Fulfillment by Amazon, precisely known as FBA, is a storage and shipping service offered by Amazon on behalf of sellers. As a seller, all you have to do is send your products to Amazon’s Fulfillment Centers.
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Amazon then takes over picking, packaging, storage, and sending it to the respective buyer. It is also the work of Amazon to take care of post-sale services such as returns, refunds, and customer service.
As a business owner, this could sound like a good plan for your business, especially if you are operating an e-commerce business. So, is Amazon FBA worth it? Also, what are the downfalls of incorporating this service into your business?
Below is all you need to know about FBA services:
How does Fulfillment by Amazon work?
FBA services are not complex to understand. However, you could be confused, especially if you are new to the whole e-commerce business. To simplify it for you, below are three easy steps that explain how FBA by Amazon works:
Step 1: Sending products to Amazon’s fulfillment centers
The first step is the seller sending the products intended to be sold to the Amazon fulfillment center. However, you need to have an Amazon seller account before doing that. Also, make sure to have your products listed on your seller’s account. Otherwise, your products could just sit in an amazon warehouse for not being on sale.
All products are required to be labeled. You can choose to do that independently or through Amazon’s label service.
Step 2: Storage by Amazon
At this stage, your inventory has already reached an Amazon fulfillment center. The products are scanned to confirm the label attached, weighed, measured, and then stored accordingly. It is your duty as a seller to use online inventory tracking to know when to ship more products to the warehouse.
Step 3: Purchase of products on Amazon
When a product is purchased, it is the work of Amazon to pick it from the storage, package it, and send it to the respective buyer. Also, Amazon will provide the needed customer service throughout the purchase and after if need be.
Benefits of using the Amazon FBA services
Every business is different and with diverse requirements. Are you an e-commerce business owner thinking of turning to FBA services? Well, that could be all you need to scale up your business due to all the advantages this Amazon service offers. So, what are some of the advantages of incorporating FBA services into your business?
1. Cost-friendly shipping rates
Customers turn to online retail to avoid high shipping rates. Costly and fluctuating shipping rates could be a turn-off to potential customers. Thanks to Amazon FBA, sellers can now make their customers happier by offering them more cost-effective and competitive shipping rates.
2. Eliminated hassle for shipping and returns
It is a lot of work preparing an ordered item to be delivered to a customer. Now imagine the amount of time and energy you would have to consume sending products to about thirty customers in a day! If you are working with FBA, Amazon will do the work for you. All you have to do is keep track of the sales and watch your numbers rise without having to break a sweat.
3. Top-notch customer service
As the sales of your business grow, you will start wondering how to handle all the sales and after-sales promptly. Customer service is an involved task since you will have to handle all the customers’ inquiries, complaints, and returns amongst many other things. Letting Amazon take care of the growing customer service will be a huge load off your shoulders.
4. Never have to worry about storage space
Deadstock is a great worry to business owners as it steals time and resources that could be used for business growth. Amazon FBA lets sellers store inventories in their warehouses without any limit.
Disadvantages of the Amazon FBA services
As mentioned before, businesses are different, with different needs and requirements. Therefore, FBA might not be ideal for every business. Below are some reasons why:
1. High costs
FBA comes in handy, but costly. Some businesses might not be able to pay for these services yet. The Amazon FBA is not ideal for low-cost products due to the high fees associated with the services.
2. Storage fees for long-term storage
While Amazon saves you from worrying about storage space, you will have to pay a fee for inventories that sit in their warehouse for the long term. From time to time, you will be forced to check on your budget to ensure that the FBA makes financial sense to your business.
3. Strict prep requirements
Amazon has a strict list of requirements to be met before sending inventories to their warehouses. Some of the requirements can be difficult for sellers to adhere to.