Everything You Need To Know About Amazon FBA

Are you new to the concept of Amazon FBA and do you want to know more about it? Then, you are in the right place.

In this read, we will be discussing things you need to know about Amazon FBA fulfillment, from what it means to how it works, and just about anything that will help you know more about it. 

So, sit back and allow us to take you through the world of Amazon FBA. We promise it will be a wonderful and informative read.

FBA – What Exactly Does It Mean? 

FBA is an acronym for Fulfillment by Amazon. Now, you may be wondering what that even means. Well, it is a solution that allows online sellers to use the numerous large warehouses Amazon owns to both store and send out their products. The products typically will be sold on Amazon’s website.

This concept is very beneficial to startup businesses. Let us give a quick illustration of just how beneficial this solution can be to you as a seller. Say, you did your research, got the products, and you now have 2 or 3 hot selling items on Amazon. 

Now, as an enthusiastic business person, you are thinking about expanding your business. But where will you store the extra products? How will you make more time to dispatch the extra orders more products will bring? It is here that FBA comes in. 

The whole process is so streamlined that customers buying from you have no idea they are buying a product from a 3rd party seller. To them, they are getting the product directly from Amazon. This can be of added advantage to your business. 

So, as a user of FBA, you get more profit while most of the time-consuming tasks are taken off your hands.

Amazon FBA – How It Works 

You may be wondering, sure, the solution sounds just great and can be mighty beneficial to a seller, but how exactly does it work? Well, it is quite simple. 

Any seller that intends to use the solution would still use their regular selling account on Amazon. However, they will need to take some steps to get products in the FBA section. 

After which, they will send their products down to Amazon - Amazon would in turn store the products. When a customer buys the seller’s product, Amazon FBA packages it and sends it down to the customer. 

To break things down, let us look at the roles of both Amazon and the seller. 

What Amazon FBA Does 

1. Stores the product received from the FBA seller. 

2. Handles the purchase process from inventory update to payment once the product is bought. 

3. Packs and delivers the product to the customer. 

4. Handles most of the customer service jobs including refunds and returns. 

5. Deposits the seller’s profit to their bank account. 

What the Seller Does

1. Selects the products. 

2. Keeps the inventory current. When the stock in the store gets low, Amazon will notify the seller who will then have to restock. 

3. Effectively market the products and make product listings.  

You can watch this video on how Amazon FBA works to get a visual explanation and learn more of what we have discussed so far. As expected, a fee is charged for this service. 

With all that said, let us now discuss the major benefits of this service in detail. 

Amazon FBA – Pros 

The following are some of the major advantages sellers stand to gain from FBA:

1. More Sales Through Amazon’s Reputation

Amazon is trusted all across the globe. This trust is mostly because people know that they will get any goods they get off the website. It also doesn’t stop there, if there is a need to return the product, customers have the right to. 

Since FBA operations are so seamless that customers aren’t aware that they are getting the product from a third party, the trust is transferred to the seller. 

2. They Can Offer Their Customer’s Free Delivery 

Amazon Prime Subscription offers customers free delivery; this also extends to products on FBA. For FBA sellers, this gives them an edge over competitors not using this solution. 

3. Business Can Be Done From Anywhere

A seller can live or be anywhere at all while conducting consistent business. This is because this service will handle their orders round the clock. 

Customers’ queries may rarely get to the seller’s table since the service will also handle customer service. This way, the seller is saved from customer-related stress and they also get to save valuable time that would have otherwise been used to speak to the customer. 

4. Increased Productivity

Since the service handles everything from packing, dispatch and delivery, returns, storage, and customer service, the seller has extra time. This extra time can be used to build the business and increase their productivity.  

5. Fast Service 

Amazon offers fast order processing and delivery. 

6. Convenience

This is like the greatest perk of them all! The seller does not have to go through the process of packing the order, standing in queues at the post office, and every other inconvenience that comes with the territory of online selling. 

7. Better Visibility and Higher Ranking

Products under the program are usually prioritized when a search is done. Other products from sellers not using the program are often listed based on their total price (product and shipping costs) whereas FBA sellers’ products are listed based on just their price, this is why the products will be among the first products given when a search is done. You can visit this link to learn how to increase your sales rank on Amazon.

These benefits are just great! But are there disadvantages? Sadly, yes, however, they do not outweigh the advantages. 

Amazon FBA – Cons 

The following are the Amazon FBA cons:

1. It Costs Money

This is a rather obvious one - anyone that wants to use the service would have to pay fulfillment and storage fees. 

If the products do not get bought quickly, the storage fee may start to mount up. To ensure profit is made, the seller has to ensure their products are profitable after paying the FBA fees. 

2. Getting the Product Prepped May Be Tricky

Once a seller registers for the program, they will get a guideline stating how their items should be shipped to the warehouse. 

The guidelines are very strict, and when they are not properly followed, the warehouse may reject the items. This can be very frustrating and often result in delays and more work. 

3. Products Go Out With Amazon’s Logo

As we have said, customers who shop from FBA sellers often think they are buying from Amazon. This may be because the package has Amazon’s branding on it rather than that of the seller. This would make brand awareness difficult. 

For sellers that need brand awareness, this con can outweigh all the great advantages of the program. 

4. Returns May Increase

Amazon’s policy on returns would also affect the seller’s business and they may notice an increase in the returns they get. However, this advantage can be managed if only quality products are sent out by the seller.