If you are in E-commerce, then you are likely focusing on expanding the entrepreneurial aspect of your business rather than dealing with the day-to-day hustles. So you have heard of the Amazon FBA program and want to sell on Amazon but don’t know where to start. Relax, we have all been there.
Amazon FBA Guide – An Overview about the most important things to know
The program has a particularly strong allure for E-commerce enthusiasts because selling on Amazon FBA makes running an online retail business much more relaxed. Amazon takes care of most of the processes as opposed to other websites where you have to do it yourself. During the beginning of 2019, 53 percent of the total sales on Amazon were attributed to third party sellers. This statistic shows how competitive this platform can be. You surely do not want to dive into business without understanding the basics first.
This article will cover the FBA basics you need to know as a beginner. If that sounds interesting, let us hop right into it.
What is Fulfilment by Amazon?
If you do not fully understand it yet, Fulfilment by Amazon, also known as FBA, is a service provided by Amazon to its sellers. This program enables sellers to send their stock to an Amazon warehouse, and they take care of the rest for you. So, if you ship Amazon with 25 items, they will ship each of those items for you when they are sold.
How Amazon FBA Works
As stated earlier, Amazon handles all the hard work for you, so the way it works is quite easy.
1. Send your products to Amazon
Amazon being the large company that it has over 100 warehouses across the US. Some of which are over a million square feet. You inform them of the products you are selling, and they tell you which warehouse to ship your products.
2. Amazon sorts and stores your products
When the products arrive, they will sort and add them to their inventory. Your products are stored safely in the warehouse, and in case of damage, Amazon will reimburse you.
3. A customer purchases your product
If this happens, Amazon takes care of all the transactions for you. They even accept payment and update it automatically to your inventory.
4. Amazon ships your product
The product is then removed from storage, packed into a box, and then sent to your customer.
5. Amazon handles the after service
Once the customer receives your product, Amazon makes a follow up to make sure the customer is satisfied. They also process returns or questions from the client.
6. You get paid
This is perhaps the most crucial step in this process. After every two weeks, Amazon sums up all your earnings, removes the seller fees, and sends the profits straight into your ban.
What are you responsible for when using Amazon FBA?
Although Amazon seems to be doing all the work, you need to chip in too. Here’s what you are responsible for:
- Choosing the products to sell
- Keeping checking your inventory levels on Amazon
- Marketing and advertising your product
What are the Pros and Cons of FBA?
The pros include:
- Convenience- Amazon will take care of all the shipping and logistics.
- Consumer confidence- Offering products under the FBA umbrella provides shoppers with a sense of trust.
- Prime shipping- When you list your products with FBA, Prime Amazon members can receive the product within one business day.
- Search result placement- Amazon uses an algorithm, which favors FBA users making your products appear higher on search results.
- 24-hour customer support.
The cons are:
- High costs- You are required to pay $35 as a base fee every month for having an Amazon seller account.
- Delays- During peak seasons such as holidays, you may experience delays due to the high volume of deals taking place per day.
- Branding- Using this program may lead you to miss substantial branding opportunities. This factor is because all shipping boxes are marked with Amazon logos.
- No customer list- The FBA program does not allow you to build an email list of previous customers.
When is FBA right for you?
Selling on Amazon FBA might prove to be more costly than profitable. We recommend you use the Amazon FBA Calculator to see if this option is financially viable. Apart from this, FBA could be the best decision for you if:
- Amazon is your primary online selling platform.
- You also sell on other platforms like Etsy or eBay.
The FBA program gives opportunities to businesses—no matter how small, to get their products in front of millions of potential customers. This program is a great way to delegate most of the hustles of E-commerce to a company with an outstanding online reputation. If approached right, the Amazon FBA program could be the best tool to take your business to the next level.