Tag Archives: Split Shipments

How to Make the Most of Amazon FBA Split Shipments

Split ShipmentsLast month, we talked about Amazon Split Shipments and the options you have between Distributed Inventory Placement (DIP) or Inventory Placement Service (ISP). Today, we’re going to take the conversation to the next level and talk about how to make the most of whatever placement decision you make. For most of us, this decision should not be a one time decision where we set things up and forget about it. A lot of time and money can be wasted if you don’t have a strategy in how you choose to react to Amazon split shipments.

The following are different shipping situations I have found myself in. I’ll do my best to explain how I have dealt with Amazon split shipments and why I felt it was the best decision to make.

Note: When I mention BNA3, PHX6, RIC2, etc, I am referring to the code names of individual Amazon fulfillment centers that are spread throughout the country.

A. Shipment contains 250 items.

138 → BNA3
  70 → PHX6
  42 → RIC2

I leave this shipment with Distributed Inventory Placement (the default). There are more than enough items in each individual shipment to warrant the shipping costs. It’s not worth it to pay $0.30 per item to send them all to the same FBA warehouse.

B. Shipment contains 30 items.

26 → BNA3
 2 → PHX6
 1 → RIC2
 1 → ABE2

You have four options with this situation:

1. You can send the items in under Distributed Inventory Placement, but you’ll overpay in shipping costs to send only two items to PHX6, one to RIC2, and one to ABE2. This option might cost you about $15-$20 more than it needs to cost.

2. You can turn on Inventory Placement Service and pay around $0.30 per item. This will make sure (most of the time) that they will all go to the same fulfillment warehouse. In this example, you will be charged a fee of $9.00 ($0.30 x 30) for all 30 items to be sent to the same FBA warehouse. Note: Inventory Placement only promises not to split up quantities of ASINs, not that all of your shipment will go to the same place – although most of the time that’s what happens.

3. You can send in your shipment of 26 items to BNA3, and then delete the other shipments. Maybe next time you enter them in, they’ll all go to the same fulfillment center. Important: I do not recommend deleting shipments on a regular basis. This will hurt your seller metrics in the long run, and should only be used in rare circumstances.

4. You can go ahead and send in your shipment of 26 items to BNA3, but leave PHX6, RIC2, and ABE2 open. While leaving these shipments open, you can add more items on a future date. Once you have enough items (maybe 8-10 items or 8-10 pounds worth of items), then you can proceed with sending them in.

The tricky thing about Inventory Placement Services, is that you need to turn it on before you even start a shipment. If you want to use ISP, then the most likely situations when you would need it would be: 1) if you had a small amount of inventory to ship and/or 2) if you had a smaller shipment with multiples of the same SKU. When you have multiples of the same item, Amazon likes to spread those out at different fulfillment centers. Most likely, these two circumstances would be the times that you would consider using ISP. Just don’t forget to turn IPS off when you’re about to start a new, large shipment.

cardboard-box-open-lgPersonally, I don’t think it’s a wise financial decision to pay $0.30 – $0.40 per item to send them all to the same warehouse. If I have a shipment of 50 items where Amazon wants to send 48 items to Indiana and 2 items to Arizona, I am not going to pay $15 just so that I’ll avoid paying an extra $10 to ship those two items to a Arizona. To me, it’s just not worth it. Most of the time, I’ll simply leave the smaller shipment open and wait until I have enough items to make a full box which, overall, makes the shipping cost lower.

On the other hand, just because it’s not worth it to me, doesn’t mean that Inventory Placement Service isn’t a good decision for you. You may not be able to wait for a larger shipment to send your inventory in. You might not have the storage space to hold even a few items at your house, or the item you just bought might be a super hot toy item that needs to get to FBA ASAP. In that case, do the math and see if Inventory Placement Service is right for you. If you decide that inventory placement is a long term solution for you, then be sure you include that in your costs when you are out sourcing an item for resale.

So what do you think about using inventory placement service? Is it worth it to you? What other split shipment situations have you been in? I’d love to hear your thoughts on this.

***********************

Imagine knowing exactly what to expect in your Amazon FBA business every month of the year.

Imagine what it would feel like knowing you were not missing out on any of the opportunities that will come your way this year. 

Imagine working on your Amazon business knowing exactly what your priorities are, what you need to avoid, and what you need to accomplish during each month to make progress toward making this year your best sales year ever.

Find out more about The Reseller’s Guide to a Year in FBA: A Month by Month Guide to a Profitable Amazon Business today. The package includes a 200-page ebook, monthly live webinars, and 4 special bonuses.

Amazon Split Shipments And What You Can Do About Them

It’s the number one question I hear from those who are new to selling via Amazon FBA: Why is Amazon forcing me to send my inventory to multiple warehouses all over the country? It’s expensive, inconvenient, and it’s cutting into my profit margins. What can I do to fix this?

brownbox2In a perfect world, Amazon sellers would be able to take all of the items they are selling, send them to a single FBA warehouse, and continue to see those items sell quickly. Unfortunately, we don’t live in a perfect world. Amazon has their reasons for shipping our inventory to multiple fulfillment centers, so it’s important for us to understand why Amazon wants to do this.

