What is Amazon FBA: Why it Is Crucial To Your Business. (Guide)

Anyone who has ever sold anything on Amazon will know or at least heard about FBA, also known as Fulfillment By Amazon.

FBA is designed for online sellers to keep their work hassle-free. With this, they can relax back and let Amazon do all the heavy work on their behalf.

FBA allows sellers to use the massive warehouse of Amazon across the globe. Along with this, the packing and sending out of the orders to deliver to the customers is handled by the staff.

It includes customer care as well. FBA does have lots of benefits, and this program is helpful for online sellers. But while you enjoy the perks, it’s not free either.

To know if FBA is helpful for your online business or if you should consider it for yourself as a seller, it’s important to know everything about the program offered by amazon.

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What To Know About The FBA and Why It Matters?

In 2006, Amazon launched FBA services, and it was considered one of the groundbreaking programs.

Amazon allowed any business, regardless of its size, to use the facilities and present itself to millions of customers.

With the program, the sellers can take leverage of the largest networking, first-class customer service, storage capabilities, etc.

What To Know About The FBA and Why It Matters?

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It also added a level of trust as the products are backed by Amazon itself. This boosted the recognition and sales to small businesses.

Well, there are more than 300 million active customers that Amazon has; counting in the US alone, the numbers of prime subscribers are 90 million. Also, as compared to normal buyers, the prime ones spend more.

The average goes to $700 per year, where Prime customers spend around $1300 per year.

Because of this, not just FBA is taking a huge burden from the sellers. But also, they get visibility to the prime customers of Amazon.

How You Can Start With FBA: Steps To Follow

Hands down but there is no doubt that FBA has its major perks, but if you want to start and you are new to this. There will be lots of things you might find confusing.

To make sure you are making the best use of FBA services, here are the steps that you need to follow.

Step 1: Determine What You Are Selling

This is a first yet crucial step that you need to understand. Choose the product that you want to sell using the amazon program.

It will also help you in tracking all decisions that you will take further to this point. However, make sure you are taking your time to decide on the product.

You can also look at other sellers on Amazon so you know what is good for you. Also, you can understand if the product you are choosing has the range of selling and earning profits or not.

Step 2: Calculate The Overall Amazon Revenue

Start with estimating the monthly sales volume that you have for amazon products. It will include the sales rank and current price too.

Add the shipping cost and the cost price to get the total revenue as well as potential profit.

When the calculation is done, you can decide if it’s a good opportunity and worth further pursuing or not.

Step 3: Get A Supplier For Your Product

However, if you are manufacturing your product, this step is not for you.

But if you are not, then you will need a supplier who can supply the product to you. There are lots of suppliers whom you can find, but make sure you are doing the research well.

If not, you can also ask other sellers that you follow on Amazon and get recommendations from them.

Once you get the product range and supplier, you are all set to sign up for Amazon.

Follow the steps and create your amazon seller account. Now you will need the FBA, and here you have to do another sign-up.

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This comes with different benefits that you can enjoy, it includes :

Sending direct products from your supplier to Amazon
It latkes 2-day prime shipping
Manage your customer services and returns
The shipping cost is included to the customers in FBA fees
You can get multi-channel fulfillment, including Shopify and eBay stores.

Step 5: Create And Optimize Your Listing

Well, one of the important aspects that you need to focus on is making your product listing on Amazon.

It can be critical, and you are going to need to pay close attention to each product while you list them.

When you do it, make sure you are following these points too :

Keep your product title clear and simple.
Add concise features and descriptions, and make sure to use the keywords.
List the relevant categories as well as subcategories.
Add high-quality and professional photos of your products.
Use feedback and reviews to encourage customers.
Make sure you have a good rating; if you don’t have one yet, make sure to keep it better.
Add SKUs; either you get yourself or amazon will help in generating one.

Step 6: Create Your FBA Shipping Plan

Make sure you are choosing the products and that they all are in good condition. Inspect them thoroughly before you send them to Amazon. Also, you need to follow the guidelines, so pay attention to that as well.

Look for the products which can help you in reducing the shipping cost and profit a good profit margin. Keep your shipping cost low as you can.

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Make sure your shipping cost has a reasonable rate; it includes deciding the delivery time, the weight of the product, etc.

The heavy ones cost more as compared to the light ones.

