If you take interest in eCommerce business, you might have noticed, in the last 3-4 months after Covid-19 took the world by storm, a lot of businesses have lost tremendously, if not gone bankrupt. However, Amazon is one such company, which not only managed to continue to do business but became the biggest company in the world. The sales in the last 3-4 months have skyrocketed. Amazon’s owner Jeff Bezos even has become the world’s biggest contributor to the Covid-19 response fund.
Every Tom, Dick, and Harry can benefit from Amazon’s Business. In fact, Amazon has a business model that allows anyone to do business on Amazon. This business is called Fulfilled By Amazon or FBA in short. Fulfilled By Amazon is one of the best models of online business that can be done with little investment. This business model takes away the pain of marketing and branding as you will be selling from Amazon store and under Amazon brand.
Making Money on Amazon
If you have heard about FBA for the first time, you might be really confused about how you can do business with Amazon or how this business model actually works. If you are looking forward to doing online business but do not have enough funds to launch your own online store or do not have enough funds for marketing and promotion, you can use Amazon’s selling platform. In this article, we are trying to explain what FBA is and how you can do FBA business. First of all, let’s look into the Amazon business model, Amazon distribution network, and Amazon’s customer base.
One of the easiest ways to make money on Amazon is by doing affiliate marketing. Amazon pays a commission to the people who refer buyers to the Amazon store. However, here we are trying to understand what FBA is and how FBA works. In the FBA model, you will be sending your goods to the Amazon warehouse and let Amazon include your item in its inventory. Your product will then be listed for sale. Since Amazon has your product, it will provide the fulfillment of everything including packing, shipping, return, replacement, and even refunds. This business model eliminates the hassles related to packaging, shipping, and even customer service.
FBA is for small business owners as well as big business owners, especially those who do not want to sell themselves. Fulfilled By Amazon business means that you will have the ability to act as a big firm but do not have to encounter headaches involved with being big entrepreneurs. This business model allows you to focus on product developments, product manufacturing, and product procurement because Amazon takes care of the rest of the things. When you are doing online business, it is crucial that you identify shipping logistics of your products to customers in a timely and fast manner, which is really hard if you are selling yourself. However, with FBA being around, prime members will have their products shipped to the buyers’ doors within five days of placing the order. The other common challenge in an eCommerce store is making an inventory and listing extra products for sale that may make your business additionally complex.When you have FBA, the only thing that you will do is shipping the product to the Amazon warehouse. From there, the firm will handle the rest for you.It will be quite easy to add your products without the need of adding more workload.
Fulfilled By Amazon (FBA) Business
Now that you know what exactly is FBA, the next thing you should know is how to use Amazon FBA. Before getting started with Fulfilled By Amazon business, make sure that the goods you want to sell are going to make money for you. Since Amazon charges FBA fees for storage and product handling, you need to make sure that the fees are not going to affect your profit margin in a bad way. These fees, however, may differ according to size, weight, and type of products.
After you decide on FBA business, the first thing you need to do is to create an Amazon seller account and then list your products. The next thing to do is to send your products to the Amazon warehouse. You may choose to label the products by yourself or give Amazon a small fee and they will do the labeling for you. After finishing with labeling or not putting labels on the products, you will now have to send them to the required FBA centers. You may also choose to send them to Amazon to utilize the fulfillment placement service of the company for product distribution. The choice you make depends on the inventory you have.
The first option is perfect for small inventory, while the second one suits to the large enterprises. With FBA, Amazon will handle all aspects from packaging, processing, to shipping of the products to fulfill the needs of the customer.
Fulfillment by Amazon or FBA is an online business model where indie seller, or even companies and third-party vendors send their products to the Amazon warehouse and use Amazon distribution network and customer base to sell products. When the product is purchased, Amazon packs and ships the product. Amazon fulfills everything related to the product that includes shipping, return, replacement, and refund in case the buyer is not satisfied (that’s why this business model is called Fulfilled By Amazon). FBA makes sure that Amazon is offering products from different vendors alongside its products.
FBA provides small as well as big vendors access to the web-to-warehouse picking and arranging system of amazon pay per click advertising and other services of logistics, giving the vendor enough time to focus on other business aspects. It charges the merchants for space of storage and a fee for the orders to be fulfilled. You need to use the Amazon FBA calculator to know how much it will cost you for shipping and whole day customer service.
How Does FBA Work?
FBA is selling your products through Amazon warehouse and using Amazon distribution network. In order to use the Amazon FBA business model, you will have to pay for Amazon FBA fees, how much you have to pay can be calculated by using the Amazon FBA calculator. Merchants in Canada, the United States, and Mexico are required to sell via their Amazon accounts. As a merchant, you can only add up to bulky products or one product at a time either by integrating the inventory management software with Amazon or by using the application program interfaces of Amazon. Listings on the website of Amazon can be viewed from the logo of Amazon Prime. There will be no more Amazon FBA fees for the free two-day shipping, and you will get free shipping for eligible orders. You can also integrate FBA into the website of the vendor for the customers to do shopping via Amazon minus leaving the site of the third party.
