11 Things Every Amazon FBA Seller Should Know
If you already are an Amazon seller, it’s time to enhance the entrepreneurial side of your business using Amazon’s Fulfillment service.
Being an FBA seller on Amazon has its pros and cons, but at the end of the day – if you do it right – it can be very beneficial. In this article, we will deep dive into the crucial things to remember when it comes to selling with Amazon FBA. You will arrive at the final decision if you want to become an Amazon FBA seller after weighing up all pros and cons. Let’s get started!
What Is FBA and How Does It Work?
FBA (Fulfillment by Amazon) is an outsourced shipping and handling service available to Amazon sellers.
FBA denotes that Amazon has entirely fulfilled your merchandise. When a consumer buys anything, Amazon picks it from the inventory, packs it, and ships it to them. Moreover, it is a program that allows Amazon sellers to register their products. Then they build their Amazon product listings. And after that, they prepare their products and ship them to an Amazon fulfillment center.
From there on out, Amazon takes care of all the normal duties related with order fulfillment. Customer service and refunds are included in this. From this point on, your life as an Amazon FBA seller will become a whole lot easier.
Who Is FBA for?
Well, let’s face it: FBA is not for everyone. That’s why it’s important to consider who it fits best. You need FBA if:
1. Your Company Has No Fulfillment Scheme in Place.
Amazon FBA is a streamlined, hands-off, and very straightforward service that allows you to focus on other things while Amazon handles your purchases. They’ll pack and ship orders, deal with returns and customer questions, and make your items Prime eligible.
2. You Sell Wholesale and Compete for the Buy Box.
When you buy things from established companies in quantity and resell them online for profit, this is known as wholesale sourcing. Private labeling, on the other hand, entails developing a product from the ground up that you can then label and trademark. When you use wholesale sourcing, you acquire branded items in bulk from a manufacturer and resale them on Amazon at full retail price.
FBA is a good option if you sell Wholesale, here’s why:
- Your items might become Prime-eligible, allowing them to participate in Prime Days and Cyber Days.
- You can provide your consumers with free shipping and same-day delivery.
- Your items may have a better chance of being ranked higher in the search results.
- It’s possible that your product listing can win the Buy Box.
- FBA Subscribe & Save, FBA Small and Light, FBA Pan-EU, Multi-Channel Fulfillment, and FBA Export are all options for expanding your Amazon FBA wholesale business.
3. You Are Expanding From a “Sell Out of Your Garage” Kind of Company to an “I Need Warehouse Space” Kind of Company.
Not all manufacturers have the time, staff, or resources to meet FBA’s product preparation standards. If a company is unable to prepare things directly, they can ship inventory to Amazon’s fulfillment centers. Third-parties who specialize in preparing items for Amazon run these facilities.
Note: Remember that if you sell items where close customer contact is part of your brand, do not use FBA.
If you’re considering using Amazon fulfillment services to handle your orders, there are a few things to consider before you start!
Key Things To Know When It Comes To Selling On Amazon FBA
#1 Don’t Rush
With Amazon FBA, as with so many other aspects of business, it’s best to take things slowly at first. There will always be unforeseen costs and obstacles. It’s preferable if you deal with those issues on a small scale. Begin by making a small number of products available for sale through Amazon FBA. Give it a try for a couple of months.
Evaluate your costs and income after a few months have passed. Determine if employing the service for a larger amount of your product will allow you to make a lot more money.
#2 Save Money by Creating Your Own FBA Shipping Plan
When you ship your items to Amazon for fulfillment, the business will determine which warehouse is ideal for your items. After a while, Amazon may decide that moving your products to a different warehouse is a smart idea.
Unfortunately, the seller is liable for the delivery charges in this case. The cost of shipping to the new facility is not covered by Amazon. By requesting your own delivery plan, you can avoid these unexpected expenditures and warehouse modifications.
Check out the guide how to create your own FBA Shipping plan here.
#3 FBA Can Be Expensive
There’s no way around it: when you use FBA, you’re going to pay Amazon seller fees.
FBA sellers on Amazon are charged for both storage and fulfillment by Amazon. Storage fees are established based on the amount of space your inventory takes up at fulfillment centers and are charged to sellers on a monthly basis.
You will not be charged for shipping up front. Shipping is included in Amazon’s fulfillment costs and is factored into FBA rates.
Using FBA has a number of distinct advantages. As an Amazon FBA seller, your products are eligible for Amazon Prime customers’ free two-day shipping option. Customers who are devoted to Amazon can order things online and have them delivered in two days at no additional cost to you or the consumer.
