What is Amazon FBA?
Are you looking to take your Amazon business to the next level? If so, it’s worth considering Amazon FBA. But what is Amazon FBA? FBA (Fulfilment by Amazon) is a service offered by Amazon that allows sellers from all over the world to leverage Amazon’s vast logistics infrastructure to store, pick, pack, and ship their products to customers. It’s a basic idea: Sellers sell, and Amazon ships. In this article, we’ll cover everything you need to know about Amazon FBA and how it can help you grow your business.
How Does Amazon FBA Work?
Let’s examine Fulfilment by Amazon’s (FBA) specifics. Sellers can keep their products at Amazon’s fulfilment centres using the service of Amazon FBA. Sellers that want to grow their business and reach more clients can use this service without having to worry about the logistics of keeping and transporting their goods.
Sellers can concentrate on expanding their businesses and developing new products with Amazon FBA while Amazon handles the rest. In addition to selecting, packaging, and shipping the goods, Amazon FBA also entails handling customer support requests, returns, and refunds on the seller’s behalf.
Using Amazon FBA is easy. You must first register as a seller on Amazon Seller Central. As a next step you have to create a product listing and choose “Fulfilled by Amazon” as the fulfilment option. FBA handles the rest when your merchandise is received at an Amazon fulfilment facility. Amazon selects the item from the inventory, packs it, and ships it to the buyer after receiving an order.
Amazon FBA: Who Should Use it and Why?
With Amazon FBA, sellers can focus on growing their businesses rather than the day-to-day operations of warehousing and shipping products to customers. Sellers that want more time for research and development, marketing, customer support and experience may also benefit from this amazon service. Those who wish to take advantage of Amazon Prime and other benefits that can boost sales and attract more customers should consider Amazon FBA. It’s true that Amazon FBA is a fantastic choice for many vendors; however, this doesn’t mean it’s the best choice for everyone. The costs of using Amazon Fulfilment by Amazon (FBA) may be prohibitive for some merchants, such as those that deal in bulky, heavy, or easily damaged goods. Considerations including the specifics of your business, the goods you offer, and your long-term objectives are crucial when deciding whether or not to use Amazon FBA.
What Does Amazon FBA Cost?
This section is the most interesting for every reader. Before you decide to start an Amazon FBA store you have to keep in mind the following main fees: fulfilment fees and storage fees.
Fulfilment fees are charged based on the size and weight of the product, as well as the destination of the shipment. But what exactly do these fees entail? Fulfilment fees cover the cost of picking, packing, and shipping your products to customers. These fees vary depending on the size and weight of your items, as well as the shipping destination. For example, a small, lightweight item shipped within the United States will have a lower fulfilment fee than a large, heavy item shipped internationally.
Also, there are two primary categories of FBA fulfilment fees, non-apparel and apparel, with different prices. Below you can see the costs of each category.
- Non-apparel: Fulfilment expenses range from $3.07 per item for small-standard items to $161.11 per item for exceptional gigantic items, depending on the size of your product and the peak rate.
- Apparel: Pricing for apparel products is relatively comparable, ranging from $3.43 to $161.11.
Inventory Storage Fees
nventory Storage fees are charged based on the volume of storage space your inventory takes up in Amazon’s fulfilment centres. Storage fees are charged based on the amount of space your inventory takes up in Amazon’s fulfilment centres. These fees are calculated on a monthly basis and vary depending on the time of year. During the holiday season, for example, storage fees are typically higher due to increased demand for warehouse space.
|January – September
|$0.75 per cubic foot
|$0.48 per cubic foot
|October – December
|$2.40 per cubic foot
|$1.20 per cubic foot
Ultimately, the decision to use Amazon FBA will depend on your individual business needs and budget. It’s important to carefully weigh the benefits and costs before making a decision, and to regularly monitor your expenses to ensure that FBA is still the best option for your business.
