Amazon FBA (fulfillment by Amazon) is an option available to Amazon sellers. It means that you store your products in Amazon’s fulfillment centers, and Amazon is responsible for packing, shipping and customer service for those specific products. Sellers must pay fulfillment fees per unit and monthly inventory fees to Amazon. Typically sellers who exclusively sell on Amazon and are high volume sellers make an excellent fit for Amazon FBA.
Sellers benefit from using an Amazon fee calculator to discern which products will sell best and in which marketplaces. Amazon FBA product research should be on the high priority list of any e-commerce seller, associated costs and fees can influence your overall strategic business plan. Algopix assists online sellers with the right Amazon FBA research tools to make well-informed decisions regarding their online businesses.
Advantages of being an FBA Seller:
- Buy Box priority: FBA sellers almost always receive the Buy Box.
- Lower Shipping Rates: Amazon shipping costs as part of the FBA program will very likely be lower than if you were to ship your items on your own.
- Returns: Amazon will handle all returns.
- Customer Service: Amazon’s 24/7 Customer Service team will take care of all customer service related services by both phone and email.
- Amazon Prime: FBA sellers qualify for the Amazon Prime program with more than 85,000,000 subscribers.
- Storage space: FBA sellers send a portion of their inventory to Amazon which frees up some storage space.
- Credibility: By having the “Fulfillment by Amazon” logo next to your products, customers find you as a seller to be more credible.
Disadvantages of being an FBA Seller:
- Complicated fees: Being an FBA seller isn’t free, and the way Amazon calculates the fees is quite complicated. The costs are based on the size and weight of the products that you sell as well as where you sell them and how long the product is stored in their inventory. There are two initial FBA fees: fulfillment fees and monthly storage fees.
- Return box: As an FBA seller, you will receive a large box with all of the returned products. This creates a potential risk of customer fraud more than with FBM sellers who can match the returned item with the customer.
- Complete reliance on Amazon: As an FBA seller, if a customer has an issue with a product or if the wrong product is sent out to a customer, then that item will either need to be removed or sent back to you. Because you do not have access to the inventory, you rely on the warehouse staff to make sure the orders are fulfilled correctly and promptly.
Branding: All of the shipping boxes with your products will have Amazon branding on them. This makes it more challenging to build a reputation and form a connection with your customers.