How to Sell on Amazon for Beginners Using FBA a Step by Step Guide
Fulfillment by Amazon (FBA) can be your ticket to the eCommerce big leagues. Having Amazon handle orders can boost your bottom line by as much as 20 percent and give you hands-off order processing. However, Amazon FBA isn’t for everyone. So, is Amazon FBA worth it for your business? This article will help you decide if you should sign up or pass.
Amazon FBA Beginners Guide: Definition, Cost, Pros & Cons
What is Amazon FBA?
Amazon FBA (Fulfillment by Amazon) is a service where sellers send their products to Amazon's fulfillment centers, and Amazon handles storage, picking, packing, shipping, and customer service on those items. Instead of doing these tasks yourself, Amazon takes care of them in exchange for fees.
With FBA, you'll need to properly prepare and label products to Amazon's specifications before shipping them to fulfillment centers. Using a prep service can help ensure your items meet requirements so there are no issues or delays. Once checked in, Amazon stores items until they are ordered, then picks, packs, and ships them to customers. This includes 24/7 customer service and handling any returns.
How Much Does FBA Cost?
The costs of FBA include:
Inventory Storage Fees: Amazon charges monthly storage fees that vary by item size and time of year. These fees cover the shelf space your items take up while waiting to be sold.
Fulfillment Fees: There is also a fulfillment fee charged per item when it sells. This covers Amazon's costs for picking, packing, shipping and customer service. Size is a major factor in fulfillment fee pricing.
See Amazon's FBA pricing page for full details on current storage and fulfillment fees.
Factors to Consider Before Using FBA
While FBA offers significant benefits, it also has some downsides to weigh. Consider these key factors when deciding if FBA is right for your business:
Benefits of Amazon FBA
Key advantages of FBA include:
- Prime eligibility for faster shipping
- Higher chance of winning the Buy Box
- Access to Amazon's customer service resources
These perks boost visibility and sales volume for FBA items. It's an easy way to scale up without added fulfillment workload.
Drawbacks of Amazon FBA
Potential disadvantages to weigh:
- Storage and fulfillment fees decrease profit margins
- Must adhere to Amazon's seller policies and returns
- Complex preparation process before shipping inventory
- Lose branding and customer relationship opportunities
Make sure to factor in all costs, risks and tradeoffs before deciding if FBA meets your business needs.
Is Amazon FBA Worth It?
For high-volume sellers, FBA can increase sales enough to justify the fees. Outsourcing fulfillment also frees up time for other priorities. But for low-volume sellers, the cost may not make sense. Use Amazon's FBA calculator to estimate profitability based on your products.
Consider if your business is positioned to benefit from FBA or if you would be better off handling fulfillment in house for now. Leverage FBA's advantages where it adds value, but don't force it if the fees will eat up margins.
Next article: 6 Key Factors for Choosing the Best Amazon FBA Prep Services
FAQs
What is Amazon FBA?
FBA stands for Fulfillment by Amazon. It is an Amazon service where sellers send products to Amazon's warehouses, and Amazon handles storage, order fulfillment, shipping, returns and customer service.
How much does Amazon FBA cost?
The costs include monthly inventory storage fees based on size and season, as well as order fulfillment fees charged per item sold. Fees vary broadly based on product size tier and category.
What are the benefits of Amazon FBA?
Key FBA benefits include Prime eligibility, improved visibility and higher sales. Amazon also handles delivery, returns and customer support so you can focus on growing your business.
What are disadvantages of Amazon FBA?
Potential downsides include reduced profit margins from fees, less control and branding opportunities, and complex prep/shipping requirements. Amazon sets the rules for sellers.
Is Amazon FBA worth it for small businesses?
FBA can provide a sales boost, but fees may not make sense for very low order volumes. Use Amazon's FBA calculator to estimate if it's profitable based on your products and sales.
How do you send inventory to Amazon FBA?
You properly prepare and label products per Amazon's requirements, then ship palletized inventory to designated Amazon fulfillment centers for checking in and storage.
Can you use FBA and still sell on your own website?
Yes, FBA and selling on your own ecommerce site can complement each other. FBA widens your distribution while you still build direct customer relationships.
What is FBA prep service?
An FBA prep service handles labeling, bundling and palletizing inventory to meet Amazon's specifications so sellers avoid problems sending products themselves.
