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Rising Shipping Costs: What’s an Amazon FBA Seller to do?

February 20, 2021 by Andrew Minalto - 2 Comments

As if COVID-19 hadn’t caused enough shipping problems for Amazon FBA sellers importing from China, we now have to deal with the Brexit disaster and even some snowstorms to top it all off!

Any Amazon FBA seller who imports from China knows that 2020 saw some HUGE increases in Amazon freight rates, with costs increasing by up to ten times. Typically, shipping a 40ft container would’ve cost between $1,500-$2,000, but we’re now seeing ocean freight rates of $10,000-$15,000 for the same 40ft container.

And that’s not all, my fellow Amazon FBAers! Consider you pay import VAT on the total amount of the goods you’re importing, including shipping, so the government adds insult to injury with your higher VAT bill, too. 

This has had a significant effect on margins and profitability, and for many Amazon FBA sellers has meant having to increase their prices. The only saving grace is that this shipping nightmare affects everyone importing from China: not just you, but your competitors, too.

What’s causing this increase in cost to ship to Amazon FBA?

These increases were initially caused by carriers reducing capacity in the early stages of the COVID-19 pandemic last year by introducing “blank sailings,” which basically means a cancelled sailing. This can be the entire sailing or the removal of certain ports on the route.

The outcome is that a lot of importers had their goods stranded and they had to find another free vessel with space so they could ship their products. With this happening on a large scale, coupled with increasing ecommerce and Amazon FBA sales, demand for shipping containers skyrocketed globally. There simply weren’t enough empty containers in China to meet this demand.

And as we all know, increased demand and decreased supply only means one thing – higher prices!

The issue worsened and worsened, reaching its worst point in Q4 last year when there were severe congestion problems at some of the major port hubs in Asia, which then spread to Europe and the UK, in particular Felixstowe port, which all saw severe delays.

I saw firsthand the effect this had on businesses here with some Amazon Sharks members having their products stuck both at port and then again at Amazon FBA fulfilment centres as the delays caused a huge bottleneck. Despite all this, they managed to hit their biggest Q4 sales ever, so just imagine what it would’ve been without the shipping problems!

Now I know what some of you may be thinking – “if there’s such high demand, why not just produce more shipping containers?” Simple right?

Well sadly, no – it doesn’t work like that. For various reasons, COVID-19, of course being no.1, container production in 2020 was actually down compared to 2019 (H1 2020 container production was 40% less than H1 2019). This decrease in production coupled with the sudden increase in demand has led to a significant drop in global container availability.

And this is really the problem at the moment – there’s simply not enough containers, along with congestion and delays caused by COVID-19, which is causing a number of further issues, including:  

  • Delays in the return of containers to China.
  • Lower productivity at ports and terminals.

Take Felixstowe port, for example, which was hit particularly badly in the busy Christmas season last year. As a result, they’re currently moving 22-23 containers per hour, down from the usual 28-30.

That might not seem like a huge difference, but these bottlenecks add up and cause more delays, exacerbating the problem further and further. And with the big 3rd wave of COVID-19, it’s really not a surprise – there were 250 staff off from COVID-19 at Felixstowe at one point, though this is now down to 130.

I’ve seen a few people online suggesting this, and in theory, it makes sense. After all, nearly all factories are closed for most of February, so there’s no production and no new shipments, which will allow the backlog to be cleared…

Won’t Chinese New Year clear the backlog and get everything back to normal for your Amazon FBA business?

Unfortunately not. While there will be a drop in shipping volumes for a short while, March will see another significant increase as all the delayed orders are shipped out. Sorry to be the bearer of bad news, but if anything, I expect the problems to worsen after Chinese New Year.

What about shipping using other methods? Or ordering from suppliers in another country?

I’ve had a lot of people messaging me asking these questions, and the short answer is it won’t really help.

While, yes, the problem is being caused by sea freight, this has spread and affected both air freight and even rail shipping from China. And it makes sense because those who can switch to air freight have done so, thereby increasing demand and affecting pricing and services.

I would still suggest speaking to your freight forwarder about this option because it could be the case that while sea freight costs for you have doubled, air freight is only 50% higher… so it might still be worthwhile switching.

Then in terms of ordering from other countries, by now this is a global issue with nearly all ports and hubs being affected, so that’s not really an option to save on shipping.

So that’s it? Are we stuck paying $15,000 for a 40ft container?

No, and thankfully I can finally give some good news.

Speaking to Andy Ball, the Director of Trade for Asia for Woodland Global and he told me that the general feeling moving into 2021 is that “carriers operating ocean freight services have learned some harsh lessons since the outbreak of COVID 19, and in the main, the best lesson they have learned is that it’s no longer a race to the bottom in terms of rates. They are managing their utilisation much better and are limiting the amount of business they want to take on of lower rated contracts thus forcing the considerable surplus freight to move on higher rated spot contracts, meaning they don’t necessarily have to have their vessels full to make profit. 

