What is Amazon FBA?

post-date Mar 25, 2021 read-time 5 mins read
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FBA stands for Fulfillment By Amazon is an Amazon service for sellers that provides Storage, Packaging and Shipping assistance. The program allows sellers to ship their goods to an Amazon Fulfillment Center, where items are stored in warehouses until they are sold. This strategy takes the burden off of sellers and allows them to be more flexible with their selling strategies.

So when an order is placed, Amazon employees pack and ship the items by themselves. This method will help Sellers grow their business and avoid investing thousands of dollars for storage facilities and staff.

How does Amazon FBA Work?

Amazon FBA does not require a separate account. It only requires a few clicks to expand your business with the help of Amazon. You can use your Amazon selling account to access this service in a few steps.

How Amazon FBA operates is pretty straightforward.

  1. You send your products to Amazon.
  2. Amazon will safely store them in their warehouses.
  3. When a customer orders one of the products you sent to Amazon, Amazon itself picks the requested item. It does the packaging, shipping, and handling of customer support for you.
  4. Amazon also handles your Returns and Refunds.
  5. Amazon will settle your account and deposit the profits directly into your bank account every two weeks.

You have to provide Amazon with the stocks, and you will earn the cash.

Amazon will charge a fee for the FBA services. But when we compare the profit, the FBA costs are less.

How to get started with FBA?

It will take a few steps to start with FBA.

  1. Create an Amazon Seller account
  2. Setup FBA
  3. Read the instructions and accept the conditions.
  4. Pack the items that you will send to the fulfilment centre.
  5. Make sure to follow the Packaging Guideline and shipping and routing requirements.
FBA Fees
  1. Standard Seller Fees — Amazon will charge 15% — 18% of the product price as a seller’s fee when customers order the product.
  2. Fulfilment Fees — These fees are per unit. It will vary based on the product size and include picking and packing, shipping and handling, customer support, and product returns.
  3. Inventory Storage Fees — Amazon will charge per cubic foot of inventory based on the products’ calendar month and daily volume.

You can check the list of FBA fees and use the fee calculator here.

Advantages of using Amazon FBA
  1. You will get Amazon’s reputation to benefit your business - People from all over the world know and trust Amazon. They know that if they order a product on Amazon, it will be delivered on time, and they can return the product if there are any issues. This reputation will help your business grow.
  2. Superfast service - Amazon fulfilment runs with a separate team. So the ordered product will ship to your customer quicker than you may be able to.
  3. Higher ranking on Amazon and Better visibility - When you use Amazon’s FBA program, your product will appear top in the search results. In other words, this will make your product one of the first items in the search results.
  4. Amazon’s Customer Service - Amazon is providing 24/7 customer support management. They will handle inquiries, returns, and refunds on behalf of the seller.
  5. Your customers will get free delivery - When you are using Amazon FBA, you can get free Amazon delivery using Amazon Prime.
  6. Your running expenses have been significantly reduced - You don’t need to spend money on storage, employees, and administration because Amazon FBA will take care of these things for you.
  7. Increased Productivity - Because Amazon will handle all your customer inquiries, storage, shipping, returns, and refunds, you can save time to focus on your business.
Disadvantages of using Amazon FBA
  1. Amazon FBA costs Money - Like you, Amazon is also running a business to profit. So they do charge for the Storage and fulfilment facilities.
  2. Preparing your Product for Amazon FBA is a tricky process - When you register for Amazon FBA, you need to follow the guideline set by Amazon to prepare and ship your products to their warehouses. These guidelines are stringent, and they will not compromise any mistakes.
  3. Product packaging is not rendered with your logo - When your products are delivered to the customer, the package will have an Amazon logo. So it is difficult for you to build brand awareness as your brand logo is not visible in the box.
  4. Product handling issues by Amazon - Sometimes, inventory may get lost or damaged in the fulfilment process. Often time, the error is on Amazon’s side. In these cases, Amazon will reimburse sellers proactively. However, some cases might go unnoticed, and Amazon will lose the seller’s money.
Summary

FBA (Fulfillment By Amazon) is a better feature for Amazon sellers. It will decrease your investment in Storage, Employee, and Administration facilities and increase your overall profit. All you need to do is follow Amazon’s packaging guidelines and send it to Amazon fulfilment. The rest will be taken care of by FBA.

KwickMetrics supports reports and insights of FBA and FBM sellers. Whether you’re selling on FBA or FBM, reports and insights are paramount. Check your reports and insights on time to understand the profitability of your business. Check out KwickMetrics for more details.

KwickMetrics is a cutting edge business intelligence and analytics tool that will provide custom reports and insights that a seller needs to understand their business in-depth. Please visit the below link to know more about KwickMetrics.

Happy Selling!

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