Since its inception in 2006, millions of sellers have utilized Fulfillment 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 most successful sellers because it allows convenient management of customer orders, timely sending of shipments, and easy access to product information.
Therefore, making restocking, promotion, inventory management, and sales of your items much more manageable than other fulfillment methods. All you have to do is ensure that your inventory items reach Amazon’s fulfillment centers, and Amazon will perform the rest of the fulfillment process.
To simplify the concept of FBA, 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’ catalogs.
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.
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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.
Product research is never random; there are checklists to consider. Here are some of the essential things you should check when performing Amazon product research:
- There is a sufficient profit margin.
- There is moderate competition.
- There is a good demand for the item.
- The item is licensed and not restricted
- The item must not be bulky and complex.
- The item belongs to a popular market niche.
Trial The Use Of Amazon Ads
Amazon Ads is a convenient way of increasing product and brand visibility in the Amazon marketplace. If you are considering advertising campaigns for your Amazon business, it is best to check the onsite ads on Amazon.
Amazon advertising solutions such as Sponsored Products and Sponsored Brands offer a quick and effective way of advertising on the Amazon website. Amazon Sponsored Products promote individual product listings, while Amazon Sponsored helps showcase brands and product catalogs through creative ads appearing in relevant shopping results.
If you wish to increase brand or product visibility, you can also contact Amazon Influencers for help. Amazon influencers are those individuals or groups who have established themselves as an authority in a particular niche or social media platform. Thus, giving them the ability to influence the purchasing behavior of consumers.
One of the things to consider when venturing into an influencer marketing campaign is the conversion rate. Accordingly, a commonly agreed-upon good conversion is 3% and above. Amazon FBA sellers should focus on the following campaign goals when leveraging Amazon influencers:
- Increase brand awareness
- Increase of engagement
- Lead generation
- Website traffic boost
Get More Reviews
Reviews or feedback from Amazon shoppers play a crucial role in your Amazon business. It is estimated that around 93% of shoppers read reviews before purchasing online. Hence, you should strive to obtain more positive reviews for your Amazon FBA listings.
Amazon product reviews can help increase consumer trust and interaction. Amazon reviews from previous shoppers who have bought, tested, and examined the products can increase the likelihood of prospective customers purchasing your product.
Besides influencing consumers’ purchasing behavior, Amazon reviews likewise affect product ranking. The more positive reviews you obtain for your listings, the higher the chance they will appear on top of Amazon search result pages.
Furthermore, good reviews also affect your Buy Box win rate. Since customer review is one of the factors evaluated by Amazon for awarding the Buy Box, you should always strive to provide the best products and customer service to gain more positive reviews on your listings.
Offer Competitive Pricing
Apart from checking previous customer reviews, Amazon shoppers also base their purchases on the product price. After they have decided on what item to purchase online, price is a top consideration for shoppers.
It is a must, therefore, for Amazon FBA sellers to offer competitive prices. In most cases, Amazon sellers provide the best price possible by using AI repricers. Automated repricing can help sellers offer a competitive price based on various market conditions, including competitors’ pricing behavior.
Use High-Quality Images
Uploading high-quality product images for your listings can help improve the conversion rate of your business. Product images attract shoppers to your listing page. It also allows shoppers to evaluate your product.
The high-quality images you upload, accurate product descriptions, and previous customer reviews can increase the likelihood of your FBA products being purchased by Amazon shoppers.
How to Start Fulfillment By Amazon in 2023
Starting your own FBA business need not be complicated. Here are some steps to help you begin your Amazon seller journey.
• Choose a product niche and engage in product research.
• Create an Amazon seller account, and set up FBA.
• After creating a professional seller account, choose reliable product sources, either locally or overseas.
• Package products for shipment to an Amazon fulfillment center. 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 2023
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 Fulfillment by Amazon in 2023:
- Trusted Reputation
One of the reasons why many sellers subscribe to the FBA program 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 Amazon 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 Amazon 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’s 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 fulfillment centers scattered around the globe, shipping can be faster. Handling the shipping of products sold on multiple channels is more convenient with FBA.
- Low Startup Cost
Even though starting an FBA business with a substantial investment can be advantageous, it is optional. For those with a capital of less than $1000, there is still an opportunity to start your business. You may refer to our guide on How to Start an Amazon FBA Business With Little Money to learn more.
Disadvantages of Using Fulfillment By Amazon
- Product Guidelines
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.
- Amazon Fees
Amazon FBA costs money. 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 2023
Amazon sellers and would-be sellers need to know the primary fees involved in the FBA service.
- Referral Fees
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.
- Fulfillment Fees
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 inventory storage fees for the items sent and stored in the 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 business.
Here are some of the Amazon seller tools you can use to increase FBA sales in 2023.
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 Amazon 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 2023.