Since its inception in 2006, millions of sellers have utilized Fulfilment by Amazon (FBA). With more than 175 Amazon fulfillment centers, Amazon has enabled FBA sellers to grow their business with the help of its fulfillment network worldwide.
One of the reasons why Amazon created FBA was to help small businesses benefit from Amazon’s top-notch customer service and unrivaled fulfillment capabilities.
The in-house fulfillment service by Amazon is geared towards the benefit of both sellers and shoppers alike.
What is Fulfillment By Amazon (FBA)?
Fulfillment is defined as an eCommerce business process that involves warehousing, packing, shipping, and processing of orders, including returns and exchanges. This is an instantaneous process that begins after an online shopper checks out the purchased item.
The tech giant offers several options for fulfillment regarding your Amazon business, including Amazon FBA. This fulfillment method is popular among sellers because it allows convenient management of customer orders, timely sending of shipments, and easy access to product information.
Therefore, making restocking, promotion, and sales of your items much more manageable than other fulfillment methods. All you have to do is ensure that your inventory items reach the Amazon fulfillment centers, and Amazon will perform the rest of the fulfillment process.
To simplify the concept of fulfillment by Amazon, it means that the seller finds items to sell on the platform, and Amazon will take care of the picking, packing, and shipping of orders on behalf of the seller.
Using FBA the Right Way
Fulfillment by Amazon will only work if you use it properly. It would serve you best to know the right way of utilizing this kind of service at the onset of your business.
Think Big, Start Small
In the Amazon business, endurance is one of the keys to success. In order to endure costly expenses, penalties, and abrupt market changes, you should avoid selling everything you see from suppliers’ catalog.
Start small and try to limit your portfolio to in-demand items. Remember that the more items you sell online, the higher the storage and warehousing fees.
Perform Product Research
Try to consider a few items first before you ramp up your inventory. The thorough product research will help you narrow down your options.
With the help of a product research tool, you will get to know the highly competitive niches and profitable items while avoiding stagnant and/or dead inventory.
How to Start Fulfillment By Amazon in 2021
Starting your own FBA business need not be complicated. Here are some steps to help you begin your Amazon FBA journey.
- Choose a product niche and engage in product research.
- Create an Amazon seller account, and set up FBA.
- Choose reliable product sources, either locally or overseas.
- Package products for shipment to Amazon fulfillment centers. Make sure that packing and shipping guidelines are followed.
- Create your product listing and establish your brand.
- Optimize your listing and listing price. Make use of Amazon seller tools, including a repricing software, for maximum output.
Advantages of Amazon Fulfillment Service in 2021
Sellers usually ask what fulfillment by Amazon is and what are the benefits. To answer this for new and would-be Amazon sellers, here are some of the reasons why you should sign up for Fulfilment by Amazon in 2021:
One of the reasons why many sellers subscribe to fulfillment by Amazon is its reputation. You can quickly gain the trust of customers when your products are associated with Amazon FBA, thanks to Amazon’s solid reputation in the industry.
Free Delivery Offers
With Amazon FBA, sellers can offer free delivery for customers with Amazon Prime subscriptions. Offering free shipping increases the likelihood of online shoppers choosing your product while decreasing instances of cart abandonment.
Increase Amazon Buy Box Win Rate
Another known advantage of using fulfillment by Amazon is the increased chances of winning the Amazon Buy Box. It is a known fact among sellers that the Amazon algorithm favors FBA sellers when awarding a spot in the Buy Box.
Quick Order Processing
Since FBA operates on a unique ordering system, it can provide faster processing and dispatching of customer orders. Since Amazon has an established relationship with shipping companies, ordered items are shipped faster.
Impeccable Customer Service Management
Amazon is known as a leader when it comes to customer service. When enrolled in the FBA program, you can take advantage of Amazon’s customer service management. The customer service team of Amazon will answer queries concerning items ordered, including questions about refunds and returns.
