FBA season for meltables ends on April 15th in the US, and April 30th in Canada.
What this means is that after that date Amazon will not accept or fulfill products that are considered meltables until October 15th (Canada) October 30th (US).
Today we will share how chocolate brands can approach transition from FBA to MF (Merchant Fulfilled) fulfillment to ensure there is no impact to your sales growth on Amazon.
Let’s start with the two main operating principles:
1. It is better to sell through faster than have leftover inventory in FBA
2. Start merchant fulfilled while there is still units in FBA
It is better to sell through before the FBA season end date, than over estimate, and thus end up with FBA inventory sent back or destroyed.
Main reasons for such logic:
- FBA removal and disposal fees increased significantly after January 18, 2022, most chocolate products fall into this category. Below is what will cost you to remove, based on the product weight, per unit.
|Size tier||Shipping weight||Removal fee per unit|
|Standard size||0 to 0.5 lb||$0.52|
|0.5+ to 1.0 lb||$0.75|
|1.0+ to 2.0 lb||$1.14|
|More than 2 lb||$1.51 + $0.63/lb above 2 lb|
- April gets into warm enough territory for a lot of parts of the US to potentially create customer experience issues with melted products left on a porch, etc.
- If you end up removing leftover inventory after the FBA season end date, it will come back to you damaged and/or melted from Amazon warehouse (point 2), and thus deemed unsellable.
How to estimate FBA inventory needed to sell through inventory right before the FBA season end date
Evaluate your selling patterns, planned marketing, cycle of FBA replenishment, and inventory in FBA to estimate needed sell through date.
Amazon has beefed up their Inventory Planning algorithm in Seller Central. We do not recommend using Recommended Replenishment Quantity in this case (because it’s reactive, AND does not consider the end of FBA season for chocolate).
But 30 days sales, Days in Inventory, and Total Days of Supply can be used for estimates in this context.
Add/subtract for any changes planned changes in marketing. Example, if you are planning to run a coupon, promotion, increase in advertising spend, it will give a lift to sell through.
Depending on the aggressiveness of your marketing through April, we suggest estimating 10-30% sales lift for any additional efforts and dollars you will put into Amazon marketing from now till April
Now you should have a fairly strong estimate of what your FBA inventory be by the FBA season end date.
Set MF fulfillment live while FBA is still in stock
Why? In addition the obvious argument (to avoid losing sales), being out of stock always hurts your Amazon rankings. When you are out of stock you lose some of the SEO search results, you lose organic growth momentum. So when you re-start advertising after your items are back in stock, in a way you are paying for advertising to recapture what you already paid for with advertising when you were in stock.
Caveats: if operationally you are not ready, don’t rush into MF to avoid out of stock scenario. Our recommendation above is for brands that are ready to delivery operationally per Amazon’s requirements.
What if you are at risk of having leftover inventory at FBA after the cutoff date?
We suggest deploying additional marketing to increase sell through velocity. As you saw above, FBA removal fees increased. It is better to invest a $1 into selling more of your products, than pay that $1 for a removal fee, and have your products sent back to you in April in unsellable condition.
We have found that, in addition to PPC, dollar specific coupons (ex. $2 off) work well with CPG products, including chocolate.
Are you looking to launch or increase sales on Amazon for your chocolate brand? Let’s connect