The general feeling is that rates will come down at some point this year as the current levels simply cannot be sustained but they will not return to the levels that have previously been enjoyed with the general consensus being that 40ft/HC rates settling around USD 5000-6000 mark but again there is no timeframe as to when this will happen and it’s only a feeling being shared amongst forwarders.”

So there you have it. If nothing further goes wrong, rates should start to settle, and while we won’t enjoy the same prices as before, we also won’t have to pay the current exorbitant fees.

What should Amazon FBA sellers do?

I’ve spoken in-depth to a number of Amazon Sharks members to try and help them navigate through this and my answer is really that it depends on your individual business, and there’s no one blanket suggestion that will apply to everyone.

This is the plan of action I would suggest:

  1. Speak to your supplier/freight forwarder about alternate shipping options and see what they say. Compare air freight and sea freight quotes and see what makes sense for your business. You will always pay more for air freight, but it does offer a number of benefits to Amazon FBA sellers, such as much faster shipping times (especially important now when sales are up) and decreased storage costs as you don’t have to hold as much stock, either yourself or with Amazon.
  2. Reassess your margins and pricing.

Again, this is very specific to each individual business as it depends on how much your Amazon seller shipping costs have increased, your margins before and after, your competitors and whether they’ve increased their pricing etc.

But you have to make sure you know all these numbers! Please don’t be one of those sellers who blindly charge the same amount while their costs have increased, not even knowing their margins and net profit. Work it all out, and then make the best decision for your business.

One final piece of advice is that now, more than ever, it’s so important that you work with a good freight forwarder. And my suggestion is Woodland Global.

I’ve recommended them countless times on this blog and to my Amazon Sharks members, and I’ll continue to do so as their service is always fantastic. They’re sending out a lot of emails keeping us all up to date, and you can also check their page here for more info: https://www.woodlandgroup.com/news/news/global-shipping-update/

Last but not least, for today’s post, I do want to point out that it’s not all doom and gloom!

Yes, COVID-19 has meant much higher shipping costs, but it’s also meant much higher demand for e-commerce and Amazon FBA goods! Many of my students hit new sales records in November without spending a penny on PPC. That resulted in big jumps in NET PROFIT in one month, so the opportunities for Amazon FBA sellers really are bigger than ever.

Until next time!

All the best,

Andrew.

23,223 UNITS on Amazon UK in a MONTH without spending a DIME on PPC!

December 16, 2020 by Andrew Minalto - 6 Comments

Welcome back!

I know that everyone is already in the Christmas mood, but I still wanted to get this update out to you and share my results on how my Amazon FBA business did in November.

Yes, this Christmas will be different, but I can still feel the Christmas spirit in the air, and I will still enjoy this holiday with my family in the best possible way.

And those with kids will know that they expect the “whole thing”, regardless of whether there’s a global pandemic happening or not. In fact, I don’t think kids worry about all this drama at all. They are so quick to adjust and simply look for enjoyment in the simple things. At least, that’s what my kids do.

I did all my Christmas shopping online this year. On Amazon. I spent no more than an hour ordering all of the gifts (well, not all) that my kids put in their letters to Santa. What’s interesting is that some of the items looked very promising from a business perspective, too! 🙂

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WARNING: DO NOT use Jungle Scout for Amazon research!

December 10, 2020 by Andrew Minalto - 2 Comments

Welcome back!

Yes, the title of this post is rather dramatic, but there’s a reason for that: you really SHOULDN’T use Jungle Scout for your Amazon research.

At least not in the way that 99% of the self-proclaimed “Amazon experts” on YouTube recommend you do.

I really want to clear the air and show you exactly why you can’t blindly trust Jungle Scout numbers—or any other Amazon research software for that matter!

The main reason I wanted to write about this is that every week, I receive messages from people asking me “does this look like a good product?” Inevitably, they will have attached a Jungle Scout Chrome tool screenshot, often with the actual product names blurred out so all I can see are some numbers.

How can you possibly tell if a product has potential or not just by looking at the Jungle Scout numbers?

You can’t.

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WHAT trademark CLASS to use for your Amazon FBA business?!

December 7, 2020 by Andrew Minalto - 0 Comments

Welcome back!

It’s time to resume our Questions & Answers blog post series! I really hate when so many good questions/topics get buried in the long comments threads, so starting from now, I will try to regularly publish the best questions and answers in a separate blog post.

In today’s post, we’re talking about trademarks. I have previously talked about the best time to register a trademark for your Amazon business, as well as the common trademark scams and pitfalls people encounter during the trademark registration process.

But today, I want to talk specifically about trademark CLASSES and what you, as an Amazon seller, need to know about them.

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THE SIMPLEST WAY to START selling on Amazon FBA Sweden!

December 3, 2020 by Andrew Minalto - 6 Comments

Welcome back!

Amazon has added yet another marketplace to its network: Sweden! This means that there are currently seven active marketplaces in Europe:

  • United Kingdom
  • France
  • Germany
  • Italy
  • Spain
  • Netherlands
  • Sweden

That’s seven opportunities to expand your business and reach more customers! Do not underestimate how important this Amazon expansion into other European countries is. Remember, there are 66 million people in the UK, but 741 million in Europe (including Russia).

