What is Amazon FBA & How Does Its Works – SellerApp
If you’ve ever sold something on Amazon, you’ve most likely heard of FBA, or Fulfillment the Amazon.
With the introduction of FBA, online stores were able to sit back & relax while Amazon handled the heavy lifting.
Amazon’s huge warehouses throughout the world are now available to sellers.
All items purchased for your items would be packed and sent by Amazon’s hardworking workforce.
When it came to FBA, Amazon staff even manage customer service.
These are just a few of the advantages of Amazon’s FBA service. While these benefits seem appealing, they are not without expense.
To determine if Amazon FBA can offer value to you online business, you must first comprehend the programme from start to finish.
1 What exactly is Amazon FBA & how does it operate?
2 Amazon FBA inventory costs are described in detail.
3 Advantages of Amazon FBA
0 Scalability and logistical assistance
0 Amazon Prime provides fast and free shipping.
0 The Buy Box Benefit
0 Shipping costs are reduced.
0 Customer service
4 Disadvantages of Amazon FBA
0 It isn’t free.
0 Inventory control
0 Branding is limited
5 Should your company utilise Amazon FBA?
6 Last thoughts
1 what’s Amazon FBA?
While it when it comes to fulfilment when a product is sold on Amazon, buyers have three options.
They can either pack and ship the goods themselves (Satisfaction and Seller Fulfilled Prime) or outsource storage, packaging, including shipment to Amazon via FBA.
1.2 How does it function?
When making an item listing or offering an item for purchase on Amazon, sellers must decide on their fulfilment plan.
Sellers can swap between fulfilment methods as needed.
The FBA process is simple.
1 Sellers obtain the items and ship them to something like an Amazon warehouse. Amazon may send you the necessary contact information & address.
2 The items are then held in Amazon’s fulfilment facility until a client places an order. There’s a storage cost, which is generally determined by the product’s size/volume.
3 When you place an order, Amazon handles the transaction & updates existing inventory.
4 Amazon will pack and ship the order.
5 The online retailer provides customer service and order fulfilment. Amazon also handles returns and refunds.
6 Amazon provides you the proceeds from your sales every two weeks.
Sellers must verify that their packages to Amazon fulfilment facilities adhere to the online retailer’s stringent packing rules.
Because Amazon handles important logistical services, this is an excellent option for many sellers to build and scale their internet company.
All you are required to do is replenish your inventory & count your money.
As I already stated, the service is not free.
However, the fees are extremely reasonable and frequently less expensive than keeping and transporting the things yourself.
Furthermore, while Amazon handles the majority of the shipping, FBA merchants are still accountable for product selection, inventory management, and marketing.
If you want to understand more about Amazon FBA costs, watch this video in which Ankitha Nagaraj, Customer Engagement Head at SellerApp, lays down all of the program’s expenses.
Amazon FBA inventory costs are described in detail
Supply chain and storage are two of the most significant benefits of FBA.
If Amazon merchants use the service, they will not be required to invest enormous sums of money in storage space up front.
As I already stated, this comes at a low cost.
All inventory at Amazon’s fulfilment centres is subject to a monthly fee.
The cost is dependent on volume and is determined by the size of a product & the time of year it is stored.
During the holiday season, storage prices are raised (October to December).
Amazon charges monthly storage fees for items in the United States between 7th and 15th of such month following that month for which the cost applies.
This implies that your March storage price will be charged during April 7th and 15th.
Advantages of Amazon FBA
You’ve undoubtedly heard a lot of good things with Amazon FBA so far.
However, in order to determine whether the programme is right for your company, you must consider a number of factors.
That is why it is critical to grasp the many benefits and drawbacks of Amazon FBA.
Let us begin with the advantages of the FBA programme.
Scalability and logistical assistance
This is without a doubt the nicest aspect about Amazon FBA.
Because Amazon handles shipping and storage, you may save a significant amount of cash on storage & simply grow your business.
