Amazon FBA (Fulfillment by Amazon) is a service Amazon offers, which handles all the packaging and shipping of your products to customers.
Sellers can send in their inventory to be stored in one of Amazon’s fulfillment centers, and when a customer orders an item, it is shipped from that store to the customer.
This service eliminates the need for you to maintain a warehouse and saves your time and money. It gives you an edge over competitors who don’t avail of this service.
Read on to learn more about Amazon FBA inventory, how it helps you grow your business on Amazon, and its cost implications.
Table of Content
- How Does FBA Work – A Step by Step Guide
- Amazon FBA Inventory Fees Explained
- The Advantages of Using Amazon FBA
- Logistics Support and Scalability
- Fast and Free Shipping
- The Buy Box Advantage
- The Disadvantages of Using Amazon FBA
- It’s Not Free
- Inventory Management Headache
- Limited Branding
How Does FBA Work – A Step By Step Guide
Initially, all the sellers willing to become a part of FBA inventory need to decide their fulfillment strategy while creating a product listing or putting a product for sale on Amazon. You must also learn about how to improve listing quality on Amazon in order to take your business to heights.
However, they can still switch between fulfillment strategies whenever they want.
The FBA process is extremely easy –
- Sellers first obtain the products and then ship them to an Amazon warehouse center. Amazon will then provide details of warehouse centers like contact information and address.
- All the products remain at the warehouse until a customer places a new order. However, a storage fee is charged depending upon the size or volume of the item.
- Amazon secures the transaction and updates your inventory as soon as an order is placed.
- The company takes care of packaging and shipment.
- A particular customer care team is assigned, which manages the order after the transaction. The returns and refunds are also taken care of by Amazon itself.
- Amazon will send the profits you make on the sale of your products, after every two weeks.
An important point to keep in mind while shipping your products to Amazon fulfillment centers is that sellers are strictly required to follow Amazon’s packaging guidelines.
Amazon FBA Inventory Fees Explained
After joining the Fulfillment by Amazon (FBA) program, the most significant advantage you get is inventory management and storage. As an Amazon seller, you’ll be saving a huge amount of money for upfront capital and storage centers.
Although you need to pay a nominal monthly fee for Amazon inventory and fulfillment centers.
The fees depend on the size and volume of the product and the time of the year in which it is stored. Usually, the prices increase during the holiday season (October to December).
The Advantages of Using Amazon FBA
1. Logistics Support and Scalability
This is one of the most incredible features of Amazon FBA to date. Amazon guarantees the storage and shipping of your product which lets you save a considerable amount of your money on buying new storage. You can easily focus on scaling up your business.
If your business is skyrocketing and you’re able to sell more, Amazon will automatically manage your shipping costs. You only need to ensure that your stock never goes empty.
2. Fast and Free Shipping
Amazon always tries to keep both sellers and buyers pleased with its special launches. One such thing is Amazon Prime. It offers super-fast deliveries for all the products.
All the sellers directly join Prime membership after they join the FBA program.
However, non-FBA sellers can join Sellers Fulfilled Prime (SFP), but they must qualify for its eligibility. They should have a clean sales history and a couple of good feedbacks.
The Buy Box Advantage
If you have a professional seller FBA account, your chances automatically increase to win the Buy Box.
Buy Box allows the customer to directly purchase the product or add it to the cart from the product listing page itself.
As an Amazon seller, if you’re successful in winning the buy box, you’ll see a massive boost in your business.
The Disadvantages of Using Amazon FBA
It’s Not Free
You must have understood till now that becoming a member of Amazon FBA is not free; it requires a minimal fee. Since Amazon stores your products over months, it has to pay the amount for its storage facility.
However, if you’re selling small products and have a low turnover, it would be a little costly for you to join FBA. Businesses with high turnover (high-volume sellers) are perfectly suitable for the Amazon FBA inventory program.
Inventory Management Headache
All those sellers who’re not directly involved in the sales process might find it challenging to track their inventory and keep an eye on their products.
Anytime if your product goes out of stock, Amazon will reduce its ranking and visibility, resulting in lowering your sales and revenue.
To avoid this, the sellers are advised to analyze their inventory details.
Even if it’s your product, they are delivered with Amazon’s logo and brand name. In this case, you’re losing your brand identity.
If you’re looking to create your brand identity, it’s not possible with fulfillment by the Amazon program.
Traditional sellers have to purchase inventory in large quantities and store it in their own warehouses, which can be expensive. Alternatively, you could become an Amazon FBA seller, where the platform provides all of the storage or shipping for you. In easy steps, you can learn how to create and manage inventory on Amazon?
This allows you to list your products on the world’s largest retailer with little overhead and then send them in bulk to Amazon’s fulfillment centers. Once they are there, they are shipped out to customers based on their orders.