Amazon is the most well-known e-commerce platform. More than 230 million active users and approximately 2.5 million registered sellers are using this platform.
In 2019, Amazon generated income was $141.25 billion. The sales increased by 15% as compared to 2018.
Amazon FBA works best who runs its businesses through Amazon. If your sales mostly come from Amazon, FBA's high storage fees are easily compensated by their lower shipping fees. For increasing sales, Amazon FBA is a great option.
How Fulfilment By Amazon (FBA) works
How is FBA work managed? You sell your service/products then Amazon ships it.
The complete process of FBA is:
Amazon stores the item in their warehouses that are sent by you.
The tracking system is available to monitor your products that are shipping.
The customer buys your items from Amazon.
The things that are sold, Amazon picks and packs them.
By the method chosen by the customer, Amazon ships your items, and tracking information is provided.
Customer service is provided, and a return policy is available for products.
Amazon directly deposits profits in your account.
Responsibility by FBA sellers:
You can sell anything you like; you have to carefully select the product that will sell quickly to avoid storage fees, make sure you choose products.
To keep updated about goods stay so that they will remain in stock, you’ll require to monitor your inventory levels on Amazon daily.
You’ll need to make sure that people can find your products/services easily that you own.
Costs of Using Fulfillment by Amazon (FBA)
Fulfillment fees of $2.41 from January-September is for a small standard-size product that is 1 lb. or less in weight. $5.26 is charged for a large standard-size product from 2 lb. to 3 lb. Inventory storage fees are $0.64 per cubic foot and increases to $2.35 per cubic foot for standard-size products during the vacation months.
Benefits of Using Fulfillment by Amazon (FBA)
Amazon’s mighty name is associated with your product. These benefits strengthen the trust in your buyers.
Through Amazon FBA, you can offer faster shipping for free making your products more desirable to buyers.
Amazon’s acclaimed customer service is excellent for FBA users, in which the fastest customer service is available without spending hours.
Amazon has adjusted shipping charges with significant exporters so that shipping fees will be lower.
“FBA items qualify for Amazon Prime, and you’ll be stepping into the 112 million + Prime members who spend, on average, more than twice what non-members pay.”
FBA orders are managed at Amazon in the same manner Amazon supervises its orders. According to Amazon’s policies, if your item is damaged, you’ll be refunded.
FBA enhances your customer experience significantly. Multiple shipping choices, express delivery, easy return process, and reliable customer service from Amazon are ready to win your heart.
Disadvantages of Using Fulfillment by Amazon (FBA)
Despite all those benefits provided by Amazon FBA, there come times when items can be misplaced or destroyed. Amazon provides a refund, but if Amazon overlooks the case, you’ll have to file a claim to get it settled.
Amazon FBA fees include monthly cost and Amazon’s commission, and you will also have to pay fulfillment and storage charges which include fees for the long-term storage of items. If you want to remove defective or unsellable items, you have to pay fees.
“On each item sold, you have to pay Amazon’s commission, or “referral fee”.
Refund fees are also a must for sellers.
High-volume listing fees must be given, which is a monthly flat fee of $.005 per ASIN by the sellers with more than 100,000 ASINs."
A problem occurs if you are a reseller and selling the same product as another seller, the items can blend with the articles of the same manufacture by Amazon’s default inventory setting. If you are selling a bogus or low-quality product, this can be not good, because of the blending of products, which can lead to disappointed customers. By applying item stickers to all your items, you can avoid this problem.
According to the type of product you’re selling, packaging guidelines must be followed by the sellers.
Consumers can quickly return FBA Amazon Prime items, and Amazon always takes the side of the buyer. So you have to face higher return rates.
Sellers are not sure where they should register for sales tax compliance because Amazon does not give a list of warehouses where articles could be located.
Amazon is growing at a rapid pace, and most people and businessmen are shifting to this platform. For taking your business to the upper level, investing in Amazon is definitely worth it.
Amazon FBA has both advantages and disadvantages, and you have to choose Amazon FBA is best for you or not.
Amazon fulfillment is a simple method to outsource much of the difficulty of controlling an e-commerce business for many Amazon sellers. For others, the advantages don’t maintain the cost.
Writer - Gargie Kejriwal