In a world that can never get enough of Amazon, its flagship product delivery service—Fulfillment by Amazon (FBA)—received a massive response with members crossing over 2.5 million last year.
Despite all the positives, there are some grey areas that sellers must know.
In this blog post, we’ll determine the pros and cons of Amazon’s FBA (Fulfillment by Amazon) for current sellers and to-be-sellers.
Without much ado, let’s begin…
Pros of Using FBA
1. Top Quality Service
FBA sellers are eligible to enjoy the benefits that come with Amazon Prime. So, all the subscribers receive your products with free 1-day or even same-day.
In extension, you’ll be perceived as a seller providing top quality customer service. Although the service is rendered by Amazon on your behalf.
Reports (2020) confirm that Amazon prime membership worldwide has crossed 150 million. This is a testament to the trust online shoppers have on Amazon. And as an Amazon FBA seller, you become an indirect benefactor of its growing brand value.
2. Amazon’s Buy Box
Do you know ‘Buy Box’ has been an active contributor for generating more than 85% of the Amazon Sales every year? Recognize it as the ‘Buy Now’ button on any Amazon’s product detail page.
What does that mean for the Amazon FBA sellers? It means any retailer awarded with a ‘Buy Box’ will win the sale once a user clicks on ‘Buy Now’.
There is a catch; no one knows the exact metrics based on which Amazon picks Seller A over Seller B (or Seller C, D …) for the same product. Generally, the factors include order defect rate, product price, customer service rating, fulfillment method, and membership duration.
Save your time and use TURBO PIRANHA™ to get all the details of buy box prices on Amazon web site and the ratings of those sellers
3. Simplified Logistics
The best part about FBA is sellers need not bother about storing the products. All you’ve to do is ship your products in a single shipment to Amazon.
Amazon has nearly 170 fulfillment centers across the world. So, no matter from which corner of the world order is placed, Amazon is not far to ship your orders to the customers, in a day or two.
You’re holding zero inventory and hence bearing no cost of damage or spoilage. All your products are safely stored in Amazon warehouses.
With FBA, all the fulfillment process is managed by Amazon. From order cancellations, managing returns to handling customer queries, the Amazon support team will handle it on your behalf.
Practically, you’re worry-free.
4. Leverage Multichannel fulfillment
There is something so amazing about multichannel fulfillment for FBA sellers. Your products will still be delivered by the Amazon team if orders are placed from some other online shopping websites such as eBay.
How about comparing the prices of the same product on Amazon and eBay? TURBO PIRANHA™ offers custom links that can help you access and determine the availability of the same products listed on eBay.
Talk to the Support team today!
Simply put, you’re enjoying the top-notch shipping and customer service even if your products are sold on a third-party platform.
5. Increased Sales
Traditional selling demands your hard work and time unlike the fulfillment by Amazon (FBA) wherein you’re gaining more than one way to generate revenue. And do not ignore the money saved in inventory storage and shipping.
Amazon directly transfers payment, two times a week, in your bank account.
Ne one doubts the popularity of Amazon among shoppers worldwide, yet you’ll find products that are best sold on some other eCommerce site. Our Amazon Sales Estimator can help you with the Best Seller Rank (BSR) and estimated monthly sales (EMS) for each product while mulling over your investment in a product or not.
I’m sure all the advantages sound compelling, but there are some shortcomings worth paying attention to.
Cons of Using FBA
1. Poor Inventory Management
Sellers can add any number of products in the FBA list but it is not like everything will be sold out. So, the uncertainty lingers over the saleability of your products—apparently, stored in Amazon’s warehouse.
If you’re unsure if it’s profitable to keep your product in the FBA listing, our Amazon Seller software can help you estimate profits and margins. Make an informed decision to make the most out of your inventory stored in Amazon warehouses.
2. Paid Service
Nothing comes for free in this world, and no matter how big Amazon is, sellers have to pay to use the world’s biggest shopping platform. From using FBA service to closing your seller account on Amazon, you’ll be charged based on the type, size, weight, and even number of listed products.
- Typically, sellers have to pay anything between 8 and 15% in referral fees for each product sold.
- The closing fee is determined based on the price of your items.
- Fulfillment Fees can be ascertained after weighing and sizing up your products and shipping distance.
Determine all these charges to find the cumulative fees you have to pay for utilizing Amazon’s FBA service using TURBO PIRANHA™. Visit the website to watch the demo!
3. Long-term Storage Fees
While sellers enjoy the fastest shipping of your products, if the products are not sold for a long time, you’ll be charged for prolonged storage.
The company conducts a thorough inventory check on the 15th of every month and products stored in the US fulfillment centers for over 365 days are charged with a fee: $0.15 per unit.
Save extra bucks on storage fees by having monthly storage fees for your products. At any stage, you feel like delisting your products from the FBA, our Amazon FBA Fees calculator comes handy with its advanced features.
4. Easy Returns Is Uneasy for Sellers
Amazon buyers love easy returns more than the sellers. While impulse buying benefits retailers, customers can choose to return your products-adding more worries.
You’ve to deal with the inevitable.
5. Shipping To Amazon fulfillment centers ain’t that simple
Amazon’s FBA team does a lot for the sellers. However, retailers have to properly pack and label the products for shipping. Gather all the details to avoid any confusion among products added in the FBA list and those shipping to Amazon.
How about analyzing thousands of products using your purchase prices and any of these identifiers: UPC, EAN, ISBN, ASIN, GCID, Seller SKU, or JAN? Well, that reduces a lot of your burden using TURBO PIRANHA™.
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