Fulfillment by Amazon (FBA) provides an effective strategy for any company that bases its business model on online sales. If you’re a professional seller, Amazon fulfillment services can help you avoid several fulfillment headaches while improving your operational capacity.
Businesses looking toward offering their products on the Amazon store have two choices in handling their fulfillment processes: fulfillment by merchant (FBM) or fulfillment by Amazon (FBA). While Amazon FBM requires business owners to manage their own fulfillment logistics, FBA guarantees that Amazon’s fulfillment specialists will deliver your products directly to your clients’ doorsteps.
In this article, we’ll discuss how FBA works. Likewise, we’ll delve into how eCommerce fulfillment services can help you reduce your overhead while still delivering high-quality products to consumers.
What is fulfillment by Amazon (FBA)?
Fulfillment by Amazon (FBA) is a service provided by Amazon that allows sellers to store their products in Amazon’s fulfillment centers. Amazon handles the storage, packaging, and shipping of the products to customers and provides customer service and returns handling.
Why is fulfillment important?
Working alongside a third-party fulfillment service has become essential in today’s globalized marketplace. Since Amazon handles most of the heavy lifting, businesses can deliver multi-channel fulfillment to customers without breaking a sweat.
There are hundreds of Amazon fulfillment centers located all over the world. Under certain conditions, an eCommerce business can start shipping products to other countries incurring extra costs, including oversized products. Thus, eCommerce businesses that utilize this fulfillment network can leverage international shipping and substantially expand their operations.
While some companies only start thinking about fulfillment partners at a particular stage of development, others will allow a fulfillment company to manage their entire fulfillment process from the start. Amazon provides a solid infrastructure for shipping products alongside resources such as Amazon Seller Central, which can become an indispensable tool for any eCommerce seller.
What are the advantages?
- Free shipping
- Amazon handles customer service and returns
- New customers reach
- Business management tools
What types of businesses should invest in fulfillment?
In today’s globalized economy, the FBA fulfillment option benefits any type of business. Not only will a multi-channel fulfillment solution make delivering products to customers more accessible, but you will also be able to efficiently deliver a more extensive product selection.
How FBA works
Becoming an online seller using Amazon’s FBA is a straightforward process. Following these steps, you can ship items using Amazon’s specialized services in no time.
- Establish what type of product you wish to sell: Before considering third-party sellers or shipping costs, you should envision what profitable product you want to offer the world. This includes finding a supplier or manufacturer, listing, and promoting your product.
- Deliver your products to Amazon: You should ship inventory to an Amazon fulfillment center, where all types of products are stored. Not only will your products be stored in one of these centers, but Amazon will also use its labor force and inventory management software to ensure your wares are being cared for properly.
- Sit back and watch the magic happen: Once Amazon has received your product, their advanced fulfillment networks will do all the work. If a customer places an order, all processes and item fees are handled by Amazon. Likewise, you can rely on Amazon to manage shipping notifications, tracking, customer inquiries, and even product returns.
FBA Inventory Management
The FBA Inventory Management is a tool where you can list products, create shipping plans, send in shipments, track and monitor your purchases, and remove inventory from Amazon fulfillment centers.
Within the FBA Inventory Management tool, you will
- Have access to Inventory Performance Dashboard
- Manage excess inventory
- Track inventory age
- Fix stranded inventory
- Restock inventory
Tips for growing and scaling your FBA business
Don’t be afraid of starting small
If you’re just starting, you should avoid the higher costs, such as monthly storage fees, that come with shipping a wide variety of products to customers. In contrast, limiting your portfolio to only a selection of in-demand items will allow you to learn the ropes of eCommerce order fulfillment more easily.
Choose the right inventory
It is indispensable to do your research and select product categories that drive customer satisfaction and are easy to deliver to fulfillment centers.
Essential factors to consider are:
- If the profit margin is high enough to justify your investment
- The competition
- The current customer demand for the item
- The product size tier. For instance, standard-size products will be easier to manage than larger ones.
- The target market. Offering an item that belongs to a popular market niche may help increase your customer base.
Look into Amazon’s advertisement solutions
Amazon Ads can help your brand stand out, potentially reaching millions of customers. Sponsored Products and Sponsored Brands are two advertising solutions available to Amazon users. While the former promotes individual listings, you can use the latter to showcase your entire brand.
Consider reaching out to influencers
You can improve your visibility and relationship with your customers by partnering with an Amazon influencer relevant to your target market. Influencers can demo your products and handle customer questions while increasing brand awareness, lead generation, and traffic to your website.
Make sure your prices are competitive
Pricing can have a drastic impact on the customer experience. If your competition offers an identical product as you but at a lower price, they will have a better hold of the market than you.
Use high-quality promotional material
The best way to manage customer expectations is by offering them high-quality images and videos of the items you wish to sell. This way, they can better assess what they’re buying, leading to fewer customer service issues.
How much does it cost to start an Amazon FBA?
Costs vary depending on
- Selling plan
- Product category
- Fulfillment strategy
There are two options for the selling plan. The first is the individual plan, which costs $0.99 per unit sold, or the second is the professional plan, which costs $39.99 per month no matter the units you’re selling. There are additional fees for referral and fulfillment, alongside long-term storage or advertising.
Is FBA Worth the Cost for Your Business?
Amazon is a competitive marketplace, and it will take considerable time, money, and effort to succeed on the platform. However, the advantages of FBA far outweigh the hassle of competing on Amazon.
Vantree’s eCommerce integration is an essential asset for business owners looking to expand their capacities to sell on Amazon and other virtual marketplaces such as eBay. With Vantree, you can create your own customized omnichannel shopping experience, improve your operational efficiency, and increase customer satisfaction.