Amazon FBA tips

Is Amazon FBA Right for Your Business?

Amazon FBA tipsIf you are selling products online, you may be doing so with a marketplace like Amazon, which can be a profitable enterprise for online sellers. As your business increases, you may have considered using Fulfillment By Amazon (FBA) to streamline your selling and appeal to more customers. But how do you know if Amazon FBA is right for your ecommerce business? We’ve answered some questions to help you decide if Amazon FBA is right for you.

When Does Using FBA Makes Sense?

If you are already using Amazon and you are averaging over 40 products sold each month, then you should consider FBA for the following reasons:

  • Amazon FBA is a better value than other fulfillment services.
  • Customers that meet a certain minimum order amount are offered free shipping by Amazon FBA. This encourages customers to make additional purchases.
  • FBA offers your Amazon Prime customers free 2-day shipping on your products.
  • Customers trust Amazon’s brand, so knowing that Amazon is fulfilling their order instills confidence.

Note: You don’t have to list your products on Amazon to use FBA’s infrastructure, but you probably should. Amazon likes to “keep it in the family.” What I mean by that is the best FBA advantages are for those selling on Amazon. Before you decide to use these Amazon FBA tips for fulfillment for other sales channels, shop other fulfillment companies to see what is best for your budget.

How Does FBA Work?

Basically, there are two ways that your online business can use Amazon for your customers’ order fulfillment:

  1. Fulfillment by Amazon: This is offered to online businesses that are already using the Amazon marketplace to sell their products. In other words, the customer shopped and found the item on the Amazon marketplace.
  2. Multi-Channel Fulfillment: As mentioned before, this is offered to online businesses that sell their products through another online marketplace, like eBay or Etsy, or through their own online store. This means that the customer did not find the product on Amazon, but the order will be fulfilled by Amazon.

Where your products are listed will make a significant impact on the cost of using Amazon for order fulfillment.

What Does FBA Cost?

What you pay for FBA depends on three factors: Shipping, handling, and storage fees; the type of products you offer; and referral and sales fees. The costs will be higher for using Multi-Channel Fulfillment versus Amazon FBA.

The following is how the fees are broken down for FBA:

MediaNon-MediaOversizeZero-Fee Fulfillment
Order Handling$0.00$1.00$0.00$0
Pick & Pack$1.06$1.06$4.09 – $10.53$0
Weight Handling$0.50 – $1.24 + $0.41 per lb.
above the first 2lbs.
$0.50 – $1.24 + $0.41 per lb.
above the first 2lbs.
$2.06 – $124.58 + $0.92 per lb. above the first 90 lbs.$0
Special HandlingN/AN/A$40
(specific products only)
N/A
Storage Jan – Sept43¢ – 54¢
per month,
per cubic foot
43¢ – 54¢
per month,
per cubic foot
43¢ – 54¢
per month,
per cubic foot
43¢ – 54¢
per month,
per cubic foot
Storage Oct – Dec57¢ – 72¢
per month,
per cubic foot
57¢ – 72¢
per month,
per cubic foot
57¢ – 72¢
per month,
per cubic foot
57¢ – 72¢
per month,
per cubic foot
Selling Plan$39.99 per month (if above 40 items sold)$39.99 per month (if above 40 items sold)$39.99 per month (if above 40 items sold)$39.99 per month (if above 40 items sold)
Referral Fee15% of product price (for most product types)15% of product price (for most product types)15% of product price (for most product types)15% of product price (for most product types)

 

The following is how the fees are broken down for Multi-Channel Fulfillment:

MediaNon-MediaOversizeZero-Fulfillment
Order Handling$1.90 – $14.40$4.75 – $14.75$7.00 – $17.00N/A
Pick & Pack$0.60$0.75$3.00N/A
Weight Handling$0.45 per lb. – $2.00 per lb.$0.45 per lb. – $2.00 per lb.$0.50 per lb. – $2.00 per lb.N/A
Special HandlingN/AN/A$85.00 – $125.00
(specific products only)
N/A
Storage Jan – Sept43¢ – 54¢
per month, per cubic foot
43¢ – 54¢
per month, per cubic foot
43¢ – 54¢
per month, per cubic foot
N/A
Storage Oct – Dec57¢ – 72¢
per month, per cubic foot
57¢ – 72¢
per month, per cubic foot
57¢ – 72¢
per month, per cubic foot
N/A

 

This is not an inclusive list of fees, but it gives you an idea of what you may be looking at if you decide to use Amazon FBA or Multi-Channel Fulfillment. You can find more fee information and the product category breakdown on Amazon’s website.

What Are the Benefits of Using FBA?

When you list your products on Amazon, you are making them visible to a huge market. At the end of 2015, Amazon boasted 304 million customers globally – 54 million of which subscribe to Amazon Prime in the U.S.

When you use FBA, your Amazon Prime customers are eligible for free shipping, which is a deal-maker for many customers.

On your product page, your store is listed as the seller and Amazon is listed for order fulfillment – and customers like that. Building a brand is difficult, especially for dropshippers selling on Amazon, but the added trust factor of FBA is a nice boost.

Using FBA allows you to make more sales and lower the cost of order fulfillment.

Is FBA Right for You?

The bottom line is, by using Amazon FBA you are leveraging Amazon’s recognized and trusted brand to increase your visibility and sales on Amazon. FBA’s fulfillment costs are competitive and it will save you valuable time. If you are already selling on Amazon, but not using FBA, it’s likely that you are missing out on sales by following these Amazon FBA tips.

Thinking about using Amazon FBA, but worried about managing your Amazon FBA inventory? We can help you do that.

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About the Author

Jami

Jami is a blogger for ecomdash. She is an advocate for mental health awareness and addiction recovery, drinks her weight in caffeine every day, and has a deep affection for fine-point pens.

 

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