A Complete Guide to Fulfillment by Amazon (FBA)


What is Fulfillment by Amazon?

Fulfillment by Amazon (FBA) is one of the two core fulfillment options provided to Amazon sellers. The other is known Fulfillment by Merchant (FBM)—a system by which the sellers (you) takes care of packing and shipping orders directly to customers. FBM sellers basically use Amazon as a platform to reach customers and produce demand.

Amazon, in reality, sums up FBA pretty well in Seller Central: “You sell it, we ship it.”

Here’s how it works.

FBA Step 1: Deliver your products to an Amazon fulfillment center.

It goes without saying that the products you’re delivering to Amazon must already be listed in your Seller account. You don’t desire your products sitting in an Amazon storehouse if they’re not, uh, for sale on Amazon.

You’ll require to label all your products, which you can do by yourself or through Amazon’s FBA Label service. Then, you ship your inventory either through Amazon or with a carrier of your preference.

FBA Step 2: Amazon takes care of storage.

When your inventory gets to the storehouse, Amazon scans the labels you attached; weights and measures each package, and stores everything accordingly.

You’ll use online inventory tracking to remain on top of your stock. It’s up to you to ship more inventory to the warehouse when required.

FBA Step 3: Someone orders your product on Amazon.

Amazon takes care of picking the product from inventory, packing it for shipping and delivering it to the customer.

Plus, after the order has been placed, Amazon takes liability for Customer Service.

The benefits of Fulfillment by Amazon

FBA benefit #1: More Time to raise Your Business

Using Amazon FBM denotes handling all the inventory, labeling, packing, shipping, tracking, and customer service. If you’re working your e-commerce business out of your living space or a small office, you possibly don’t have room for all that noise.

Plus, by handing off those liabilities to Amazon, you give yourself way more time to focus on the things that enhance and grow your business: product development, market research, keyword search, online advertising campaigns, SEO, partnerships, and so on. If you can’t assign enough time and energy to these practices, your business simply won’t be sustainable

FBA benefit #2: Make Consumers’ Trust

Americans admire Amazon. More significantly, Americans believe Amazon. When you order Scooby-Doo slippers with two-day shipping, you sleep deeply knowing that your feet will be both cozy and whimsical in 48 hours.

As an FBA seller, your product listings will significantly demonstrate “Fulfilled by Amazon” for all prospective buyers to see. The effect this has on your sales is certain—shoppers automatically believe you more. And customers like to buy from sellers they trust.

FBA Advantage #3: Automatic Prime Eligibility

Approximately, two-thirds of U.S households have Amazon Prime. Overall, almost 85 million consumers are using premier service.

Nobody who pays for Amazon Prime is going to buy products that aren’t Prime suitable. Why settle for standard shipping (5-8 business days) when you can get your mason jars in a small period of that time? Plus, the Prime logo clicks into that trust factor we just talked about.

Don’t miss out on tens of millions of trusting, keen customers.

FBA Advantage #4: The Coveted Buy Box

The Amazon buy box is the white box situated on the right side of a product details page where the “Add to Cart” and “Buy Now” buttons live.
In other words, it’s the place where the money is made on Amazon. To be specific, 82% of Amazon purchases made on desktops are done during the buy box. That number is even advanced for purchases made on mobile.
Amazon uses an algorithm to decide which supplier is represented in the buy box and for how long. The information of the algorithm is for another blog post, but one factor is applicable here:

FBA sellers get a lot of choices when it comes to the buy box.

The drawbacks of Fulfillment by Amazon

We must be clear—Amazon FBA isn’t a celestial bounty of good times and warm hugs. Before choosing this fulfillment option, you must know the two principal drawbacks.

FBA Drawback #1: Fees on Fees

As you may remember from an earlier section of this blog post, Amazon FBA costs money. Actually, all fees considered, the costs can run pretty high.
Although we’re of the opinion that these costs are finally worth it, we know that your business may not be in the position to take them on in addition to essential expenses such as manufacturing and marketing.

FBA Drawbacks #2: Forfeiting Control

It’s not (that) odd to consider your e-commerce business as your child. You’ve built this thing from the ground up, and you’re legally proud of that.
As such, you may not be overjoyed about the idea of handing over the reins for storage and shipping. If a lack of personal mistake and control makes you uncomfortable, Amazon FBA isn’t for you.

Thus, is Fulfillment by Amazon worth It?

The reply to this question really comes down to three factors: how much you’re shipping per month, how large your profit margins are, and how niche your market is.

You require to move at least 40 items per month to qualify for FBA. If you’re just hard-hitting that minimum threshold, it may not be worth the hassle (and the fees) of preparing your inventory according to Amazon’s strict rules. You’re possibly better off handling these responsibilities by yourself, or through a smaller fulfillment company that’s more elastic.

FBA isn’t a fine idea for e-commerce sellers with small margins. If you are not making much money per scale, it’s a safe expect that FBA fees are going to bring your margins down to zero, if not into the red. Although shipping the whole thing on your own isn’t free—in terms of money or energy—you mustn’t take on any fees that aren’t necessary for your business.

Sellers of great niche products (e.g., vintage zines geared towards old-school goth music fans) don’t necessarily require FBA, either. Memorize that one of FBA’s major advantages is the eligibility for Prime. If an Amazon customer sees a bunch of fairly identical products, and only a handful of them are Prime eligible, she’s going to instantly write off those that are ineligible.

But, not that many people use Amazon to sell ‘70s goth zines. The people who are in the market for your niche product possibly don’t care that much about Prime eligibility; they’re just glad to have found what they were looking for.
Now, if you’re a seller in a competitive market who moves tons of items per month and drives large margins, then yeah—FBA is an unbelievable investment. It’s a reliable way to free up your schedule, earn prospective buyers’ belief and win more sales on the product details page.


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