What is Amazon FBA?
FBA means fulfilled by Amazon. With the Amazon FBA program, you choose what you want to sell, send it to Amazon, and they do the rest for you.
It’s a model that is growing in popularity. Because Amazon FBA makes it easier for you to build your business without having to worry about the logistics of warehouses, packaging materials, couriers and so on. With private labelling, you also have the opportunity to build your own brand, increasing the value of your business.
In this picture we can see that “Hyatt’s All Things Creative” is selling this fluid acrylic paint set on Amazon. They are also using the fulfilled by Amazon programme.
When a third party seller sells on Amazon using FBA, the item pages look just as they would if the item was being sold by Amazon. Most customers do not even notice who the item is being sold by. They are just interested in the item price and the delivery speed.
Amazon has built its huge customer base by offering fast and free delivery through its Prime service. There are over 60 million Amazon Prime members today and they are most likely to purchase items offering prime delivery.
Benefits of FBA
- All FBA offers show to customers as ‘fulfilled by Amazon’
- FBA items are enabled with Prime
- Offering items with FBA gives customers confidence because they trust Amazon delivery
- Increases your chance of winning the buy box
- Amazon provides customer support and deals with the logistics of returns
- If you are using an e-commerce platform that syncs with Amazon such as Shopify or BigCommerce, you can automatically sync your orders to Amazon multi channel fulfilment and enjoy the ease of automation that FBA affords.
How to sell with FBA
Things you must do:
- Find a product to sell on Amazon
- List the product on Amazon and opt for ‘fulfilment by Amazon’ (listing doesn’t go live at this point)
- Prepare the items to send to Amazon’s warehouses in accordance with Amazon FBA shipment guidelines
- Ship the items to Amazon’s warehouses
What Amazon does:
- Amazon unpacks and stores your inventory for you
- Your product listing goes live on Amazon
- Your product is featured as a Prime Eligible purchase
- Amazon Processes and manages any orders
- The Amazon warehouse workers find, package, and ship your product to the customer
- If the customer is unhappy, Amazon customer service handle all refunds, returns, and exchanges.
Amazon FBA is less time consuming for sellers than other e-commerce models. However, there’s still work for the seller.
As an Amazon FBA seller, it’s important that you do the following:
- Choose the right products – Ideally, you want items that are in reasonably high demand and are small/light to store and ship.
- Keep inventory in stock – Amazon will let you know when your inventory is running low. But it’s your job to make sure that you don’t sell out.
- Promote – Amazon is the world’s most popular marketplace, so there will already be a good stream of traffic to popular products. The marketplace is competitive though, and it’s likely that other sellers will be offering the same products. Therefore, you’ll need to do a little work to make sure people find your products.
What does it cost to sell with FBA?
The cost of selling with FBA depends firstly on how much you sell and which type of Amazon seller account you have.
There are two types of Amazon FBA seller accounts: individual and professional. Individual seller accounts are free but have higher sales fees. Professional accounts have a monthly subscription fee of $39.95, but lower fees so work out cheaper when you are selling regularly. As a guide, a professional account is the best option if you are planning to sell more than 40 items per month.
The individual account is a good option when you are just testing the waters and seeing if Amazon FBA is the right option for you.
Whatever kind of account you choose, Amazon FBA fees are split into two main categories:
1. Fulfilment Fees – charged per unit
Fulfilment fees include costs for:
- Packing
- Shipping
- Customer service
- Product returns
This cost will vary depending on the size and weight of each item.
2. Inventory storage fees – charged monthly
Storage fees for inventory are charged per square foot, and so will depend on the physical size and volume of items you wish to keep in Amazon’s warehouses.
Fees and profit margins are easily calculated using the Amazon FBA calculator.
What you need to get started
Selling with FBA does not require massive initial investment. Just the same things you would use for selling anywhere else online, and an Amazon account.
- Computer, printer, and smartphone
- An Amazon seller account
- Amazon Seller App on your smartphone
- Boxes, shipping tape, address labels, and a scale
- Money to spend on inventory and shipping products to Amazon
