How can I compete? Advice needed

I have been selling on Amazon now for about 8ish months. My products are dog treats and I own the brand. My products for the first 6 months were doing amazing, but then I got undercut 2 for 1 by bigger brands. Now I’ve been struggling to keep up. I’ve found a new supplier so now I can get my price to match the bigger competitors, but the issue of shipping cost still remains. I am FBM, if I switch to FBA do you think I can compete?

Here is a breakdown,

It costs me $8.5 to get the product and package it. I sell it for 16.99

Amazon takes their cut and shipping is charged to the customer typically between $4.50-$5.30

After shipping the customer pays much more for my product vs the competitors who offer free shipping.

This leaves me with a low profit margin.. if I switch to FBA could I do better? How should I price the product? PLEASE give me some advice. Thank you