With FBA, Amazon makes it simple to track your income and expenses. Check out Amazon seller FBA calculator on this website.
#4 There Are No Sales Quotas In Place
If you want to be a member of the FBA program, Amazon doesn’t need you to move a set amount of merchandise each month.
Amazon recognizes that not all products are equal. Some goods have varying levels of demand than others.
All business owners, including those who do not move inventory quickly, can use FBA services.
#5 Pay for Shipping to Amazon Fulfillment Centers
Although the cost of delivery to customers is included in the FBA fees, you’ll still have to pay money to get your items to the fulfillment center.
When you use an Amazon-approved carrier, you’ll get a shipping label for the packages you’re sending to the warehouse. The expense is recorded as an “inbound transportation charge” on your FBA account.
With partnering carriers, Amazon also offers partial truckload and full truckload alternatives for Amazon FBA sellers. This is useful if you need to send a large number of items to a fulfillment center.
#6 Amazon Uses the FIFO Method to Determine Storage Fees
Amazon charges your company for holding your goods in its warehouse, as we’ve seen. These fees may vary depending on the season or volume.
I’m pretty sure that at this point your entrepreneurial curiosity has kicked in and you’re probably intrigued about how Amazon charges for storage space. It employs the FIFO (First In, First Out) technique.
When clients order your products, the first batch that arrives at the warehouse will be the first to leave. They won’t be charged a storage fee once they’ve left.
When new items arrive to replace old ones, they will be charged a storage fee until they are sold. If you send in some product during a low-rate season and another shipment during a high-rate season, you may be subject to different FBA fees.
#7 Amazon Charges a Long-Term Storage Fee
In addition to the standard fulfillment fees, Amazon FBA sellers can be charged a long-term storage fee if your inventory moves slowly.
The long-term fee applies to items left in the warehouse for more than six months. You’ll have to consider that fee into your cost-benefit analysis if you have things that are in extremely low demand.
You can utilize Amazon’s Inventory Age and Inventory Health reports to figure out which of your items are likely to be subject to long-term costs.
#8 Shipment And Storage Fees
In addition to commissions and other selling fees, you’ll have to pay for Amazon shipment and storage.
Regardless of the sale plan you use, you’ll still give Amazon a percentage of your transaction as a commission if you decide to handle shipping yourself.
Always remember to account for commission as well as all other costs related with selling things on Amazon and using Amazon fulfillment services.
#9 Follow Amazon’s Rules
This should be a simple task. Simply follow the guidelines.
Cutting corners and attempting to “take advantage of Amazon” won’t get you very far. It’s also a good idea to stay current on policies so you don’t make any errors.
Your account will be fined or perhaps suspended if you do not follow the rules.
Learn more about Amazon selling guidelines here.
Here are certain offenses that will result in you losing your Amazon selling privileges:
- Breaking intellectual property rules — If Amazon discovers that you’re passing off someone else’s creative work as your own, you can expect your account to be suspended.
- Manipulation or falsification of Amazon FBA seller reviews – Amazon has been cracking down on bogus reviews in recent months.
- Having multiple seller accounts — If you want to open a second account, you’ll need Amazon’s authorization.
- Poor product quality — If people complain about the poor quality of your products, Amazon will terminate your account.
#10 Own the Buy Box
Every seller aspires to be the owner of the Amazon Buy Box. It’s the box on a product description page where shoppers jump right into the buying process by adding things to their cart. As a result, those who win the Buy Box frequently notice a boost in sales.
The Buy Box is essential for sellers who sell the same products as others.
While we can’t tell you exactly what you need to do to win the box, we can tell you that competitive pricing, product availability, fulfillment options, and seller reviews are all important factors.
#11 Use Competitive Pricing
Many shoppers go to Amazon in search of the best deal. Sellers must be aware of their competitors’ prices and how to price their products competitively.
If you’re not selling one-of-a-kind items, you’ll need to do some research to see how much similar items are selling for. Check out the SellerLogic Repricer that can help you win the Buy Box and knock out your competitors.
Final Thoughts & FAQs
Remember that Fulfillment by Amazon is a terrific method to outsource a lot of the e-commerce headaches to a company with a stellar reputation.
When you get Amazon’s help, you will, however, pay a price. Before you sign up for Amazon FBA, make sure you estimate the cost and incorporate it into your prospective profit margin.
The right Amazon FBA seller tools will help you on your way!
If you decide to become an FBA seller on Amazon, check out our guide on Amazon seller FBA registration here.
New Amazon sellers are earning an average of nearly $30,000 in annual profits.
With 6.3 million total sellers, Amazon is one of the world’s largest seller platforms.
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