Fulfillment by Amazon, or FBA, is one of the most interesting and intriguing online retail experiments going on today. If you can participate,
FBA can be a tremendous resource for lowering your workload and increasing your sales volume.
Taking advantage of this service could be the most important step you take to becoming more competitive and effective as a seller.
It could mean the difference between operating a small business and launching a large-scale online sales operation capable of generating some serious income.
So What is Fulfillment by Amazon?
Basically, there are two methods of selling on Amazon.com:
A direct seller lists items on Amazon.com and handles all of the shipping and customer service chores.
When you sell directly, you ship the item and handle returns, customs, packing, and anything else required.
indirect sellers store their items at a fulfillment center — a large warehouse owned and operated by Amazon.
When a customer orders one of those items, Amazon.com employees pack it and ship it from the center.
The advantage to this process is that Amazon.com handles the shipping and customer service chores for you. That includes returns.
Fulfillment by Amazon allows small sellers in certain countries, including the United States and the United Kingdom, to take advantage of this incredible service. Sellers of all sizes can ship items to these centers and turn the customer service over to Amazon
The potential advantages to this arrangement are enormous. A small business or an individual seller can now utilize the customer service department of a large corporation.
You won’t have to deal with the frustration that comes with customer service!Sellers will be spared the hassle of shipping, packing, returns, runs to the post office,and other distractions.
Another hassle that will be eliminated is the need to rent or purchase warehouse and storage space.
- But There is a Catch using FBA
The big disadvantage to Fulfillment By Amazon is the cost, which can be considerable. Currently Amazon charges around $1.48 a pound to pack an item and an additional 60¢ to store it.
Costs for larger items are higher, and there are additional fees, such as labeling, which costs around 20¢.
Another disadvantage to Fulfillment By Amazon is that Amazon.com will hold money from sales in escrow for about 14 days to cover the cost of potential returns.Basically, this means you will not receive the cash from the sale for about two weeks.As with other Amazon services, any fees or charges with FBA are taken out of the final sale price before you are paid. This will considerably reduce your profits, or eliminate them entirely if you don’t choose a product with high enough margins!
Shipping can be another problem because Amazon.com charges you to ship to the center, and they can add shipping charges to the final products.
However, FBA users can qualify for a certain number of free shipping credits, which can cut the costs.
Amazon FBA does have it perks well maintained,
Products sold through FBA become eligible for other Amazon services, including Prime, which offers customers free 2-day shipping, and promotions through Amazon Associates.This in turn can lead to additional sales.
Fortunately, there are ways that the average seller can utilize Fulfillment by Amazon to maximize profits.
- Only use FBA for high-volume products
- Use FBA when you do not have the resources to handle orders yourself
- When you sell on Amazon, it is easy for expenses to quickly exceed the profits you are generating.
Another interesting advantage to using FBA is that items shipped through the service will have packaging with the Amazon label on it, which associates your products with one of the most popular and trusted brands in the world.