I have been following eCommerce trends since the early 2000s. I have seen the growth of Amazon and eBay with my own eyes. It all started in the US, then it expanded to the UK, Canada and Australia (the main English-speaking countries), and then, slowly, it moved into other regions.

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BREXIT & COVID: The WORST time to START selling on Amazon UK?!

November 26, 2020 by Andrew Minalto - 5 Comments

Welcome back!

Every week, I receive emails from people asking me if this is a GOOD time to start selling on Amazon? Indeed, 2020 has been full of surprises. Apart from the worldwide pandemic, people in the UK have to deal with another new reality: BREXIT is actually happening on the 1st of January of 2021, and that will dramatically change the way Amazon FBA businesses will be run in the UK and EU.

But—and this is a big but—does it really matter?

Should you really stay away from Amazon until things clear up?

No, I don’t think you should, and here’s why:

1) Things are never perfect. This whole situation reminds me of an average person’s attempt at starting a diet. It’s always TOMORROW. There are always excuses for why you can’t start your diet or exercise today, but we all know that TODAY is the BEST day to make a change, no matter what.

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NEW! How to add VIDEOS to AMAZON UK Product Listings!

November 20, 2020 by Andrew Minalto - 9 Comments
Amazon UK Product VIDEOS

Welcome back!

I’m SO excited! 🙂 This is the feature I have been anticipating for more than two years now—and it has finally happened! Just a few days ago, on the 16th of November, Amazon announced that we can now upload and manage product videos on Amazon UK!

I already “tested” this feature two years ago, when I tried selling on Amazon US, but it has not been available for the UK or EU marketplaces until now. Well, it’s still not available for the EU marketplaces. From what I can see, only the UK platform is currently supported, but I’m hopeful that they will roll this out to all marketplaces next year.

Amazon UK Product Videos

Why am I so excited about this new feature? Because I believe that video will GREATLY help increase conversion rates and will generally help shoppers go through the buying process quicker and easier by SHOWING them the product in action and answering the most common questions in an engaging and visual way.

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HOW to EASILY FIX the 5665 BRAND NAME ERROR on Amazon!

October 22, 2020 by Andrew Minalto - 20 Comments

Welcome back!

Let’s talk about the infamous Amazon ERROR 5665, what it is, how it works and how to fix it for good!

The ERROR 5665 started to show up on Amazon earlier this year when sellers tried to create a new listing for a product and enter a brand name that was not registered with Amazon’s Brand Registry.

Here’s the exact ERROR 5665 message that comes up on Amazon:

Amazon must approve your brand before you can use it to list products. Brands should be registered through Brand Registry, but if your brand is not eligible for Brand Registry, you can obtain an exception by contacting Seller Support and mentioning error code 5665.

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My £27,461.60 Amazon FBA BUSINESS UPDATE for September 2020!

October 8, 2020 by Andrew Minalto - 7 Comments
Amazon Prime Day

Welcome back!

Another month has passed, and it’s time for my monthly business update post. In these posts, I share results from my own Amazon FBA business and update you on the latest Amazon FBA news.

September has been a very busy month. Sales have increased since August, which is always good to see! Also, at the end of September, I started to see more and more sales of Christmas-themed items, which officially means that THIS YEAR, Christmas sales have started at least one month sooner than usual (end of October).

There has also been a lot of Amazon-related news. Here’s a summary of what we’ll be covering today:

  • My Amazon business results, and how to make £8,227.30 NET profit doing NOTHING!
  • Prime Day is here! What is my strategy to maximise profits?!
  • Brand-new Sponsored Brands video ads!
  • New Amazon FBA warehouse in Switzerland—another VAT trap?
  • FBA inbound shipment problem—do you need to worry?
  • Latest BREXIT news—split inventory pools confirmed by Amazon!
  • Amazon Netherlands and Sweden—time to create your listings!
  • Amazon’s brand-new freight service?!
  • Jungle Scout’s new review automation feature!

As you can see, there are LOTS of things we need to go through, so, without further ado, let’s get started!

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My SECRET LIST: 100 Products to Sell on Amazon UK!

September 17, 2020 by Andrew Minalto - 12 Comments
Top products to sell on Amazon UK!

“What product should I sell?”

That is the million-dollar question—and it’s one that I have heard thousands of times over the last 15 years of doing business online and running this blog. For the first decade, it was all about eBay, and now it’s all about Amazon. It doesn’t matter what the platform is, new sellers have ALWAYS struggled to find the RIGHT product to sell.

And I totally get it—the struggle is real! Take, for example, my Amazon Sharks program. Even though I explain exactly how to do market research in the course, as well as how to find profitable products to sell on Amazon UK, there are still people who find this process difficult and stressful. And there are several reasons why this happens:

1) They can’t see through the numbers. There are so many data points that we need to simultaneously look at and weigh up as part of this process. It is based on what these numbers say and how they relate to each other, etc. that we make our product selection decisions. For many people, this is simply too much and they start to think that this Amazon FBA game is only for math geniuses. Which is not true at all!

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