Optimizing Amazon Vendor Agreements and Pricing
Transcription
When it comes to choosing how you send your purchase orders to Amazon, Amazon allows you to select between two options collect, which means that Amazon pays for the freight, which has the benefits of being able to make use of the highly favorable rates of shipping that Amazon has negotiated with their carriers, as well as leaving Amazon to make all the shipping arrangements using their preferred carriers.
show moreBut it does have the requirement of you having to agree to a freight allowance, which is updated annually, and which becomes a part of your initial standard agreements with Amazon or the second option, which is prepaid. This means that you pay for the freight of your purchase orders to Amazon’s for fulfillment centers, but at non Amazon negotiated shipping rates.
And which requires you to make all the necessary shipping arrangements yourself, but where you can use your own preferred carrier. Whichever option you end up choosing is ultimately dependent on how you set up your costing model per ascent, Amazon, that is you would need to include the freight allowance percentage into your costing model per ASIN.
Otherwise, if you choose prepaid, you would need to calculate your percentage freight per ascent and include that in your model. The best approach would be to run both calculations before selecting a freight option. Calculate your freight percentage per ASIN to the furthest Amazon fulfillment center for your first costing model to calculate ASIN costs.
If you choose prepaid as your freight method for the second costing model, use the standard 5% for freight allowance for the collect option with Amazon and for a third calculation for the collect option to factor in increases in the coming year or two use up to 7% for freight allowance from. These models will then assist you in selecting the correct freight method for you.
And the one that will be the most economical and profitable for your business with Amazon.