Reduced Overhead Expenses
Fulfillment by Amazon is the best option if you are trying to minimize your expenses. Since you will simply be sending inventory items to Amazon fulfillment centers, you will drastically reduce warehouse rental fees, operating expenses, and other overhead costs related to the FBM process.
Multi-Channel Fulfillment Center
With multiple Amazon fulfillment centers scattered around the globe, shipping can be faster. Handling the shipping of products sold on multiple channels is more convenient with FBA.
Disadvantages of Using Fulfillment By Amazon
One of the observed challenges when dealing with fulfillment by Amazon is the precise product guidelines. Since these guidelines are mandatory, observance of the guidelines can be demanding on some sellers, especially the new ones.
Sellers have to pay fees to use Amazon’s services, such as referral fees, storage fees, and even product return fees. These Amazon FBA fees can be burdensome for sellers.
Change in Control
Sending your inventory items to the Amazon warehouse means giving up complete control of your inventory. Amazon will ship and pack the items their way.
Danger of Returns
The product return policy of Amazon can be detrimental to your business if you frequently experience it. Product return fees can dramatically impact your Amazon business.
Getting to Know Primary FBA Fees in 2021
Amazon sellers and would-be sellers need to know the primary fees involved in the FBA service.
A referral fee is what Amazon charges for every item sold from your inventory. The fee is taken from the total sale price, and the percentage of the deduction or the referral fee varies depending on the product category.
This refers to the fees Amazon charges per unit. It is a flat fee and is based on the size and weight of the inventory item.
Inventory Storage Fees
You will also incur fees for the items sent and stored in the Amazon fulfillment centers. The storage fees vary depending on the product size tier and the duration of the unit’s stay in the warehouse.
Other FBA Fees
Product Return Fees: For items eligible for free returns, especially via Amazon Prime, sellers will be charged for the FBA returns.
Inventory Removal Fees: When removing items from the Amazon warehouse, sellers will incur charges in the form of inventory removal fees.
Amazon Seller Tools for Increased FBA Sales
There are many methods and suggestions concerning increasing your Amazon sales. However, regardless of what approach you follow, you must consider using Amazon seller tools to increase the profitability of your FBA business.
Here are some of the Amazon seller tools you can use to increase FBA sales in 2021.
Amazon Repricer: An Amazon repricer, particularly the more advanced AI repricers like Seller Snap, can help in creating an effective pricing strategy. Repricers will help you avoid Amazon price wars while maintaining a competitive listing price.
Product Research Tools: As emphasized in the preceding paragraphs, product research tools will help you find a product that provides better value for your business. This tool will also help you avoid slow-moving products.
Amazon FBA Calculator: Another must-use seller tool is the Amazon FBA calculator. With the help of the FBA calculator, you can have insight into the potential revenue and the possible margin impact of an item’s price change.
Feedback Tools: Reviews or customer feedback matter for Amazon. If you wish to increase store credibility and customer rating, you should approach customer reviews proactively with the help of feedback tools. A feedback tool will automatically send review request emails to customers.
What is Fulfillment By Merchant (FBM)?
The good thing about Amazon is that they allow multiple fulfillment services for third-party merchants. If you need to customize the packaging, you have a very large-scale operation, or the weight and size of your products are large, then Amazon FBM is the best alternative.
Amazon FBM is a method that gives sellers control over the entire handling and shipping process. This means that sellers will not incur all the fees associated with FBA.
Let Amazon FBA Improve Your Business
Since its inception, numerous online sellers have realized the benefits of Amazon fulfillment to their retail business. Despite having other channels to dispose of their items, Amazon FBA remains the top destination for online sellers.
What attracts sellers to engage in Amazon FBA is the convenience it brings to the table. Instead of focusing on the whole process of picking, packing, and shipping, you have Amazon as your reliable proxy to handle those things for you.
If you want to stay competitive in the eCommerce industry, Amazon FBA might be the fulfillment service you need in 2021.