Amazon FBA Pros
It’s exciting to know that Amazon FBA offers a wide range of services beyond just storage! FBA offers a multitude of benefits that can assist Amazon sellers in expanding their business and boosting their sales. FBA has revolutionised the online selling experience for many sellers by offering access to Amazon’s customer service team and enabling them to expand their reach with free, two-day shipping through Amazon Prime. Using Amazon FBA can bring about numerous benefits:
Access to Prime Shipping
Amazon Prime shipping is available for FBA products, which can boost exposure and sales. Customers who have Amazon Prime memberships can, therefore, get their orders within two days or even the same day. Customers are more inclined to select products that are eligible for Prime shipping, which may be a major benefit for merchants.
Less Time and Effort
FBA manages all order fulfilment logistics so that sellers may focus more of their time on expanding their businesses. Picking, packaging, shipping, and resolving consumer inquiries, returns, and refunds are all included in this. Sellers who use FBA may concentrate on finding new products, improving their listings, and promoting their business.
The good name that Amazon has for dependable and quick deliveries can contribute to customer trust. Customers may expect fast and dependable shipping when they notice that an item is fulfilled by Amazon. Sellers may benefit from increased consumer loyalty and a great reputation as a result.
Sellers don’t have to manage consumer inquiries, returns, or refunds because FBA takes care of these matters. Given how time-consuming and frustrating providing customer service can be, this can be a tremendous relief for merchants. By utilising FBA, sellers can be sure that their clients will receive prompt and competent assistance.
Amazon FBA offers additional advantages in addition to these, including access to Amazon’s global client base, multi-channel fulfilment possibilities, and affordable shipping and storage costs. In conclusion, using Amazon FBA might be a wise decision for sellers who want to organise their business, boost sales, and establish a strong brand on Amazon.
Amazon FBA Cons
Although there are numerous benefits to using Amazon FBA, sellers should be aware of some disadvantages before signing up. You may encounter the following issues:
When compared to fulfilling orders yourself, Amazon FBA has the potential downside of being more expensive. This is especially true for low-margin or low-volume products, as transportation and storage expenses can eat into profits. Even though Amazon FBA’s shipping and handling rates are among the most affordable in the industry, they can still add up quickly if you’re selling a large quantity of items.
Lack of Control
Using Amazon FBA also means you lose some management over the shipping and delivery of your products. Since Amazon is handling the shipping and packaging, you won’t have any control over the process. Sellers accustomed to total autonomy over their enterprises may find this disconcerting.
Overstocked items that remain in Amazon warehouses for a long period incur storage costs. For these kinds of products with a longer sales cycle, this reason might be a limiting factor. If you’re not careful, you could end up decreasing your profit margin due to these kinds of storage fees. It’s important to keep track of your inventory levels and make sure that you’re not storing too much product in Amazon’s warehouses.
Due to the large number of Amazon FBA sellers, competition is high. Getting your products noticed in a crowded market can be challenging. To get your products in front of buyers, you’ll need to put money into marketing and advertising. If you’re not familiar with Amazon, you would better advise an Amazon Consultant to guide you at every step of your amazon journey.
Amazon has strict rules about what types of products can be sold through their FBA program. Certain items, such as hazardous materials and perishable goods, are not eligible for FBA. This can be a problem for sellers who specialise in these types of products. Before you decide to start an amazon fba store, it is substantially important to check if your product category is eligible for amazon FBA. The simplest way to do that, is to see if Amazon sells similar products.
Amazon FBA vs. Seller-Fulfilled Prime
There are two primary order fulfilment models available to Amazon sellers: Amazon FBA and Seller Fulfilled Prime (SFP). While both programs provide sellers with access to Amazon Prime customers and the ability to provide fast shipping, they are very different. Sellers need to be aware of these differences so they may pick the most advantageous program for their operations. To assist you choose the right program for your company, we’ve compared Amazon FBA and SFP below.
