In this post, we’ll cover Remote Fulfilment with FBA, how to use it, and, most importantly, how to opt-out if you feel it’s not right for your brand.
Understanding the Remote Fulfillment with FBA Program
Before we get into the weeds, let’s start by defining Remote Fulfillment with FBA. Remote Fulfillment with FBA allows sellers in the United States to use its U.S-based Amazon inventory to sell to customers in Canada and Mexico. Your products will be listed on Amazon.ca or Amazon.mx, but they will be shipped and fulfilled from their U.S.-based warehouses. Remote Fulfillment with FBA is different from FBA export, which is when Amazon fulfills your international orders. Customers knowingly visit Amazon.com to order an item and ship it internationally. Amazon uses its U.S. inventory and ships it to them using its own planes and trucks, so it fulfills the order to the customer on your behalf. The beauty of these programs is that Amazon handles all of the duties and taxes involved in shipping products internationally, which can be a big barrier to expanding internationally. Now, Remote Fulfillment with FBA isn’t a new program, but a big change is coming. Beginning July 1, 2022, Amazon is automatically opting eligible SKUs into these programs unless you choose to opt out. For some brands, this can be a good stepping stone to determine if your products are viable in these different markets. It can help you take that first step to see if your products have traction in Canada or Mexico. Before you do, make sure it’s right for your margins. If it’s not, that’s okay. Expanding internationally isn’t right for every product or brand so take care to opt out if it’s not for you.
How Does Remote Fulfillment with FBA Impact Your Brand?
Remote Fulfillment with FBA has actually been around since 2018. Previously, all you had to do was go in and enroll your SKUs. After July 1, 2022, it will be even easier to participate. All eligible SKUs will be automatically enrolled, but that’s not always a good thing. As you consider if you want to expand internationally, it’s important to understand your product eligibility and how this program will impact your margins.
If your product is regulated in the United States or abroad, it’s likely not going to be eligible for export. That includes topical solutions, ingestible items, food, and more. Anything that has to be reviewed by an independent body for safety is probably not going to make the cut. If you are interested in participating in Remote Fulfillment with FBA, Amazon makes it easy to review your eligibility on its Seller Central page. Visit the remote fulfillment page and download a flat file that shows what SKUs in your marketplace are eligible for export. That’s the first thing you want to check as you consider expanding your sales internationally.
Amazon charges you an FBA fulfillment fee, just like they do for domestic orders. However, this fee is higher for international orders, and it’s also in the local currency. So if you’re sending inventory into Canada, your FBA fulfillment fee will be in Canadian dollars. Keep that in mind for currency conversion’s sake. Your margins are critical to preserving the health of your business, so it’s important to understand the pricing, particularly the balance between meeting your desired margins while still selling at a competitive price. To help you do that, Amazon offers the FBA revenue calculator on Seller Central. This calculator allows you to select the product you want to sell and the remote FBA fulfillment program to identify your FBA fee. Now that you know the fee, you can work backward to identify how much you should be charging. Put in your product’s ASIN or search for your item. Now that you know the fee, take it out of the price for that item. This is the cost per unit that you’ll be receiving. If it still hits your required margins, great! No further action is needed. However, if it doesn’t, you’ll want to adjust your price accordingly. Most importantly, remember to account for changes in currency. Don’t be afraid to change the price of your listing on Amazon Canada or Amazon Mexico to reflect the price you need to make your margins.
As you work through your inventory, maybe you decide that only five SKUs out of 20 make sense to sell internationally, either from a margin or eligibility standpoint. Remember, you can opt SKUs out of this program, so it’s not an all-or-nothing kind of thing. Instead, it’s important to take a step back and assess what works best for you and your brand. Amazon is a business, and just like you, they want to make money. The Remote Fulfillment with FBA is a great revenue driver for both you and Amazon, but only take this step if you’re ready. You can always opt back in at a later date if now’s not the right time, so don’t feel the pressure that you have to do it now or never.
Six Steps to Remote Fulfillment with FBA Success
Now that you’ve determined that Remote Fulfillment with FBA is right for you and your brand, let’s go over the six steps that will help you tackle this new challenge successfully.
Consider Additional Tax Implications as Seller of Record
You’re now a seller of record, which means you are a legal entity that sells to the end consumer in these countries. Even though Amazon handles the duties and taxes from a product movement and fulfillment standpoint, there may be additional tax liabilities that you’re responsible for. Check with a tax professional. They can help guide you through this process and make sure you’re aware of any hidden costs.
Once you’ve made the decision to go international with Remote Fulfillment with FBA, be patient. Don’t get discouraged if you don’t see sales straight away out of the gate. Your listings may need time to index if they’re new to the Canadian or Mexican Amazon marketplaces. There could also be a discrepancy in the need if you have a more seasonal product. There can be any number of reasons you’re not getting immediate sales, so take a deep breath and wait it out. You’ve got this.
Watch Your Metrics
Look for patterns in your sales. If you see sales start to grow over a period of time, ensure that you have sufficient inventory to meet the demand. Remember, that includes both your U.S. and international sales because you’re pulling from a single pool of inventory with Remote Fulfillment with FBA. Consider any factors that impact your demand as you forecast your inventory for the quarter and the year. If you mis-forecast, you might not be able to produce more to meet the need in time.
Accelerate Your Growth Through Advertising
Supplement your success by investing in advertising. You can run ads for your products in these marketplaces to boost visibility. Use branded keywords, as well as high-conversion keywords and phrases that you’ve seen success with in the past for best results. You can also take some of your U.S. campaigns and apply them abroad, but remember, there are language barriers, so you’ll need to adjust accordingly. Run automatic campaigns for keyword discovery in your target countries. You’ll find new keywords and phrases to convert shoppers into customers.
Identify Your Tipping Point
Remote Fulfillment with FBA is convenient, but there may come a tipping point where you’re paying higher fulfillment fees to ship a single order than you would to store your inventory in bulk locally in warehouses in Canada or Mexico. That tipping point is going to be different for every brand, depending on your margins and your products. Keep an eye on your sales so you can make an informed decision when it comes time to it.
Have a Backup Plan
If you end up shipping inventory to your target country and run out, that’s okay! You can always use Remote Fulfillment with FBA as a backup. There are many things that happen that you can’t forecast, so if you go viral – congratulations! Use your U.S. inventory as a backup until you can re-stock locally.
Remote Fulfillment with FBA and Your Brand
It’s exciting to see Amazon expand its program, though you should be the one to decide if you’re ready to expand internationally. Doing so through Amazon can keep your costs minimized; however, you have to make the right call for you, your business, and your brand. Consider the following questions. Does it make sense to expand? Do I have the resources, time, and attention to devote to expanding my business? Does it align with my overall goals for my business? If the answer is yes, then you’re ready to expand, and we can help you get there.