Fulfillment by Amazon, or in short FBA, is a wide range of services offered by Amazon. This means Amazon offers third-party seller fulfillment and shipping services from their own warehouse. It’s a straightforward and compelling concept. If you are a seller, then your duty is to sell your products through the Amazon marketplace, and the rest of the selling, like Shipping and packaging, will be done by Amazon for you.
In this article, I will narrate the whole part of Amazon FBA, and finally, you have to decide whether you will take the service.
We all know Amazon is a giant e-commerce platform. But do you know Amazon runs the site with half of the third-party seller’s products? This means not only Amazon sells their products on Amazon, but also millions of sellers sell their products through the platform. And for your attention, around 72% of Amazon sellers choose to ship their orders through Amazon FBA service.
How Does FBA Work?
As I said before, Amazon FBA is a simple concept. If you are a seller and you have access to Amazon Seller Central, you can use this service. For your product shipping, you just need to set the order fulfillment method as Amazon FBA, and you need to send your units to the Amazon FBA warehouse.
Amazon will pick your products and store them in their fulfillment center. When they receive any order, the Amazon fulfillment team will pick up the order, and they will ship the products to the customer’s door with proper packing. So, as long as Amazon has your products in their warehouse, they will do the same for you, and in some cases, Amazon will handle the customer returns and any other issues regarding the order process.
Amazon FBA Cost of Fulfillment and Storage:
Fulfillment by Amazon is a cost-effective delivery option for many Amazon sellers. We always calculate in every business the cost of operations. FBA is a handy option if you are a new seller and want more customer trust and hassle-free delivery options, so while deciding to grab the Amazon FBA service, you will need to think about the following cost in your calculations.
Each year, amazon provides an FBA fee rate chart from January to September and October to December. The chart indicates which weight and dimension will cost to fulfill by Amazon.
Fulfillment Cost:
The foremost cost of FBA is fulfillment fees. This cost includes fulfilling customers’ orders with picking and packing, Shipping and handling, customer returns handling, and customer service. These fees are determined and charged by the weight and dimension of the products.
Monthly Storage Cost:
This cost is also charged by the product’s weight and dimensions, the average number of daily units stored, dangerous or hazardous goods stored, and the month of the year. This cost differs two times in a year, January to September and October to December.
Aged Inventory Charged:
If you use FBA for your business, you might have some inventory for a long time in the Amazon FBA warehouse. In this case, amazon charged a surcharge on inventory over 271 days aged. This calculator is also partially the same as monthly storage fees. It’s based on the total number of units and the total cubic feet the products are staying.
Unplanned or Unorganized Product Fees:
Amazon will charge on your fba inventory if they are not well packaged or unplanned. In this case, amazon will help your product with proper packaging as their packing and leveling criteria, and they will charge.
How to Enroll Products on FBA:
It’s just simple, as I said before. Here, I’m narrating the steps. Let’s learn how you can enroll your first-ever products on the Amazon fulfillment network.
Fulfillment Channel:
When you make a decision to ship your products through the world’s biggest fulfillment channel. To do this through your products, offer features in Amazon Seller Central. Need to indicate fulfillment by amazon check mark. You also can fulfill your own website orders through FBA. Amazon has the option called multi-channel fulfillment options with API pre-built applications. You just need to connect your store with that api.
Add your Product to FBA:
It’s easy to add products or enroll in an FBA program. Like is said before, if you are adding a new product, just select fulfillment channel fba from the offer and tap on your seller central inventory management section.
If you have an existing listing with another fulfillment network, for example, FBM. You can turn that listing to FBA also. To do this, you just need to go to the inventory section. Search the product, and from the result, go to the right edit section. Click on that, and from the drop-down menu, select Fulfillment by Amazon.
For your little reminder, whenever you select the fulfillment channel to FBA, always try to fix your product’s weight and dimension correctly. Otherwise, you might fall into the incorrect inventory issues.
Product Preparation and Packaging:
To make a hassle-free product booking and receiving at Amazon warehouse. Make sure you have followed all the amazon fba booking and packaging guidelines.
Product Shipping to Amazon Warehouse:
Now is the time to send your inventory to the Amazon warehouse. To ship products from your end to, Amazon try to send them by the Amazon partner courier service. It will help you reduce the time and cost of checking in at the Amazon warehouse.
