What some people don’t know about Amazon FBA is that just about anyone can sell a thing or two on Amazon, given they know where and how to do so.
More than three million people around the world are doing it, and now it’s up to you to determine if it’s the right direction for your business. Amazon FBA does not only work in the United States but many countries worldwide. This article will cover the important points you need to know.
Amazon FBA is a service delivered by — you thought it — Amazon, as a means for third-party sellers to automate their order fulfillment and shipping services. It’s a very simple concept: Sellers sell products, Amazon ships the products. Anyone involved with Amazon FBA lets Amazon handle all the shipping, this includes refunds and returns not forgetting warehousing in Amazon warehouses, picking, packaging and so much more.
Sellers send their goods to Amazon, which stores everything and then filters all of the orders as they come in. As long as you handle the sales and make sure Amazon stays stocked with your goods, the rest is handled for you.
You do need to pay Amazon fees for it. So, what do you get for the money?
- 24/7 Amazon client service
- All fulfillment and shipping fees included (pick, pack, and ship)
- Access to one of the world’s most vibrant fulfillment networks
The cost of FBA
It is going to cost money. For beginners, think about things like how Amazon charges fees — in the warehouse, products are charged based on the amount of space they take up. For you, that means selling large low-dollar products through FBA could amount to more than it’s worth.
Amazon Monthly inventory storage fees
For standard-size products, monthly storage fees are:
- $0.79 per cubic foot between February and October
- $2.60 per cubic foot between November and January
For oversize products, monthly storage fees are:
- $0.68 per cubic foot between February and October
- $1.40 per cubic foot between November and January
Monthly inventory storage fees for dangerous goods
Monthly storage fees for standard-size dangerous goods are:
- $1.15 per cubic foot between February and October
- $3.83 per cubic foot between November and January
For oversize dangerous goods, monthly storage fees are:
- $0.88 per cubic foot between February and October
- $2.63 per cubic foot between November and January
The more merchandise you have stored, the more it’s going to cost you. Amazon also has a policy where your costs go up for products that are stored for longer than 190 days. This is to discourage people from keeping slow-moving goods in the warehouse.
Besides, Amazon tracks products that are in storage at an Amazon warehouse but are not listed for sale or stranded stock. Stranded inventory costs you money, but Amazon assists by providing a stranded inventory report that will help you decide what to do with it.
You can find your fee reports in your reporting column of the FBA dashboard, which will authorize you to see what type of fees you’re paying to Amazon as a part of this policy.
Remember that because of peak holiday demand, you’ll pay higher warehouse fees to store your inventory during the holiday season than the rest of the year. Remove anything that won’t sell from the FBA warehouse so you don’t waste money.
Yes, there are a few different costs involved with FBA, as well as other factors to consider. However, Amazon normally does well to provide useful data and help to ensure clarity as much as possible.
The pros and cons of FBA
After doing a thorough review of the platform and its offerings, here are the pros and cons to offer for your deliberation.
Pros of FBA.
While this isn’t a detailed list here are some of the greatest things that stand out about Amazon FBA to us.
- Straightforward Shipping and Logistics: All the work is done for you. You just keep track of your listings, all you need to do is replenish your stock, and let the fulfillment be taken care of from beginning to end. For a small fee, you get a big weight off your shoulders.
- Discounted Shipping Rates: You are going to spend less on your shipping costs through the Amazon FBA platform. Therefore, even though you’re paying fees, they may be lower than you think when you factor in the shipping savings, and still cheaper than managing your shipping and fulfillment in-house.
- Return Management: In addition to sales, FBA also handles returns and refunds because they are considered part of the fulfillment procedure. This takes one more thing off your shoulders.
- Customer Service Management: Amazon offers its client service for FBA sellers. You can also use their FBA program to take care of your own client service needs, routing all of your services through one platform for easy supervision.
- Quick Delivery: Goods in FBA automatically get the Prime emblem and are eligible for Prime free shipping (to the client) and quick shipping times. Plus, you aren’t going to have to pay or charge premium shipping fees to do that, because it’s included with the service.
- More Storage Space: Without FBA, how much merchandise could you realistically store? Do you have a warehouse or means to rent one? Are you capable of moving and managing merchandise on that scale? This is where the Fulfillment by Amazon wins. You essentially have access to unlimited storage space – for a cost – because Amazon has warehouses all over the country that can hold a lot of goods.
Cons of FBA.
Here are some of the factors to consider.
- Cost: For those who are trying to begin, money is everything. FBA is a really valuable service, but it costs money. Plus, this service isn’t good for low-cost products because of the way fees are calculated, so you’ll want to be particular about the goods you sell. Fortunately, Amazon has a valuable FBA calculator that can help you see whether it’s a profitable move.
- More Returns: In many cases, there have been sellers who see a rise in the number of returns. This is due, in part, to Amazon’s open return program. While this could influence the bottom line, Amazon eases the processing procedure, so it’s not the end of the world. While Amazon used to have returns shipped back to them and you would have to organize to have them then dispatched to you, Amazon is making changes that will enable returns to go promptly back to your facility.
- Long-Term Storage Fees: Amazon doesn’t like sitting on merchandise. Therefore, you’re going to pay more for stuff that stands longer. Long-term storage fees aren’t the end of the world, but you’ll have to factor them into your budget to ensure that FBA still makes financial sense for your business goals. They also don’t like to keep products that aren’t selling well and will charge for this and also negatively modify your metrics. However, all of this can be glimpsed in your seller console and you can arrange for goods to be shipped back to your facility.
- Product Prep Requirements: Amazon has its list of requirements for goods that are coming into the warehouse to be fulfilled through FBA. You will have to assure that all of your goods are prepared consequently before sending them off to Amazon, including how they are packaged, ensuring adequate labeling, and shipped following the FBA merchandise warehousing guidelines. Some of the details can be complicated.
Using FBA the right way
Fulfillment by Amazon only works if you use its features to your advantage, here are a few ideas
- Start small
You don’t have to sell everything and at least pick a well-cultivated choice of products and list them through FBA so that you have a slightly easier time understanding the best practices when you’re just beginning.
- Choose products wisely
No matter how attractive something might look just because you think something would sell doesn’t mean that it will. The market is very competitive on Amazon and you need to choose the most profitable products, avoid having products that will overstay and that might enable you to stand out. For great selling products visit nugetfind.com.
Conclusion
Leveraging the capacity of Amazon FBA enables you to get so much more out of your Amazon sales, but only if you do it right and if you have goods that are profitable for it.
Fulfillment by Amazon policy offers sellers the best of everything in an attractive little package that’s priced moderately. Nevertheless, it may not work for all brands or goods because of the tariff structure and the way fulfillment is handled.