 units run out, then switch the listing to FBM and ship it yourself.
However, lacking the PRIME and “fulfilled by Amazon” text on the listing will lower your conversion rate.
And that is why we recommend...
Option 2: Qualify for Seller-Fulfilled Prime
Seller Fulfilled Prime means you ship your own products but they still get the “Prime” badge. Amazon is not currently accepting new registrations, however you can apply here and get on their waitlist.
How does it work?
If you meet the qualifications for PRIME—including two day free shipping—then you are eligible.
To qualify for Seller Fulfilled Prime, you must:
- Ship over 99% of your orders on time
- Have an order cancellation rate of less than 0.5%
- Use Amazon Buy Shipping Services for at least 99% of orders
- Deliver orders with supported Seller Fulfilled Prime carriers
- Agree to the Amazon Returns Policy
- Allow for all customer service inquiries to be dealt with by Amazon
Five Steps to become Amazon Seller Fulfilled Prime:
Step 1: Qualify for Seller Fulfilled Prime and complete the trial period
Step 2: Store inventory in your own warehouse
Step 3: Process your orders and buy shipping labels from approved carriers
Step 4: Pick, pack and ship your orders same day
Step 5: Seller Fulfilled Prime carriers collect and deliver orders in two days to customers
Amazon says that Seller Fulfilled Prime is good for:
- High-value items
- Products with seasonal or unpredictable demand
- Items with variations
- Slow-moving goods
- Inventory that requires special handling or preparation
Seller Fulfilled Prime allows you to maintain the benefits of prime. This is incredibly important since Amazon shoppers often filter their product searches for prime products only. For Amazon arbitrage sellers, it means you have the best chance possible for the Amazon Buy Box.
Best of all, prime increases your conversion rate because the trust that “prime” badge adds to your listing.
But how can you possibly meet this standard when you're selling up to 200 products a day?
Option 3: Hire a third party logistics company(3PL)
Amazon 3PL makes FBM and Seller Fulfilled Prime much more manageable.
You hire a company to take care of storage, shipping, and fulfillment for your Amazon product. This carries some of the main benefits as PRIME when it comes to creating passive income.
You spend little to no time putting your actual hands on the product and focus on either the big picture for your business or spend time doing the things you love with the people you love.
If you are looking for a third party logistics company, I highly recommend Eric Abbey’s service in Vermont.
Now granted, using a third party logistics company will not get you the prime badge, which is why I leave my favorite option for the last:
Option 4: Negotiate lower minimum order quantities with your supplier
MOQ or “minimum order quantity” means the minimum number of units your supplier will let you buy.
Starting with just 200 units gives you the chance to optimize your listing on a small number of products and get it ranking strong before you ship in a larger batch.
If you’ve started reaching out to suppliers, you’re probably used to seeing MOQs for products in the 5000 range. So how can you get under 1000?
1. Choose a high dollar product
The more expensive your product is, the more suppliers are willing to let you start with a smaller batch of inventory.
Sure, a $15 priced retail product probably has an MOQ of 5000 or more.
Producing 200 of them wouldn’t be a good investment for the manufacturer. But what about a $50 product? Now something closer to 200 units will be worth their while.
What about a product priced at $150 to the consumer? Even better. It’s still low enough to be within the range of impulse buying, and there’s going to be a larger dollar profit per product.
2. Promise future value to the supplier
Say something like this to the supplier:
“We are doing a 'test run' on our product. We want to get some out there, receive feedback and improve the product. We want to test with a small order before ordering thousands more.”
Set the expectation with suppliers that you want a long term business relationship.
In order to be successful, you need a lower MOQ at the beginning. By working with you, a manufacturer is setting themselves up to be the exclusive supplier of a successful brand.
Undoubtedly, some suppliers have already heard of Amazon’s policy change and empathize with you.
3. Pay the supplier for the large quantity but ask them to first ship only 200 units.
A surprisingly large number of suppliers are willing to do this if you just ask. Yes, that first batch may be more expensive to ship if you are shipping by air freight instead of by sea, but look at it as an investment in your listing. The listing is the “holder” of your product. Without a listing, there is no product. You can use that first batch of 200 to optimize your listing for prime conversion and then ask the supplier to ship in the remaining inventory when ready.
Some suppliers may charge a fee for this. Even if you broke even on your first 200 units as a result, if you picked a great product with excellent differentiation, you should more than make the money back and then start making massive profits.
Amazon and the world of ecommerce change on a daily basis. No static course can provide a sustainable model of training for building a passive income machine—an Amazon FBA business that works for you even while you sleep. If you are dead serious about building an Amazon FBA business, I and my team can help. Go here to see more.