Amazon marketplace is the ultimate destination for any third-party seller. Two out of three sellers used Amazon’s FBA platform in 2020. This generated $80.46 billion in revenue for Amazon from third-party seller services, a 49.66% increase YOY. More than half of its sales are made through this platform.
What is Amazon FBA, and how can you take advantage of it?
What does Fulfilled by Amazon mean
Amazon’s Seller Central allows eCommerce businesses to sell to Amazon customers directly. Setting up a Seller Central Account is the easiest way to get started.
Amazon offers you two options when you sign up:
Pay 99C/free for each item sold + closing fee
Pay $39.99 per month + fees
Amazon recommends that companies that sell more than 40 products per month choose the second option. This is also called the professional plan. You have another binary option to choose from after you’ve made your choice. This is about the order fulfillment.
You can either fulfill them yourself or directly. You will be responsible for Shipping, returns, and customer service. You can also join Amazon’s FBA program.
What is FBA, and what are its benefits?
Fulfilled by Amazon (FBA) means that Amazon will handle all storage and Shipping logistics for you. Amazon will handle all of the logistics for you.
Stores
Packaging
Shipping
Returns
Exchanges
Customer service
You manage the sales and ensure that Amazon is stocked with all your products. They take care of the rest.
How does the FBA process work
The FBA process can be broken down into three simple steps:
Send your inventory to an Amazon fulfillment center nearby.
Amazon will store your list until you are ready to sell it.
Amazon sends the item to fulfillment after it sells.
Fulfillment is the process of packing the item and shipping it. Then, they track the order.
Amazon will handle any issue you may have, be it a return or replacement, an inquiry, etc. Customer service will take the response.
Amazon does not do this for nothing. FBA fees are required to pay for the fulfillment services. Later, we’ll talk more about that.
Benefits of Amazon FBA
Why should you join Amazon FBA? You can join the Amazon FBA program for several reasons, including:
Amazon Prime eligibility is the main reason you should list your products with FBA. They are eligible for Amazon Prime’s two-day free Shipping. This is a big draw for prime customers and could make a difference in whether they choose your product or one of your competitors.
Easy fulfillment With Amazon’s FBA program, the world-class shipping teams and logistics teams do the entire fulfillment process. You can worry less about one thing for a small fee. You can now focus on other aspects of your business, such as marketing, branding, and sales.
Discounted Shipping Rates – Shipping products yourself is expensive, especially for smaller orders. Amazon’s direct Shipping reduces shipping costs. The savings accumulate over time.
Fast Shipping When Amazon fulfills products, the fulfillment process moves quickly. Everyone is happy with the quick turnaround.
Reputation – Customers trust Amazon and especially the products it backs. You gain a competitive edge by listing your products as FBA on Amazon, especially compared to only selling them from your online store.
Storage space – No longer will you have to worry about the costs or hassle of storing your items.
Ability to scale rapidly- Amazon FBA will scale with your business. Amazon’s Fulfillment Services allow you to expand your business without worrying about the capital investment or staffing required to store and ship items as demand increases.
What is the Cost of Amazon FBA
You must consider several costs as an FBA seller. You must account for:
Inventory Charges
Amazon charges a monthly storage fee for items stored in the U.S. These fees are usually set in the middle of the month, between the 7th and the 15th. Pricing is affected by the time of year and type of goods:
Seller Center has more information about dangerous goods and what can be sold.
A long-term storage charge can also be applied if your product remains at a fulfillment center for over a year without being sold.
Fulfillment Fees
Amazon charges a fee per unit for fulfillment. This fee varies depending on an item’s size, weight, and category.
Additional Fees
Unplanned Service Charges – Fulfillment By Amazon (FBA) may charge unexpected service fees for one or more of the following:
Missing barcode or label: 20C/-40C/ per unit
A shipping box that is overweight or oversized may be assessed a fee of $25 to $75 per unit
Hazardous products such as electrical, sharp, or spilled can be charged between $25 and $75 per unit
Unacceptable pallet conditions may result in a charge of $50 to $150 per unit
Return Processing Fees – Similar to the shipping and storage fee, Amazon charges an additional return processing charge based on size, type, handling, and other factors.
Closing Fees- Some media products, such as DVDs, books, and CDs, are sold at a $1.80 flat rate.