As you probably know by now, Amazon is the most customer-centric company ever. Everything Amazon does is to make the customer happy. In relation to inventory, Amazon wants to have as many items spread out across the United States as possible. The closer an item is to the buyer, the faster that item can get there, which helps secure a happy customer. If you have a toy to sell, and Amazon already has that toy in stock in Florida, Dallas, Tennessee, and Colorado, then maybe they’ll have you ship your toy to California, where that toy is currently out of stock. When a customer in California wants that specific toy, and that toy is priced competitively, then you have a great chance of winning the buy box and getting the sale.

article_icebreakerUnderstanding why Amazon splits up your inventory doesn’t always make split shipments any easier. It can be frustrating when the bulk of your inventory is going to Indiana, yet one item needs to go to Tennessee, two items need to go to Texas, and another item to Arizona. For many of us, the cost of sending just one or two items to a separate FBA warehouse can completely destroy our profit margins.

So what is a FBA seller to do? Well, you have two options: Distributed Inventory Placement or Inventory Placement Service. Distributed Inventory Placement is where you let Amazon pick where it thinks your inventory should be shipped to. This is the default for those who sell via Amazon FBA.

Screen Shot 2014-05-22 at 8.43.26 AMThe other option you have is called Inventory Placement Service (Click here for Amazon’s page outlining inventory placement options). Choosing Inventory Placement will generally create one shipment for most of your standard sized inventory. I say generally, because Amazon actually only promises that they will send all quantities of a single MSKU to a single FBA warehouse. They do not promise that all items in your shipment will be sent to the same warehouse, but more often than not, they will. There are exceptions, such as oversized items, clothes, shoes, and some media (books, DVDs, etc), which will still need to be sent to a specific warehouse other than the main one you usually send inventory to. The inventory placement fee is currently 30 to 40 cents for each standard-sized unit and $1.30 for each oversized item. Click here to see the current fee structure. Remember, this fee is paid for every item that you are sending in to Amazon, not just on the multiples that might get split up if you did not have Inventory Placement turned on.

Here’s how to turn on Inventory Placement Service:

1. Log in to Seller Central
2. Go to “Settings” and click “Fulfillment by Amazon.”
3. Under “Inventory Placement” click “edit.”
4. Choose your preferred option (The default is Distributed Inventory Placement)
5. Click “update.”
 

Before you head on over to Amazon to update your inventory placement settings, it’s a good idea to weigh the positives with the negatives of Inventory Placement Service.

shutterstock_128422982Positives:

1. Multiples of the same MSKU will not be split into different shipments and will all go to the same warehouse.

2. No more shipments of a single item to a different warehouse.

3. Your inventory will most likely be shipped to one of the warehouses close to you. This could mean lower shipping costs and less time your shipments are in transit.

4. Since your inventory will most likely be shipped to a nearby warehouse, you’ll get faster processing times, and your inventory could go live much quicker. The faster your inventory is processed, the faster it can be sold.

Negatives:

1. The cost of 30 to 40 cents per item could add up quickly and eat into your profit margins. If you have a shipment of 100 items, that could cost you $30 in Inventory Placement fees alone.

2. Inventory placement doesn’t promise that all items in a shipment will go to the same warehouse, it only promises that multiples of the same item (MSKU) will not be split into multiple warehouses. So, you still may have to send items to three different FBA warehouses.

3. Here is a little known secret: Amazon ships your inventory to different warehouses without you even knowing it. You might have shipped your inventory to Tennessee, but after it’s processed, it could easily be removed and sent to Florida. While Amazon is shipping your item to Florida it’s considered “inactive” and cannot be sold. I believe that Amazon takes the money it makes from the Inventory Placement Fees and uses that money to reallocate your inventory across the country.

Most Amazon FBA sellers don’t like shipping their inventory to so many warehouses, but it’s up to you to decide whether it’s worth it to pay the Inventory Placement Fees or not. I, personally do not. The fact that Amazon will temporarily deactivate some of my inventory while it moves those items across the country is a deal breaker for me.

To read more about Amazon split shipments and our strategy for how to minimize shipping costs and FBA fees, click here.

So what about you? Do you use Inventory Placement Service? If so, what do you like or dislike about it? Let us know if you have any questions about these options.

********************************

Imagine knowing exactly what to expect in your Amazon FBA business every month of the year.

Imagine what it would feel like knowing you were not missing out on any of the opportunities that will come your way this year. 

Imagine working on your Amazon business knowing exactly what your priorities are, what you need to avoid, and what you need to accomplish during each month to make progress toward making this year your best sales year ever.

Find out more about The Reseller’s Guide to a Year in FBA: A Month by Month Guide to a Profitable Amazon Business today. The package includes a 200-page ebook, monthly webinars, and 4 special bonuses.