What is Amazon FBA & Is FBA Right for your Business?
Fulfillment by Amazon FBA, or FBA is a service that is provided by Amazon that handles inventory storage and returns, order fulfillment as well as customer service to Amazon sellers. FBA lets sellers focus in other areas of business, while using Amazon take care of packing, picking orders, and even shipping them out. This is a well-liked business model. 91% of third-party sellers utilize FBA.
Let’s discuss the advantages and disadvantages of FBA How to use FBA and much more.
Pros and cons of using Amazon FBA
Through the use of its own logistics as well as consumer faith, Amazon has allowed thousands of entrepreneurs from the e-commerce industry to expand and expand their business through the FBA program.
It’s amazing to think that one person with no knowledge of e-commerce can sell their own items on the biggest online marketplace worldwide and have their items delivered to customers in just two days.
Although FBA is an effective fulfillment option that comes with many positives, it has some negatives as well. Let’s look at the advantages and disadvantages of FBA.
Advantages of Using Amazon FBA:
Prime Shipping: If you’re an Amazon customer, you’re already familiar by Amazon Prime. The Prime badge means that you’re entitled to get complimentary one-to two-day shipping on purchases of the item. You can also easily return the item in case of need. If sellers make use of FBA their listings will carry the Prime badge as well as access to Amazon’s 200 million Prime customers.
Send your inventory to Amazon’s fulfillment centers. For selling your items via FBA the only thing you need to set up a shipping strategy in Seller Central and ship your items into Amazon’s fulfillment centres. Amazon will take your inventory and keep it until the time that customers buy.
Customers have faith in Amazon: When customers look at Amazon’s Prime image, they are aware that they’re entitled to quick shipping and accessibility to the Amazon customer support when something goes wrong. Your items will usually be delivered to the address of your customer with a Amazon-branded package making it more attractive to customers. your product.
Amazon delivers all orders you make: Manually packaging and shipping orders daily is a long and laborious procedure. FBA FBA is similar to being your very own warehouse staff who take care of everything.
Amazon manages customer support: Amazon will take charge of any customer service issues that are associated with orders shipped out using FBA. When orders are shipped through FBM (fulfilled by the Merchant) however the seller will handle its own service to customers.
Amazon manages returns It’s not just that Amazon package and deliver orders on your behalf however, they also take care of returns. When the product is in its original state, Amazon will return that item back to your inventory.
Multi-channel fulfillment Have you heard that Amazon could make use of Amazon FBA to fulfill orders for other marketplaces and e-commerce stores? Sellers can make a fulfillment order and deliver a item to a customer who is not an Amazon.
Disadvantages of Using Amazon FBA:
FBA charges: A downside to the use of FBA is that FBA fees can be rather expensive. Based on the size and weight of your item, the costs to complete your order will be around 30-40% of your item’s cost. It is essential to determine the costs prior to selling products to determine their profits.
FBA storage charges: On top of FBA costs, Amazon also charges you to store your products at their fulfillment centres. There are two kinds of storage charges: monthly and long-term. The proper management of your inventory can assist you in avoiding storage costs for long-term storage, since they can be very costly.
Inventory and Restock limits: Amazon has implemented limitations on restocking to stop retailers from overstocking their stock but it has proven to be a bigger problem for sellers who are unable to send enough products. Be aware that you might not have enough storage space to accommodate all your inventory.
Amazon allows customers to return items Although this is extremely convenient for consumers however, it is easy to return goods on Amazon can result in more frequent returns than other marketplaces.
Is FBA suitable for your business?
After you have a better understanding of the advantages and disadvantages of using FBA Is it the right choice for you?
It is possible to make use of FBA in the following situations:
- Sell lightweight and small-sized items which will make you FBA and storage charges less
- You can run your business from your home and do not have storage space to store your inventory
- Aren’t in the mood or resources to package and deliver orders
- Do you want your items to be Prime shipping eligible?
- Do you want Amazon to manage customer service and return issues?
It is possible that you do not need to make use of FBA If you:
- Sell extremely heavy and/or large items.
- Do you want to control how your products are delivered to your customers?
- Own your own warehouse that can be used for storage and fulfillment
- You can process returns on your own
- Utilize a third-party fulfillment provider
- You are in charge of your fulfillment, however you are part of Seller-Fulfilled Prime
- You cannot afford your own warehouse space , or employees to pack and ship your orders
This article should give you an understanding of FBA and how it operates and if it’s appropriate for your business.