|Seller Fulfilled Program
|Storage and Shipping
|Amazon stores and ships the products for sellers
|Sellers are responsible for storage and shipping of their products
|Amazon provides Prime and 2-day shipping to eligible products
|Sellers can offer their own shipping options but may not be eligible for Prime shipping
|Amazon handles inventory management and storage for sellers
|Sellers are responsible for managing their own inventory
|Amazon handles customer inquiries and returns on behalf of sellers
|Sellers are responsible for customer service
|Amazon charges fulfilment fees and storage fees based on the volume and size of products
|No additional fulfilment fees, but sellers may have to pay for shipping and storage on their own
|Amazon FBA can handle large volumes of orders and scale with seller’s business growth
|Limited scalability based on seller’s capacity for storage and shipping
|Sellers have less control over the fulfilment process but benefit from Amazon’s logistics expertise
|Sellers have more control over the fulfilment process but need to manage their own logistics
|All sellers are eligible to use Amazon FBA
|Sellers need to meet specific criteria to be eligible for Seller Fulfilled Prime program
|Generally more expensive than Seller Fulfilled Program due to added fees and storage costs
|Generally less expensive than Amazon FBA due to lower fees and storage costs
|Ease of Use
|Amazon FBA is easy to set up and use for sellers
|Seller Fulfilled Program requires more manual work and logistics management
|Amazon FBA enables sellers to reach a wider audience due to Prime eligibility and access to Amazon’s customer base
|Seller Fulfilled Program may limit the audience reach based on shipping options and customer service capabilities
How to Maximise FBA Sales
Utilising Amazon FBA is only the first step on your amazon journey. The following are some suggestions and advice that will assist you in increasing your sales & revenue:
- Create High-Quality Product Listings: Make sure your product titles, images and descriptions are accurate and compelling.
- Competitive Pricing: Research your competitors’ prices and adjust your prices accordingly to remain competitive.
- Advertise: Amazon offers several advertising options, such as Sponsored Products, Product Display Ads and many more that can help increase visibility and sales.
- Monitor Your Inventory: It is important to closely monitor your Amazon inventory and ensure that you restock it before you run out of stock and can no longer sell your products.
While these tips are essential, there are additional strategies you can employ to further maximise the amount of money you make from FBA sales.
Offer Bundles and Packages
Offering bundles or packages of your products is one way to boost sales. This not only encourages customers to buy more products, but it can also help set your products apart from those of rival companies. If you sell kitchen utensils, for instance, you might offer a set of your most well-liked products, like a spatula, whisk, and tongs. This could be promoted as a “must-have kitchen set” and sold for less than if the individual items were bought separately.
Encourage Customer Reviews
Sales on Amazon can be significantly impacted by satisfied customers leaving reviews. Include a note on the product’s packaging or send a follow-up email to customers after they’ve made a purchase to ask for feedback in the form of a review. You can encourage clients to post reviews by providing them with a discount code or free sample. Customers’ propensity to go to the trouble of posting a review might be boosted in this way.
Utilise Amazon’s Promotions
To help sellers boost their numbers, Amazon provides a number of different promotional options. A buy-one-get-one-free or percentage-off discount coupon are two examples of promotions. You can promote these deals through your product detail page, your Amazon shop, or any of Amazon’s advertising channels. Customers might be enticed to buy more of your product or service by running a promotion.
Stay Up-to-Date with Amazon’s Policies and Trends
It’s crucial to stay up-to-date on Amazon’s policies and trends if you want to make the most of your sales. For instance, Amazon has lately introduced a policy that requires all product listings to include a UPC or EAN. Another way to be ahead of the competition is to follow the latest trends. If you’re in the cosmetics business, for instance, it’s important to know what’s trending in skincare so you can stock your shelves accordingly. You may increase your amazon fba sales and expand your Amazon business by using these additional tactics.
The Future of Amazon FBA: Is It Still a Viable Option for Sellers?
As with any business model, it’s important to consider the long-term viability of Amazon FBA before making such a big commitment. So, what does the future hold for this popular fulfilment option?