Usually, inventory toward Amazon takes some time to reach. In normal times, it takes two to four weeks to check in at the Amazon warehouse, and during the peak session, it could take four to six weeks to arrive at Amazon. Whenever Amazon picks your products in their hand, your sales will start. So, always try to maintain an excellent supply chain of your products in Amazon warehouses.
Inventory Track:
Fulfillment by FBA has excellent features and easy business modules. You can track your inventory at the amazon warehouse or fba warehouse at any time. You also can track the shipment and inventory performance at fba. So, it’s wise to track and keep a calculation of your inventory through manage inventory section of your amazon seller central homepage.
Boost Your Sale Through Amazon SEO and PPC campaign:
FBA is a great option for any small business. Because you are worryless and relax with your shipping and order fulfillment to the customer. Amazon is doing it for you precisely. So, you can focus on another business thing like growing your sales and profit.
You can grow your Amazon sales on a large scale through Amazon SEO and Amazon PPC campaigns.
Pros and Cons About Fulfillment by Amazon (FBA)
The advantage of Amazon FBA for a seller is enormous. To make a smooth business chain, especially with Amazon, FBA can benefit on a large scale. So, first, I will show you how you can benefit through Amazon fulfillment.
Trust Factors to Make Buying Decision:
When customers see the products buy box dispatched by Amazon, it’s a sign of positivity for a customer. Because they thought Amazon would deliver their order and come to their door as soon as possible, and it could be returned. Another thing is it creates credibility for a seller. This is a trust factor for the customer when they place an order.
Amazon Ranking and Popularity:
Amazon FBA can boost your sales and ranking on the Amazon website as it shows the whole cost, including Shipping. If you are not selling with FBA, this opportunity could be lost.
Easy to Win Buy Box:
Amazon FBA sellers can easily win the buy box. The buy box is the add-to-card button, which has a more significant impact on increasing sales on Amazon. Beating the competitors and winning the buy box is winning the battle over the competitors in the first place.
Free Shipping Facilities:
Free Shipping to Amazon Prime customers can boost your sales. Amazon FBA sellers can make this opportunity for Amazon Prime customers and boost their sales and revenue.
Lowering Business Operating Cost:
With the Amazon fulfillment service, you can lower your expense of storage fees, staff salaries, and management of products. These could be reduced, and you can focus on selling your product, ranking on the site, managing your PPC campaign, and sourcing more products for sale.
Millions of Amazon sellers found FBA a reliable and profitable business model. But still, so many sellers need to embrace the system. I’m trying to determine some cons that could prevent them from enrolling.
Potentially Costly Charges:
Sometimes, Amazon FBA could charge a product shipping cost more than the other shipping company. Some small businesses need help to justify their profit and loss, fulfilling with Amazon FBA.
Enhanced Returns: Vendors often witness a surge in the frequency or quantity of product returns, partly owing to Amazon’s liberal return policy that involves no inquiries. Previously, Amazon would send returned items to you, necessitating payment for processing. However, the platform strives to streamline the process by directing returns straight to your warehouse.
Extended Storage Charges: Amazon imposes additional fees for products kept in storage for prolonged durations. These charges could be a financial burden and negatively impact your performance metrics, especially for items with slower sales. Calculating this cost is crucial to evaluate the financial feasibility of utilizing FBA (Fulfillment by Amazon) services.
Demanding Product Preparation Guidelines: FBA mandates stringent standards for packaging and labeling when dispatching goods to Amazon’s warehouses. Complying with these requirements can be a time-intensive and meticulous task on your part.
Intricate Sales Tax Considerations: Sales tax administration operates at the state level, often leading to confusion regarding the appropriate tax rates. This becomes intricate for businesses situated in one state while housing their inventory in another state’s warehouse.
Branding Limitations:
Because Amazon packs and ships your product from their warehouse. They use their own package with the logo and branding. Thus, you will get limited branding opportunities.
Though you ship your products to the Amazon fulfillment center with your own packaging, Amazon will put your package inside their own package to deliver to the customers. Thus, you get the limited branding of your products.
Should You Use FBA?
I have clarified the facts, including Amazon FBA’s pros and cons, in this article in an easy way. Now it’s your decision whether to use the Amazon FBA service. I prefer to grab the opportunities if you are a new seller with a limited workforce.
Final Words:
Leveraging Amazon fba in your business can be a quick start to an easy way to grow your business and revenue. Amazon fba can allow you to get much more out of your Amazon business if you choose the right products.
