What is Amazon FBA? FBA stands for Fulfillment by Amazon.
To sum it up, Amazon FBA fulfills your customers’ orders for you.
The basics: When you sign up as an FBA seller, you send your inventory to any of Amazon’s FBA warehouses (Amazon will specify which location you need to ship your inventory to). When you receive an order, Amazon ships it instead of you handling the shipping yourself.
Fulfillment by Amazon was created to keep up Amazon’s strict commitment to customer satisfaction. When Amazon handles your inventory, shipping, returns, etc., they are able to keep the majority of customer service in their hands and out of yours as a seller.
What are the benefits of Amazon FBA?
Amazon FBA increases profits.
Many sellers increase their profits selling through FBA. One perk is that as a seller, you can avoid the costs and aggravation of storing inventory, dealing with shipping, and other similar issues.
Chitagam Saluja, a Paralegal at Rosenbaum Famularo, PC states that:
“One of the greatest benefits provided by using FBA is that Amazon provides storage for your products. This is an extremely cost-effective benefit as compared to renting a warehouse yourself.”
Amazon FBA qualifies your listings for Amazon Prime, free shipping and other benefits. When you sell through FBA, you’re able to reap the benefits of Amazon Prime, a service that just about every Amazon customer knows and loves. You also receive the benefit of free shipping on eligible products, and the “gold star” next to your listings – that is, the Amazon Prime logo.
Amazon FBA is cost-efficient.
All of your shipping fees (including Amazon Prime and free shipping) are included in your fees with no extra charge. Plus, you’re only charged for the storage space and the orders you fulfill.
Amazon FBA takes the stress out of customer service.
What is FBA handy for besides inventory management, shipping, and a sales boost? Less stress. As an FBA seller, you don’t need to worry as much about dealing with customers – Amazon will handle the customer service and returns for you.
Chitagam Saluja adds, “Orders are shipped by Amazon in a timely manner and they process returns directly; this dramatically cuts down on sellers’ return process time.”
Amazon FBA allows multi-channel fulfillment.
This is one of the best parts of becoming an Amazon FBA Seller – Multi-Channel Fulfillment. That means the inventory you store in Amazon’s fulfillment centers isn’t only eligible for sales on Amazon – your inventory can be sold on other e-commerce platforms through the FBA warehouses, even though the warehouses are of course, operated by Amazon.
What are the downsides to Amazon FBA?
There are a few downsides of FBA that you should consider before signing on to become an FBA seller. Here is a quick rundown of the negative aspects of FBA:
Strict Requirements for Shipping.
Depending on your product, you will need to abide by the rules and regulations set forth by Amazon FBA when it comes to shipping.
Here are a few of the packaging rules for shipping products through FBA:
- Remove every old shipping label or any other marking, logo or branding if you are reusing boxes
- Use exactly 2 inches of padding between all of the items inside your shipment box.
- All barcodes must be completely covered up or removed entirely if you use recycled boxes for FBA shipments.
Strict Requirements for Packing Items.
The items you send to an FBA warehouse must only be the specified materials approved to pack those products. That means bubble wrap, polyethylene foam, sheets of paper, or air pillows that can be inflated. Nothing else. If you use foam peanuts, any other packing peanut material, wrap that may crinkle, or paper that shreds, your FBA shipment will be returned – and you’ll have to pay for it. Amazon FBA is detrimental if you do not follow the regulations Amazon sets forth.
Inventory Risks if your Account is Suspended.
If you have inventory in FBA and your seller account gets suspended, you must handle the suspension immediately or risk losing your inventory. This can be very risky if you have very valuable items stored in the FBA warehouses.
Paralegal Sean Law of Rosenbaum Famularo, PC states:
“Sellers need to be careful when utilizing FBA because once you start using the program, you are automatically enrolled in two other Amazon programs: Commingling and Repackaging. These programs involve the commingling of your inventory with that of other sellers and the repackaging of returned products. These can be devastating to a sellers account; be aware.”
Paralegal Ashley DiPinto adds,
“Customers should opt out of Commingling and Repackaging in the seller’s central account under the Settings tab, FBA.”
Overall, the benefits make it quite enticing for sellers. When selling on FBA, it can catapult a business’ profits a thousand times over as long as the rules and regulations are followed.
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