What is Fulfillment
Amazon (FBA) is one of two core fulfillment options provided to Amazon sellers.
The other is known Fulfillment by Merchant (FBM)—a system by which the sellers
(you) takes care of packing and shipping orders directly to customers. FBM
sellers basically use Amazon as a platform to reach customers and produce
Amazon in reality
sums up FBA pretty well in Seller Central: “You sell it, we ship it.”
Here’s how it works.
FBA Step 1: Deliver your products to an Amazon
It goes without
saying that the products you’re delivering to Amazon must already be listed in
your Seller account. You don’t desire your products sitting in an Amazon
storehouse if they’re not, uh, for sale on Amazon.
You’ll require to
label all your products, which you can do by yourself or through Amazon’s FBA
Label service. Then, you ship your inventory either through Amazon or with a
carrier of your preference.
FBA Step 2: Amazon takes care of storage.
When your inventory
gets to the storehouse, Amazon scans the labels you attached; weights and
measures each package, and stores everything accordingly.
You’ll use online
inventory tracking to remain on top of your stock. It’s up to you to ship more
inventory to the warehouse when required.
FBA Step 3: Someone orders your product on Amazon.
Amazon takes care of
picking the product from inventory, packing it for shipping, and delivering it
to the customer.
Plus, after the
order has been placed, Amazon takes liability for Customer Service.
The benefits of Fulfillment by Amazon
FBA benefit #1: More Time to raise Your Business
Using Amazon FBM
denotes handling all the inventory, the labeling, the packing, the shipping,
the tracking, and the customer service. If you’re working your ecommerce
business out of your living space or a small office, you possibly don’t have
room for all that noise.
Plus, by handing off
those liabilities to Amazon, you give yourself way more time to focus on the
things that enhance and grow your business: product development, market
research, keyword search, online advertising campaigns, SEO, partnerships, and
so on. If you can’t assign enough time and energy to these practices, your
business simply won’t be sustainable
FBA benefit #2: Make Consumers’ Trust
Amazon. More significantly, Americans belief Amazon. When you order
Scooby-Doo slippers with two-day shipping, you sleep deeply knowing that your
feet will be both cozy and whimsical in 48 hours.
As an FBA seller,
your product listings will significantly demonstrate “Fulfilled by Amazon” for
all prospective buyers to see. The effect this has on your sales is
certain—shoppers automatically belief you more. And customers like to buy from
sellers they trust.
FBA Advantage #3: Automatic Prime Eligibility
two-thirds of U.S households have Amazon Prime. Overall, almost 85 million
consumers are using the premiere service.
Nobody who pays for
Amazon Prime is going to buy products that aren’t Prime suitable. Why settle
for standard shipping (5-8 business days) when you can get your mason jars in a
small period of that time? Plus, the Prime logo clicks into that trust factor
we just talked about.
Don’t miss out on
tens of millions of trusting, keen customers.
FBA Advantage #4: The Coveted Buy Box
The Amazon buy box
is the white box situated on the right side of a product details page where the
“Add to Cart” and “Buy Now” buttons live.
In other words, it’s
the place where the money is made on Amazon. To be specific, 82% of Amazon
purchases made on desktops are done during the buy box. That number is even
advanced for purchases made on mobile.
Amazon uses an
algorithm to decide which supplier is represented in the buy box and for how
long. The information of the algorithm is for another blog post, but one factor
is applicable here:
FBA sellers get a
lot of choices when it comes to the buy box.
The drawbacks of Fulfillment by Amazon
We must be
clear—Amazon FBA isn’t a celestial bounty of good times and warm hugs. Before
choosing for this fulfillment option, you must know the two principal
FBA Drawback #1: Fees on Fees
As you may remember
from an earlier section of this blog post, Amazon FBA costs money. Actually,
all fees considered, the costs can run pretty high.
Although we’re of
the opinion that these costs are finally worth it, we know that your business
may not be in the position to take them on in addition to essential expenses
such as manufacturing and marketing.
FBA Drawbacks #2: Forfeiting Control
It’s not (that) odd
to consider of your ecommerce business as your child. You’ve built this thing
from the ground up, and you’re legally proud of that.
As such, you may not
be overjoyed about the idea of handing over the reins for storage and shipping.
If a lack of personal mistake and control makes you uncomfortable, Amazon FBA
isn’t for you.
Thus, is Fulfillment by Amazon worth It?
The reply to this
question really comes down to three factors: how much you’re shipping per
month, how large your profit margins are, and how niche your market is.
You require to move at least 40 items per month to qualify for Amazon FBA. If you’re just hardly hitting that minimum threshold, it may not be worth the hassle (and the fees) of preparing your inventory according to Amazon’s strict rules. You’re possibly better off handling these responsibilities by yourself, or through a smaller fulfillment company that’s more elastic.
FBA isn’t a fine
idea for ecommerce sellers with small margins. If you are not making much money
per scale, it’s a safe expect that FBA fees are going to bring your margins
down to zero, if not into the red. Although shipping the whole thing on your
own isn’t free—in terms of money or energy—you mustn’t take on any fees that
aren’t necessary to your business.
Sellers of great
niche products (e.g., vintage zines geared towards old-school goth music fans)
don’t necessarily require FBA, either. Memorize that one of FBA’s major
advantages is the eligibility for Prime. If an Amazon customer sees a bunch of
fairly identical products, and only a handful of them are Prime eligible, she’s
going to instantly write off those that are ineligible.
But, not that much
people use Amazon to sell ‘70s goth zines. The people who are in the market for
your niche product possibly don’t care that much about Prime eligibility;
they’re just glad to have found what they were looking for.
Now, if you’re a seller in a competitive market who moves tons of items per month and drives large margins, then yeah—Amazon FBA is an unbelievable investment. It’s a reliable way to free up your schedule, earn prospective buyers’ belief, and win more sales on the product details page.
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