Step 7: Make Your First Sell

The last step includes generating your first sale. Also, make sure you are keeping an eye on what is selling or what is not.

This will help you in deciding the products that just take too much energy as well as cost.

You can review your listing over time so you know your products are what the customer wants.

How Does Amazon FBA Works?

Amazon‘s program is helpful for sellers as it takes responsibility as well as the burden of doing most of the work for you.

The working of FBA is simple and pretty easy; it follows the steps:

You Send Your Products To Amazon

In the US, Amazon has around 100 warehouses, and some of its storage capacity is more than a million square feet.

Contact them and inform them about the products you are sending, the team chooses a warehouse that suits the product, and they ship it there to keep it safe as well as stored.

Amazon Stores Your Product

Once they get your product, they short it and add it to their inventory section. With all safety, your products get stored safely in one of their warehouses.

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Also, if your product gets damaged by any change throughout the process, the company will reimburse you.

Customer Purchase Your Product

After storing the product, the customer places the order, and Amazon takes care of it.

They handle the complete transaction process for you. They also accept the payment and make sure to update the inventory.

Amazon Ships Products

Well, one of the hassles for a seller but for amazon they have a team of professionals who handle this work.

They manage the process and make sure to keep your product safe for shipping. They grab the products from the warehouse and do the packaging as well as shipping to the customer directly.

Amazon Handles The Customer Service

After your products get received by the customer, Amazon does the follow-ups to make sure that the customers are satisfied with the process and delivery.

If any of the customers have queries, questions, or problems, they handle them. Also, they take care of returns and the other process that comes with that.

You Get The Payment

Well, Amazon totals your sales, deducts the fees, and deposits the rest of the amount to your account after every two weeks.

The deduction amount includes the seller fees that you need to pay before your payment is received.

What Is Your Responsibility When You Use FBA?

Amazon handles the complete process for you, but as a seller, you need to take responsibility for a few things as well.

This will help you in keeping the work much smoother. Also, you get better work done without any problem.

What Is Your Responsibility When You Use FBA

Chose The Products

When you are choosing the products for selling, you are free to pick anything you like.

However, to make sure you are not paying too much for storage fees, it’s important to pick products that can easily get sales.

This will help in getting fast sales and profit, and you can save money on storing the products in the Amazon warehouse.

Keeping In-Stock Inventory

The next important step that you need to take responsibility for is that your product is in stock every time.

If it gets out of stock, not just will you lose sales, but the expense of holding products and shipping will be increased as well.

That’s why to keep your record of when your products are out of stock or when you need to do it. Check Amazon regularly to make sure of that.

Make It Easier To Find Products

For those sellers who are selling products that are either famous or have a high ranking in brand names. This step won’t be needed.

But if you are selling your own product, you will need to do the marketing and advertising. This will bring people to your business, and people will purchase products.

Familiarity is important so that people can find your product.

There are more than 350 million products in the amazon catalog. This is why you need to do the marketing for your products.

Why Should You Consider Amazon FBA?

There are lots of benefits and perks you get; however, still, if you are confused about whether to go with it or not.

There are important factors that can help in understanding more about Amazon FBA. Here is the list you can consider:

Saving Your Time & Money

When you become the FBA partner, you can save time as well as money. Also, if you are struggling to manage the inventory and shipping, you can get the technology from Amazon, which is the most advanced but has delivery logistics throughout the US.

Apart from this, Amazon has one of the fastest speeds and capabilities to deliver products. It also takes care of returned products.

For that, you get fulfillment by amazon’s revenue calculator as a tool that will help in helping to compare the cost of ordering it yourself or with FBA.

Avoiding Extra Responsibilities And Risks

Well, it’s not just about time and money, but you can avoid the responsibility you find extra to handle. This includes the risk which makes the work most hassled for the sellers.

You outsource the fulfillment, which helps in avoiding the risks related to different factors. It includes some of the important ones, such as shipping goods, packaging products, and storing inventory.

If you are not planning to have the monitoring of your sales on your own. The Amazon team helps you in making sure you won’t miss anything.

Offering A Ideal Customer Experience

Customer experience is a factor that can have a huge effect on your business. Especially platforms like Amazon pay special attention to the customers. Also, you need customer reviews.

By offering a customer experience that is not just good but also has the strength to build your brand. You can get a more satisfied customer, and it leads to more repeat purchases.

When you partner with FBA, you get access to using the customer service team provided by Amazon. With that, they have a professional team to handle the issues and disgruntled buyers. It includes handling customer inquiries, complaints, and returns.

Using Multi-Channel Fulfillment

Well, not just you get the products selling on Amazon, but the services are also provided for other e-commerce platforms.

By using the MCF services, you can place your orders through the dashboard, and it will be fulfilled by Amazon.

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This means you don’t have to limit your selling to amazon; the service will be used for different platforms you want to sell your products.

The Buy Box

Winning the buy box can help you in getting a huge boost to the sales number. To professional sellers, using the FBA can help in getting the buy box.

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The buy box is an important part that can help you in getting more sales as well as you can get better numbers in profit.

What Are The Drawbacks Of Amazon FBA?

While you get the advantages, there are some drawbacks too, which makes it a more important consideration if you want to go with this.

When you are using the services, there are some points that might affect your business. To know better, here is what you need to know about it :

Having a Lack Of Control

One of the biggest drawbacks that you will get, especially if you are a business that wants to offer full transparency and control over your work, might be the issue you need to consider.

When you outsource your fulfillment, it gets a handle by Amazon.

You get less control over further procedures.

For example, with Amazon FBA, you don’t have access to get the emails of your customer. This does not just limit the nurturing of your customer further. But also you won’t be able to do the cross-promotion.

As a seller, you need the emails of your customer as it’s a valuable thing that helps in boosting your marketing capabilities.

Disconnecting You And The Customer

FBA controls your customer service and shipment. This feature also disconnects the connection with your customer.

Also, for communication, it creates an extra obstacle that distracts you, and you don’t get the customer connection directly.

The FBA representation is professionals, and they can handle the issues too. But they are not the one who is connected to your brand, so this can be an issue in getting important feedback from your customers.

Cost Of The FBA

Well, if you do not have the budget, this will be an issue. The services are not cheap; they are expensive, and for lots of people, it’s not affordable either.

You are required to pay the cost of storing your goods in the warehouse of Amazon and using their services.

If your items are inexpensive, bulky, or large, this can be a hassle as it will charge more than your profit margin.

That’s why it’s important for sellers to give their attention when they are considering FBA, knowing what they are paying and for what will help in understanding the expenses too.

Limited Branding

Here amazon does the shipping and other processes. This, it limits your opportunities for branding the product.

However, you get control over your packaging related to the product, but Amazon uses their boxes logo and brand name.

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This limits the branding and opportunities to create the branding for your business.

Inventory Management

Tracking the inventory can be tough work, mostly because you are not involved directly in the sales process.

If the product is out of stock, Amazon will reduce the visibility and ranking of your product. This will eventually result in a lower number of sales.

Here you will need to check the numbers and stock frequently, so you will know if you need to restock it or not.

To reduce the risk and chances of getting out of stock, you need to analyze your inventory regularly which can be a whole new work to handle.

Sending the inventory to Amazon is not easy. You will need the middlemen that will supply each product to fulfillment centers.

You need to manage the guidelines given by Amazon, as it’s strictly important to follow.

Should You Consider Using Amazon FBA?

Well, the answer to that question can be tricky.

Sellers should consider it if they are selling small products which have high turnover. This will help in limiting storage fees and they can save money on expenses.

Also, the important point that you should remember is the methods of FBA change as per the products. So what you are choosing will impact everything.

Choosing FBA is helpful for sellers for its obvious reasons and benefits. The perks are something that can’t be avoided, but it comes with certain drawbacks too.

That’s why self-fulfillment strategies are important, along with using Amazon FBA. This will help you in making the most of the marketplace.

Frequently Asked Questions

How FBA works for sellers?

Amazon does the work like picking, packing, and shipping the products you send to their warehouse. Once they get the orders placed from the customers on the site, they do the whole process of picking to deliver the product to the customer.

Do sellers need FBA?

Amazon FBA is beneficial for customers; this will help in getting a bigger marketplace that has the trust and attention of million of buyers. However, using the FBA requires you to follow your own conditions, which sellers should pay attention to.

Is FBA worth it now?

Definitely, FBA is worth it for sellers even now. However, the sellers require to calculate how much they want to spend and for what. Also, consider factors like what you are selling and if it is quickly sellable or not.