Amazon FBA - what is it, and how to use it
FBA, or Fulfillment by Amazon, is a service provided by Amazon that allows online retailers to ship their products to Amazon’s numerous warehouses. Amazon stores these products, completes orders and ships them to customers. The Amazon Prime logo will appear next to your products, making you an even more reliable seller in the eyes of buyers. Customer service is also on Amazon’s side.
Amazon FBA vs Amazon FBM
Fulfillment by Merchant (FBM) is an option in which your company deals with the processing of orders and their logistics. In this case, the products are stored in your warehouse or third-party warehouse, not in Amazon’s fulfilment centres. FBM may be a better choice for large and heavy items that sell in small quantities and for items with low turnover. Unlike the FBA, you are required to provide buyers with the appropriate customer service.
Amazon FBA - how it works - step by step
- You send your products to one or more Amazon warehouses (depending on which market you choose to sell to). You will receive the necessary shipping addresses from Amazon.
- Once the products reach Amazon’s warehouse, they are stored there until the buyer places the order.
- The customer places an order. Warehouse employees complete individual orders while the transaction is handled by Amazon. You can watch any changes and updates taking place in the stock.
- After the order is properly packed, it is sent to the customer.
- You don’t have to worry about whether the order will reach the buyer on time. It is Amazon’s responsibility to track the progress of the order. What’s more, returns and refunds are also supervised by Amazon.
- Every two weeks, the profit from sales goes to you.
Amazon FBA Fees
FBA members are subject to several fees, including:
- Standard Seller Fees
It ranges from 15 to 18% of the product price.
- Fulfillment Fees
Charged per unit, the amount of this charge varies depending on whether the product is standard size or oversized. This fee also covers picking and packaging, shipping, customer service and returns.
- Inventory Storage Fees
This is the monthly storage fee for a cubic foot of goods. Charges for products of different sizes are disparate. Additionally, if products are stored for too long, Amazon will add a long-term storage fee.
- International Shipping
This is the fee charged when shipping inventory worldwide.
Amazon FBA Advantages
By using the Fulfillment by Amazon service, you get a quality guarantee that is appreciated by buyers. The ‘prime’ logo next to your products increases consumer confidence in your brand, which translates into a greater number of orders. You can reach a wider audience who is interested in the free one- or two-day shipping that Amazon Prime subscription offers.
Moving on, Amazon provides 24-hour customer support so you can be sure that customer issues are resolved as quickly as possible.
Storing inventory at Amazon Fulfillment Centers allows for express shipping.
Moreover, the FBA will allow your products to appear higher in the search results. The higher you rank on the displayed page, the greater the chance of getting an order.
Since Amazon deals with all logistics and order administration, you can use the time you would have to spend on expanding the range of products, improving listings of existing products or starting advertising campaigns. All of this can contribute to increasing your sales profit.
Despite the many advantages of FBA, there are also a few disadvantages.
The costs associated with the Fulfillment by Amazon can eat up your profit margin, especially when selling large, heavy, or cheap products.
You must bear in mind the costs that products charged for long-term storage will generate.
Also, Amazon has its own requirements for shipping products to their warehouses, including packaging and correct labelling.
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Amazon FBA allows you to easily start or develop your existing business. The time you gain by delegating work to Amazon can be crucial for your business development.
If you need any help regard Amazon FBA activities contact us HERE.