One of the things that you should pay close attention to when you're selling on Amazon is your fulfillment methods. It’s a topic that an Amazon FBA consultant can help you with. For this, you can either choose to go with Amazon FBA, FBM, or the lesser-known SFP. The acronyms stand for Fulfillment by Amazon, Fulfilment by Merchant, and Seller-Fulfilled Prime, respectively. Although FBA has more advantages over the other fulfillment methods, you are definitely free to choose whatever type will work for you.
If you're a new seller, one of the first fulfillment methods you're going to be introduced to is FBA. Basically, you're handing off the order processing and delivery to the Amazon fulfillment center. You don't have to pack the items ordered, label, or ship them one by one. Amazon handles all that work for you.
Now, the question for you to ask is: is Amazon FBA worth it? For the most part, it is worth it to have Amazon FBA as your fulfillment method. Especially if you’re targeting Prime members of Amazon. But for you to fully take advantage of FBA, you have to make sure that you answer the question, “How does Amazon FBA work?”
If you’re still not familiar with how this works, you can ask a trusted Amazon FBA consultant to help walk you through the whole process. In this way, you can ask questions such as “How do I start an Amazon FBA business?” among the other questions that might come up along the way.
If you choose FBA as your fulfillment method, your items will all be eligible for Amazon Prime. According to Statista's data, there were a total of over 150 million Amazon Prime members worldwide in 2019. 112 million of those Prime members were from the United States. That's how big of a market you're going to cater to if you choose to go for FBA for your fulfillment needs.
Pros: All sellers would want a wider market reach. As a seller on the platform, you would know how beneficial it is for you to cater to both non-Prime and Prime members. So if you want your customer base to expand, and to be able to focus on the marketing side of your business, then Amazon FBA is definitely the fulfillment method for you.
Another advantage is that signing up for FBA will automatically get you the Perfect Seller Rating. With this, you increase the chances of winning the Buy Box, the most coveted feature of all sellers on Amazon.
Cons: Since Amazon is going to take care of all your fulfillment needs, you will also have to spend some money on FBA fees. Your items will also be shipped and stored in the warehouse, so you have to factor in the additional costs for this.
Based on the name itself, you already get an overview of this fulfillment method. This is completely the opposite of FBA. Basically, instead of Amazon shipping out your products, you will do that on your own. You're going to have to process the orders, package them for shipping, label them, and send them out to your customers.
Pros: There are some sellers who would want total control over their business processes. This is even if it means that additional employees must be hired just to make sure that everything is processed and shipped out properly. So if you're the type of seller who would want full access to your inventory, processing, packaging, and shipping, this type of fulfillment method is perfect for you!
This method also significantly reduces the exorbitant prices that come with FBA. You also don’t have to worry about paying for Amazon's storage space if you already have one for your business.
Cons: Since you're fully responsible for handling everything on your own, you are also responsible for the shipping rates. Processing orders will also be a problem for you since the orders are coming from Amazon. Your business might be affected if you're not properly prepared to deal with an influx of orders.
Another major disadvantage is that you won't be able to cater to those Prime customers. Given there's 112 million of them, it will definitely be your loss.
Now that you know the main differences between both fulfillment methods, the next thing to ask is what would be the best method for you. Here are some of the factors that you should consider if you were to choose between the two.
Choose FBM if you want full control over your business process. However, if you don't want to oversee the processing, labeling, and shipping side of the business, then FBA will be the perfect fulfillment method for you.
If you already have an established customer service set in place, you can consider going for FBM. For this, your team should be trained in handling all of the customers' concerns. If you're not confident about how you're going to do this and you're completely okay with handing these off to Amazon, then you should get FBA instead.
One major factor in this decision will have to be the warehouses. If you already have a warehouse, you'll save a lot in terms of storage costs. Having a warehouse will definitely qualify you for FBM. But if you're just starting out and you don't have space, handing off your inventory to Amazon's warehouses will be helpful for you. Thus, you should go for FBA.
One of the main things that you have to thoroughly decide on will be your fulfillment method. This will greatly affect how your business will be overall and how this is going to impact your sales. It's safe to say that it's more than just how you're going to fulfill your products.
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