Hiring storage space does not need a large upfront investment.
If your firm is just getting started and you’re buying more frequently than ever, Amazon would cover the increased shipping costs.
All you have to do is ensure that your stock is replaced.
Amazon Prime provides fast and free shipping.
Amazon has irreversibly altered the way we shop.
Customers demand lightning-fast delivery every time with the launch of Amazon Prime.
Amazon FBA sellers are instantly eligible for Prime membership.
Your purchases can be shipped within a few days thanks to the hundreds of Amazon fulfilment facilities across the world.
Non-FBA merchants can sign up for Seller Fully met Prime (SFP), but they must first qualify.
This necessitates a flawless sales history as well as seller feedback.
To apply for SFP, you’ll also require a professional account.
The Buy Box Benefit
You are much more likely to obtain your Buy Box if you are a professional merchant account & sell a product through Amazon FBA.
What’s the significance of this?
The unassuming yellow button on such a product listing generates or more 80% of Amazon’s purchases.
Winning a Buy Box usually leads in a significant increase in your sales.
If you want to learn how to win the Buy Box on a consistent basis, I recommend watching the clip.
Ankitha Nagaraj will walk you through the entire process of winning the Amazon Buy Box.
Shipping costs are reduced
Amazon is unquestionably the king of e-commerce.
Their connections with big shipping companies frequently result in lower shipping rates.
Everyone engaged benefits from this.
FBA sellers must stop spending money on delivery.
Amazon’s extensive logistical network also provides clients with the best delivery costs – sometimes even shipping is free with Prime.
If you are an FBA vendor, Amazon will be your customer’s point of contact.
This implies that Amazon’s customer service is available 24 hours a day, seven days a week.
When it came to returns, there is a handling cost, but it is typically worth it.
Disadvantages of Amazon FBA
Now that I’ve spoken lyrical about Amazon FBA, it’s time to discuss some of its drawbacks.
It isn’t free.
FBA isn’t free, but that’s hardly surprising.
The problem stems from Amazon’s storage prices.
Because it accumulates from to month, when you have a poor turnover, you might lose a significant amount of money.
This is exacerbated if your items are subject to lengthy storage fees.
It is possible to remove merchandise from Amazon ’s fulfillment centers, although it is not always free.
If an online business offers tiny items with a large turnover, FBA is ideal (high-volume sellers.)
If you’re going to offer a huge product with a low turnover, you might choose to send the parcels yourself.
To determine a product’s profitability, utilise SellerApp’s FBA profit calculator.
When you’re not intimately implicated in the sales process, it might be tough to keep track of your inventory or what goods you have available.
If your product is faulty, Amazon’s product ranking and exposure will suffer.
This frequently results in reduced sales. Sellers must review their inventory data on a frequent basis to keep on top of inventory.
Sending merchandise to Amazon is also difficult.
You have the option of sending the things yourself, hiring a middleman, or having your supplier transport the products straight to fulfilment centres.
However, Amazon’s packaging and labelling policies are quite stringent.
If you do not follow the requirements, the online retailer may return the merchandise.
If you are uncertain about Amazon packing, it is usually a good idea to contact logistics firms that can assist you at the start of your seller adventure.
Branding is limited.
You are passing on a branding advantage because Amazon packs and sends your product from their fulfilment facilities.
While you have flexibility over your product labels, Amazon’s logo & brand name will always appear on delivery boxes.
With FBA, your possibilities for building a brand and personalising the client experience are restricted.
Should your company utilise Amazon FBA?
Answering this question is difficult. In general, merchants should consider adopting FBA if they offer tiny, high-turnover items.
This reduces storage prices and assures that they will never incur long-term storage expenditures.
The main thing to note is that fulfilment methods might vary depending on the goods.
A same seller can utilise FBA to sell little children’s toys and FBM to sell a huge table.
As a result, many sellers employ both FBA or self-fulfillment tactics to maximise their profits on the Amazon Marketplace.