What is Amazon FBA? How does it work? This beginners’ guide instructs how you can utilize Amazon’s service to store and ship your products through the Amazon website.
Amazon FBA is a very fitting eCommerce solution for new entrepreneurs or sellers who want to earn additional income or both! If you are planning on selling online, go for Amazon. It is undeniably one of the largest eCommerce companies in the world.
Whether you have previous experience on Amazon or you’re exploring your options, you probably have heard of Amazon FBA or Fulfillment by Amazon. It is an incredible eCommerce solution for sellers because Amazon does the hardest work, including storage management, shipping, and customer care. At this point, you should be asking:
How to become an Amazon FBA seller?
Look no further because, in this article, we guide you to the world of Amazon FBA.
Table of Contents
- What is Amazon FBA?
- How does Amazon FBA work?
- Amazon FBA process
- What are your responsibilities as a seller?
- Amazon FBA fees
- Monitor your inventory
- Is it suitable for my business?
- The Best Repricer for Amazon FBA Sellers
What is Amazon FBA?
If you want to sell on Amazon, there are three ways how sellers can handle order fulfillment. You can choose to pack and ship the product yourself, and if this is the case, Fulfillment by Merchant (FBM) and Seller Fulfilled Prime are the ways to go. However, if you decide to outsource this process, Amazon FBA is for you.
Fulfillment by Amazon or FBA is a service that Amazon provides for the sellers that join the program. The sellers benefit from effortless storage, packing, and shipping services. Amazon employees even take care of refunds and customer support. It is an easy solution from the seller’s perspective because it allows them to focus on improving their business.
Listing items both FBA and FBM on Amazon
A seller can switch between fulfillment options when necessary. Additionally, Amazon also allows the same product listed for both FBA and FBM. There are multiple benefits for Resellers and Private Labels to do this. However, in order to manage their listings effortlessly, they should trust tools with proper technology that can handle listings simultaneously.
How does Amazon FBA work?
As mentioned before, Amazon stores, packs, and ships the products on your behalf. You send your inventory to the Amazon fulfillment center, which they have over 175 worldwide. Even though Amazon handles the heaviest lifting from the logistics perspective, the seller is still responsible for choosing the product, maintaining inventory, and marketing. The Amazon service isn’t free either. There are various fees you should consider, but we’ll get into them in more detail later.
Amazon FBA process
The Amazon FBA process itself is quite simple and requires minimal effort from the seller.
- Ship Your Inventory Ship your products (either from you or your supplier) to the Amazon warehouse. Amazon scans your products and puts them available for sale.
- Let Amazon Manage Fulfillment After a customer places an order, Amazon packs the product and ships it to the customer. Your inventory is updated automatically.
- Wait for Your Profits Amazon collects the payments and sends you profits every two weeks.
- Utilize Amazon Customer Service If any problems occur, the Amazon service team takes care of questions, order returns, and refunds.
What are your responsibilities as a seller?
- Choose your products. Amazon handles the heavy lifting but finding and sourcing the products is on you.
- Keep your inventory up to date. Amazon warns you when inventory levels are low. Make sure to refill the stock when necessary.
- Create your product listings. It’s really important that your customers find your products on Amazon. For this reason, focus on effective listings and titles.
- Market your products. There are many marketing efforts you can utilize to make sure people find your products. One of them is advertising on Amazon with PPC (pay-per-click) ads.
Amazon makes selling incredibly easy for third-party sellers, but there are several kinds of fees for selling on Amazon. Moreover, selling in the first place requires that you sign up for an Amazon account and select your selling plan. For the selling plan, there are two options to choose from: you can either pay per sold item starting at $0.99 or pay $39.99 per month.
Amazon FBA fees are costs that Amazon charges from the fulfillment service. You should consider at least three types of fees: fulfillment, referral, and inventory storage fees.
The greatest advantage of Amazon FBA is inventory management and storage. However, this handy perk comes with a cost. It is a fixed fee and the amount is based on the size and weight of the product. Luckily, Amazon has clear size tiers that the seller can use to calculate the exact fees.
Depending on the product category, Amazon charges an additional fee for each sold product. The cost is based on a certain percentage but typically starts from a minimum of $0.30 per product.
Inventory Storage Fees
Amazon charges a monthly fee based on the cubic feet volume for space your inventory in fulfillment centers. The fee is charged based on the volume that the properly packaged and shipment-ready product takes. Note that the fee varies depending on the month and whether they require special handling.
Dangerous and special handling goods
Monitor your inventory
The key point of keeping your Amazon business profitable is to monitor your inventory. Too high inventory turnover means a stock-out risk and too low can drastically increase your expenses. In addition to the monthly storage fees, Amazon charges long-term storage fees if your items are stored for over a year. The fee is $6.90 per cubic foot or $0.15 per unit, whichever is greater and is deducted monthly. With the help of the Inventory Health report, you can keep track of the inventory.
Is it suitable for my business?
Amazon FBA provides incredibly low-barrier access for third-party sellers to get into eCommerce and grow their online businesses. However, it won’t be ideal for everybody. There are many business models and it’s up to you to decide which works the best for you.
Amazon FBA is an excellent choice if you wish to expand your business. The fulfillment service allows you to focus on new products and making sales. Time management becomes efficient when time-consuming fulfillment tasks are outsourced. Keep in mind that you don’t have to stick to on fulfillment strategy. Altering between options can be beneficial. The choice depends on your business model, product’s size, demand, and profitability among other key factors.
The Best Repricer for Amazon FBA Sellers
If you want to be a serious seller on Amazon, you need the right tools to grow your business. Repricer is a software that automatically adjusts prices of your products. Eva Intelligent Repricer is an AI-powered solution that considers all the different factors and ensures you win the Buy Box with the optimal price. It allows you to handle repricing effortlessly while maximizing profits.
Unlike other repricers, Intelligent Repricer does not limit the potential of your Amazon business. Eva’s advanced technology is capable of managing thousands of SKUs and provides you insightful data in a single Dashboard. Since the monthly pricing is based on your revenue, you don’t need to worry about excessive costs.
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