It’s important to keep in mind that Amazon can and does change its policies and prices at any time. It’s possible that the advantages of FBA, such as access to Amazon Prime customers and reduced shipping rates, may decrease in the future. Another limitig factor can be the increasing competition on Amazon’s platform. It may become more challenging to stand out your brand and turn a profit as more sellers adopt FBA to their operations.
However, Amazon FBA still has a lot to offer companies that want to sell on the site. FBA allows sellers to tap into Amazon’s massive customer base and efficient fulfilment network, allowing them to expand their business and better serve more customers. In recent years, Amazon has opened new marketplaces around the world . Amazon is also planning to expand to many other countries. This opens up new sales channels for you as an Amazon FBA seller.
The diagram displaying the increasing sales of Amazon worldwide is a clear indication that Amazon continues to grow as a marketplace. This is a perfect opportunity to take advantage of the growing customer base on Amazon and enjoy the benefits of fast, reliable, and cost-effective shipping. With the right product, right implementation and guidance you can sell successfully on the platform.
Fulfilment by Amazon (FBA) has the potential to greatly aid sellers in expanding their Amazon sales. By relying on Amazon to handle logistics, sellers are free to focus on expanding their business rather than worrying about the finer points of fulfilling customer orders. However, FBA may not be optimal for all vendors; thinking through the benefits and drawbacks is essential.
We hope this article was helpful! This article was written by Konstantinos Theodoridis, co-founder of SatiSupp, a leading European Amazon consulting agency. With 10+ years of experience in the Amazon marketplaces (UK, US, DE, FR, IT, ES) SatiSupp has helped numerous sellers optimise their product listings, increase their sales, and grow their businesses. Contact us today for a FREE consultation and start taking your Amazon business to the next level. Don’t miss out on the opportunity to maximise your success on Amazon.
FAQs About Amazon FBA
No, you can choose which products to fulfil with FBA and which products to handle yourself.
FBA fulfils orders as quickly as possible, usually within one to two days of receiving them.
Yes, Amazon FBA allows sellers to fulfil orders from international customers as well.
You will be charged storage fees for any inventory that sits in Amazon’s warehouses too long.
You can sign up for Amazon FBA by creating an Amazon Seller Central account, selecting the products you want to sell, and choosing the FBA option for fulfilment.
While FBA is available for the vast majority of Amazon’s product catalogue, certain categories (such as hazardous materials and perishables) are excluded.
Simply make a shipment plan in your Seller Central account, label your products in accordance with Amazon’s guidelines, and send them off to the fulfilment centre of Amazon’s choosing.
You can manage your inventory with Amazon FBA by tracking your inventory levels in your Seller Central account and setting up automatic replenishment or restocking alerts.
If your products are damaged or lost in transit with Amazon FBA, you may be eligible for reimbursement or replacement under Amazon’s FBA Lost and Damaged Inventory Reimbursement Policy.
Yes, Amazon FBA offers multi-channel fulfilment services for orders from other sales channels such as your own website or other marketplaces.
FBM, or Fulfilled by Merchant, means that the seller is responsible for storing and shipping their products. FBA, or Fulfilment by Amazon, means that Amazon is responsible for storing & shipping the products on behalf of the amazon seller.
If you’re utilising Amazon’s FBA service, you can always check your Seller Central account or use Amazon’s tracking service to see where your packages are in transit.
Amazon Fulfilment by Amazon (FBA) takes care of returns, refunds, and restocking on the seller’s behalf.
Yes, at any point you can switch back to FBM and remove your products from Amazon FBA.
If you cancel your Amazon FBA account, you will need to arrange for the return or removal of your inventory from Amazon’s fulfillment centers
Amazon FBA pays sellers every two weeks for their sales, minus fees and any applicable charges.
Amazon Fulfilment by Amazon (FBA) may be a good fit for your company if you have the correct product, sales volume, and fulfilment requirements. Consider the advantages and disadvantages carefully before committing to FBA.
Not keeping tabs on stock levels, incorrectly labelling products, and failing to optimise product listings for Amazon’s search algorithm are all common blunders to avoid while utilising Amazon FBA.