Amazon tells merchants utilizing its e-commerce service to make sure that the products are ready for e-commerce for them to be securely and safely transported to customers. It makes boxes, cartons, polybags, bubble pack, stretch wrap, and other shipping items with ease availability to sell on the vendors of Amazon. There may be Amazon FBA fees applicable for optional services and for selling on Amazon.
Benefits of FBA Business Model
Listings of FBA are displayed with the FBA logo, for the customers to know that delivery, packaging, returns, and customer service is provided by Amazon. Your listings of FBA on Amazon are sorted by the price of the product minus shipping cost as you are entitled to free shipping.
The other FBA benefits are that orders from FBA channels will fulfill your orders from sales by use of the inventory that is stored at the center of Amazon fulfillment. You will manage your inventory via a simplified user interface and will have the ability to redirect people to return at any moment. Additionally, customers will also benefit from the growing assortment of benefits like the up to minute countdown for single-day shipping and gift wrapping.
Here are some other benefits of FBA Business:
FBA eliminates the cost of selling for maximum profit
A lot of sellers make money by selling through FBA. One of the biggest advantages is that as the seller, you will avoid the aggravation and costs of dealing with shipping, storing inventory, and other minor issues.
The Amazon FBA qualifies your listing for free shipping, Amazon Prime, and other benefits. While selling through FBA, you have the ability to reap Amazon Prime benefits, a service that all Amazon customers love and know. You also get the free shipping benefit for eligible products, and a gold star just next to the listing, which is the logo of Amazon Prime.
All shipping fees are included in your Amazon FBA fees without any other charges. The fees include free shipping and Amazon Prime. Additionally, you will get charged for fulfilled orders and storage space.
FBA eliminates the hassle of customer service
Apart from sales boost, shipping, and inventory management, another benefit of FBA is it eliminates the hassles of customer service, thus giving you less stress. As a seller on FBA, you do not have to worry so much about handling customers as Amazon will take care of all logistics including returns and customer service for you.
FBA allows for multi-channel fulfillment
This is among the best perks of being a seller of Amazon FBA: multi-channel fulfillment. It means that the inventory stored on the fulfillment centers of Amazon is not only qualified for sale on Amazon but can also be sold on other platforms of e-commerce in the FBA warehouses, although the operator of the warehouses is Amazon.
What are the Downsides of FBA?
Are there any downsides to FBA? Of course, there are. There are several FBA downsides that you need to consider before agreeing to the terms of becoming a seller on FBA. Below is a quick rundown of the disadvantage of FBA Business.
Strict shipping requirements
Depending on the product, you have to abide by the regulations and rules set by Amazon FBA in the realm of shipping. For instance, below are a few packaging rules for products shipping via FBA; eliminate old shipping labels or other markings, branding, or logo in case you are reusing boxes. Utilize just two padding inches between the items in the shipment box. All barcodes will have to be covered completely or removed if you choose to use recycled boxes for your shipments.
Strict packing requirements
FBA sellers should only use packaging material specified by Amazon. This means you should use polyethylene foam, bubble wrap, inflatable air pillows, and sheets of paper. Do not take anything else there. If you utilize foam peanuts, the paper that shreds, wrap that may crinkle, or any other packing peanut material, your shipment will be returned, and you will have to pay for it. FBA can be really bothersome when you do not follow the required guidelines and regulations.
Risks of inventory in case your account gets suspended
In case you have FBA inventory and your account is suspended, you have to handle the suspension with immediate effect to avoid losing everything in the inventory. This is very risky when you have valuable items in FBA stores and warehouses.
Why do you need the FBA program?
Now that you know what FBA is and what are guidelines you need to follow, you should also know more about FBA program. Amazon FBA a game-changer for those who want to sell online. You need to remember that Amazon is crucial when you want to scale your business. Amazon FBA makes sure that the seller can scale the business up. Selling on Amazon by using FBA program beats out all other e-commerce models of business as Amazon will have a big part to play in the process of selling for the sellers. In the real sense, they handle the trickiest part that consumes a lot of time. However, there are things that you should handle and there are things that Amazon handles for you.
You need to start by finding the products to sell on Amazon. You will then have to list it on Amazon but your listing does not go live immediately. You will have to prepare the items and send them to the warehouses of Amazon. Amazon will unpack and store your inventory. The product will then become live on the site. The product becomes featured as the prime eligible purchase. When Amazon buyer places an order for your product, Amazon will package your produt and ships to the customer. The client receives after two days and becomes happy.
As you can realize, you bear the responsibility of the products you need to sell on Amazon and Amazon will handle the rest. After listing the products and sending them to the Amazon warehouse, they are ready for sale, and your job is done. After the product is ordered, Amazon will find the product, schedule the shipment, pack the item, and make sure it reaches the buyer immediately.
While selling on other platforms, you will make some profits but you will not have the ability or much room for scaling your business. Making more money means finding more products, creating more listings, shipping more items, storing more inventory, and handling more customers. You will spend a lot of time on business and the thought of doubling it will drive you crazy.
You will sell out when you realize that you could make more sales on Amazon. You can send items to Amazon and disappear for one week if you wish. The reason is that all sold items will be handled and processed minus your input.