Sales

Leverage Fee Changes to Increase your Profits

Problem: When fees are increasing disproportionately (e.g., "Fee Increasing"), it directly affects your profit margins.
Actionable Steps:Identify High-Impact SKUs: Focus on SKUs with the largest FeeToPriceRatioChange. These are the products where the fees are eating into your profits the most.
Negotiate With Platforms: For platforms like Amazon, review their fee schedules or terms for specific categories or fulfillment methods (e.g., FBA fees). If the increase seems unjustified, consider reaching out to your account manager or support.
Optimize Fulfillment Options:For example, if FBA fees are increasing, consider shifting some items to FBM (Fulfilled by Merchant) if it's cost-effective.
Review Category Assignments:Platforms like Amazon charge fees based on product categories. Ensure your SKUs are correctly categorized, as misclassification can lead to higher fees.
Evaluate Profit Margins:If fees have increased significantly, reassess the pricing strategy for these products to maintain your profit margins.

Problem: Fee changes could be indicative of broader trends in your selling environment.
Actionable Steps:Monitor Regularly:Use this query as part of a monthly or weekly review process to detect ongoing trends in fees.
Analyze Seasonal Variations:Some platforms adjust fees based on seasonality (e.g., higher fulfillment fees during peak holiday periods). Plan accordingly to optimize inventory and fulfillment methods.
Focus on High-Volume SKUs:Prioritize investigating fee increases on SKUs with high sales volumes, as small changes in fees can significantly impact overall profitability.

Problem: Fee increases might make your current selling price unsustainable.
Actionable Steps:Increase Prices:For SKUs with significant fee increases, consider a price adjustment to pass some of the costs onto buyers. Use the FeeToPriceRatio to determine the impact.
Evaluate Bundling Opportunities:Combine SKUs with higher fees into bundles to justify price increases while maintaining perceived value.
Offer Discounts on Low-Fee SKUs:For SKUs with decreasing fees, you might have an opportunity to offer promotions and gain a competitive edge while maintaining healthy margins.

Problem: Not all products are worth selling if fees are disproportionately high.
Actionable Steps:Identify Low-Profit SKUs:Use this data to find SKUs with both high fees and low selling prices (e.g., FeeToPriceRatio > 30%). These might not be worth continuing to sell.
Focus on High-Margin Products:Redirect resources (advertising, fulfillment, inventory) to SKUs with stable or decreasing fees.

Problem: Fee increases may not be one-off events, especially if they align with platform-wide changes.
Actionable Steps:Anticipate and Budget:If you notice recurring patterns in fee increases (e.g., annual FBA fee hikes), incorporate them into your pricing and budget plans.
Diversify Selling Platforms:Explore selling on platforms with lower fees (e.g., Shopify, eBay) or directly on your website to reduce dependency on high-fee platforms like Amazon.
Consider Inventory Adjustments:If fulfillment costs for specific SKUs are rising, reduce stock levels for those items and focus on more profitable products.

Problem: Stakeholders (partners, investors, team members) may question changes in strategy.
Actionable Steps:Present Insights:Use the data to explain why fees are impacting profitability and justify decisions like price changes, fulfillment adjustments, or SKU discontinuation.
Benchmark Against Competitors:If fee changes are platform-wide, they’re likely affecting competitors too. Use this insight to assess your competitive positioning.

Review Fulfillment Costs:Investigate why the FBA fee increased. Is it due to weight, size, or category changes?
Adjust Price:Consider raising the selling price by at least £0.50 to offset the increased fee while maintaining competitive pricing.
Explore Alternatives:Evaluate whether fulfilling the SKU via FBM would reduce costs while maintaining service levels.

This data empowers you to: