Fulfillment by Amazon (or FBA) is a service offered by Amazon. It takes care of all aspects of Amazon sellers’ inventory storage, order fulfillment and returns. FBA allows sellers the freedom to concentrate on their business while Amazon handles picking, packing and shipping orders.  Let’s discuss the pros and cons, how FBA works, what it costs, and other details.

What are Amazon FBA’s pros and cons?

Amazon’s FBA program has enabled thousands of entrepreneurs to scale and grow their businesses by leveraging its logistics and consumer trust.

It is amazing how one person, with very little ecommerce experience, can sell their products on the largest marketplace in the world and have their products delivered to their customers within two days.

FBA has its many advantages, but there are also some drawbacks. Let’s look at the pros and cons to FBA.

Fulfillment by Amazon: Benefits

• Prime shipping If your Amazon account is active, you may be familiar with Amazon Prime. Prime badges signify that you can get free shipping within one to two days of purchasing a product. You can also return the product easily with this badge. FBA sellers will get the Prime badge and access Amazon’s almost 200 million Prime members when they list their listings.
• Ship your inventory to Amazon’s fulfillment centres: To sell products via FBA, you only need to create a shipping plan within Seller Center and then ship your products directly to Amazon’s fulfillment center. Amazon will store and receive your inventory until your customers make a purchase.
• Customers trust Amazon: Once customers see the Prime logo they understand that they have access to Amazon’s customer support and fast shipping . Amazon-branded packages will often arrive with your products at your customer’s home, increasing their perceived value.
• Amazon ships all orders. Manually packing and shipping orders every day can be tedious and time-consuming. FBA allows you to have your own warehouse workers who do everything for you.
• Amazon provides customer service.Amazon can handle any customer service issues that may arise from orders shipped via FBA. FBM orders (fulfilled by Merchant), on the other hand, must be handled by the seller.
• Amazon handles returns Amazon will not only pack and ship your orders but will also process returns. Amazon will refund the item if it is in good condition.
• Multichannel fulfillment: Did know that Amazon FBA can be used to fulfill orders on other marketplaces and ecommerce stores. Sellers can create fulfillment orders and ship products to non-Amazon customers.

The Downsides to Fulfillment by Amazon

• FBA Fees: There are some downsides to FBA. FBA Fees can be quite expensive. The fees for fulfilling your order will vary depending on the dimensions and weight. To determine your product’s profitability, you must calculate the fees before you sell it.
• FBA storage charges:In addition to FBA fees Amazon charges you for keeping your items in their fulfillment centers. There are two types: Monthly storage and long-term. Proper management of your inventory can help you avoid expensive long-term storage fees.
• Inventory and restock limits: Amazon implemented restock limits in order to stop sellers from stocking too much inventory. However, it has been a problem for many sellers who are unable to send enough product. You may not have enough storage space to store all your inventory.
• Amazon makes it simple for customers to return products: Although this convenience is great for customers, customers may experience higher returns rates than other marketplaces due to the ease of returning merchandise on Amazon .

How to Use Amazon FBA

You now know the pros and cons of Amazon FBA. How do you start?

After you have set up your Amazon seller accounts, Fulfillment by Amazon can be as easy as shipping your products to an FBA warehouse. Once Amazon receives your inventory products will be automatically made available for sale and eligible for Prime shipping.

1. In Amazon Seller Central, create a shipping plan
2. Amazon’s partner shipping carrier can be used to create a highly discounted shipping label (created in Seller Central).
3. Your shipping plan, as well as Amazon’s packaging requirements, will determine how you package your products.
4. Drop your package(s), to UPS, or schedule a pickup
5. Wait for Amazon to process your shipment

Amazon FBA: Can sellers use

All Amazon sellers, regardless of whether they have the individual plan or the professional seller plan, are eligible to participate in Fulfillment by Amazon and have their products eligible 2 day prime shipping.

What is the cost of Amazon FBA?

You will be charged a lot of fees as an Amazon seller, especially if your orders are shipped via FBA.

FBA and FBM both require you to pay a referral fee. This fee varies depending on which category your products fall into, but it is usually 15%.

FBA will charge you based on the product’s size and weight. It will be deemed standard-sized or oversize.

FBA is right for you?

Are you ready to use FBA?

If you are, FBA may be an option.

• Selling small, lightweight products will lower your FBA fees and storage fees.
• You can run your business from your home, where there is no storage space for inventory
• You don’t have the capacity or time to pack and ship your orders
• You want your products to qualify for Prime shipping
• Amazon should handle customer service, returns
• You don’t have the space or staff to pack and ship your orders.

FBA may not be a good option if:

• Sell large and/or very heavy products
• You want control over the way your products are shipped to customers
• Your own warehouse space, storage and fulfillment capabilities
• You want to process your returns yourself?
• Utilize a third party fulfillment service
• You can manage your fulfillment, but you are also enrolled in Prime Seller-Fulfilled

It all comes down to your business and what is most effective. Before you decide to use FBA, make sure that you account for all Amazon’s fees as well as variable costs. You can also sell FBA products and FBM products.

FBA is a great way to expand your Amazon business

We hope you find this article helpful in understanding FBA and how it works.