If you are immersed in the competitive and fast-paced world of eCommerce, then you may find Amazon FBA is something that gets your attention. With this Amazon FBA guide, we’ll identify what Amazon FBA is and how it can help you to better manage your eCommerce business.
Amazon wants to provided a wide variety of products for customers and they want the eCommerce buying experience to be nothing but the best. That is why they created FBA (Fulfillment by Amazon). This storage and fulfillment option allows sellers to benefit from 2-day shipping and the Prime badge, and customers to receive their orders quickly. A win-win for customer service.
What is FBA?
Fulfillment by Amazon, otherwise known as FBA, is an Amazon service that is offered for third-party sellers to automate their fulfillment and shipping.
The seller sends their inventory to Amazon for storage. Once a customer places an order, Amazon will handle everything, including picking the order, packaging and shipping. Additionally, Amazon will handle returns and refunds as well as customer service.
How Does It Work?
Under FBA guidelines, you need to ship your products to Amazon after setting up a shipping plan in your Seller Central dashboard. Once the products reach Amazon’s warehouse, the inventory is sorted, and depending on demand, the items may be sent to other geographical locations.
When the inventory is entered into Amazon’s database, the listing becomes active, and you can then begin advertising those products. Many people opt for Pay Per Click (PPC) campaigns, or they choose external ads based on what they are selling.
When the order for an item is placed, it is processed and prepared by Amazon, and then shipped out to the customer. You and the customer will receive the tracking information from Amazon for each and every order.
FBA Costs to Get Started
When registered for FBA you can choose between two plans, individual or professional. The plan you choose varies on the amount of inventory you anticipate selling.
The individual plan is best for those who sell fewer than 40 items per month or if you’re still deciding on what to sell. This costs $0.99 per sale.
With the professional plan, you pay $39.00 per month, with no limit on the number of items you can sell. This is ideal for those selling more than 40 items per month. Additionally, professional Seller Central sellers will gain access to APIs and more selling reports through their dashboard. This is also the best option if you want to utilize programs like Launchpad or Handmade.
Beyond selecting a plan, there are additional fees for storage. Those fees are updated annually. More information can be found here.
What You Need to Get Started
Before you begin your registration, make sure you have the following information ready:
- Bank account number and routing number
- Credit card
- Government issued national ID
- Tax information
- Phone number
Benefits of FBA
There are multiple advantages to using FBA for your eCommerce business.
- Convenience and Time Savings: Amazon FBA can save you time and money in the long run. Amazon is taking care of all the logistics after the sale is made and handling returns, refunds and customer service. This will free up more time for you to focus on other aspects of your business.
Fast Delivery: FBA products are eligible for free two-day shipping with Amazon Prime, as well as free shipping on eligible orders for all Amazon.com customers.
Build Confidence and Trust: Customers know that when they place their order, they will receive their purchase in a timely manner.
Customer Support: Amazon handles customer service for FBA sellers and offers round the clock customer support.
Returns and Refunds: FBA sellers also have the advantage of Amazon handling their returns and refunds because it is consider part of the fulfillment process.
Algorithm: Amazon’s algorithm favors FBA sellers, which means there is a better chance of appearing higher in search results. This can ultimately lead to increase visibility and sales volume.
However, like with any service, there are a few disadvantages to consider as well.
- Fees: To use this service, there is a monthly fee that you will need to pay (depending on the plan you sign up for: individual or professional). Additionally there will be storage fees.
- Potential Delays and Inventory Issues: During busy seasons, like holidays, there may be a delay due to the high volume of sales. This can also result in you having items out of stock. It’s important to keep a careful eye on your inventory levels.
- Product Preparation Requirements: Amazon has a strict list of requirements for products coming into their warehouse. You will need to follow these requirements including how items are packaged, following proper labeling instructions and more.
- Less Branding: You will lose out on some potentially valuable branding opportunities because all the boxes shipped out have Amazon’s branding.
- Payments Less Your Fees: Amazon will deduct all fees owed to them before making a payment to you. If you don’t have enough money to cover the fees Amazon will charge the credit card you have on file to pay off the remaining balance.
Save Time And Money
If you want to save time and money, and take some of the logistics of your eCommerce business off your shoulders so you can focus on growing your business, then FBA may be just what you need to do this.