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Last updated on January 26th, 2023
Written by Ken Zhou
Running a business on Amazon is not as easy as you think it is. Aside from learning how you can maximize business opportunities on the platform, you would also have to think of how other Amazon-related aspects work. Some of those are using an Amazon FBA account and learning more about Amazon suspension appeals.
Amazon offers its fulfillment services which are aptly named Fulfillment by Amazon or FBA. This service allows their sellers to fully automate their fulfillment and shipping process. For the sellers, fulfilling and shipping orders will be a lot easier. With this considerable load lifted from them, it enables them to focus on the development and marketing part of the business.
Anyone who's selling on the platform can enroll their products or store on Amazon FBA. When enrolling your products on this program, you agree that Amazon will handle the shipping, returns, refunds, and product warehousing. It doesn't have to be complicated. As a seller, you can shift your focus on marketing and selling your items after you've put them up on Amazon FBA.
There's no specific quantity of products as to how much you can enroll in the program. They also offer Amazon FBA wholesale for those businesses that sell their products in bulk. It is more beneficial to wholesale sellers on the platform to enroll in the FBA program. With it, they don't have to personally deal with tons of SKUs and order placements.
If you're interested in getting an Amazon FBA account for your business, you will first have to sign up for it. Then you can start sending your FBA-enrolled products to Amazon, and they will store them at their warehouses. It’s a seller’s responsibility to keep the inventory stocked. Once you've run out of stocks in their warehouses, it's going to pose some problems on your part since Amazon will not be able to fulfill and ship the orders placed by your customers.
Now that you have some overview of what Amazon FBA is and how it can boost your business' operation, the next thing you have to know about it is its cost. Logically speaking, since Amazon is offering you its service and taking a lot of workload from you, you’re expected to pay for the service and the labor. After all, it's still business.
When you enroll in this program, you're not just paying for them to fulfill and ship your goods. You're also paying for the efforts they put into Amazon FBA returns management services which is usually a very tedious process on the seller's part. If there's one thing that every online seller hates, it would be having to deal with the returns and refunds. Well, good news—this is part of what you will be paying for.
Aside from that, the two major components of Amazon's FBA costs are inventory storage and fulfillment costs. Here's what you need to know more about them:
The FBA program is perfect for people in an Amazon wholesale business but still don't have the space to store all their inventories. It's usually for those small to medium-sized businesses that have just started growing their business and expanding their reach. If this is the situation you're in now, it's great to go for FBA for your Amazon wholesale business. But if you're not exactly sure if it's beneficial for you, you may want to compute the costs that you will incur if you rent or buy your own warehouse vs pursuing this program.
Compare these with the storage costs Amazon FBA will charge you. You'd also have to keep in mind the pricing factors from your FBA, which may affect these costs. These factors include product dimensions and the season when the products are stored. Some products may also need special storage care, such as having a required temperature. You should also be mindful of how these factors add to your storage costs.
After computing, you can now compare these two and see which one will benefit you more. You can also assess the situation of what will be helpful for you in the long-term process. Overall, Amazon FBA will be advantageous if you're just starting to expand your business and you have no space to store all your inventory just yet.
Costs for fulfillment and shipping will greatly depend on the volume of products you fulfill daily or weekly. Same with the inventory costs, you should account for the costs you will incur if you do your fulfillment and shipping in-house. One factor you should consider in terms of costs for this particular aspect would be your business' manpower.
Suppose you are scaling your business from a small one to a medium-sized one. In that case, you should also scale up your business in terms of product volume and manpower. In fulfilling and shipping orders, manpower is one of the key resources to make this happen. So if you're looking forward to computing your costing for shipping and fulfillment, factor in the training and other resources you're going to invest in your manpower.
It would be a lot more beneficial for most businesses to hand off their fulfillment and shipping services to Amazon. But then again, it depends on the nature of your business, products, and business model. Working with Amazon FBA is still a great option that every seller on the platform should always consider, regardless.
Now that you're familiar with Amazon FBA and its costs, the question you might be thinking now is, "what's in it for me?" That is, aside from handing off such a massive workload from your team to Amazon. Here are the other things that you can get by using Fulfillment by Amazon.
1. Greater chance of winning Amazon Buy Box
Amazon sellers are always striving hard to get the Buy Box. Getting this would mean the opportunity to increase your sales. It's still unknown what certain factors would indicate for a seller to get the Buy Box. One thing's for sure, though—fast and free shipping is of great importance. Sources suggest that Amazon gives the Buy Box to Amazon FBA sellers because they are guaranteed that orders are fulfilled and shipped as soon as possible.
2. Earn your customer's trust
Customers on the platform, especially those accustomed to buying stuff from Amazon, are familiar with what "Fulfilled by Amazon Prime" means. It means that they can expect the prompt delivery of their orders because everything's stocked up in Amazon's warehouse.
This is very much true. They would want to take advantage of their Prime status and choose sellers who offer one-day shipping over those who don't. The surprising result is that they end up paying more than regular customers.
3. 24/7 seller and customer support from Amazon
Suppose you're hesitant about handing off most, if not all, of your inventory to Amazon. In that case, they offer 24/7 support to the sellers enrolled in their FBA program. They also give the same support and assistance to your customers. So it's safe to say that you won't have to deal with fulfillment and shipping issues; Amazon will be the one to handle that. With this, you have more time to focus on the other aspects of your business, such as marketing and operations.
Sellers can get a lot of advantages if they choose to use an Amazon FBA account. However, you can be one of those sellers who can truly maximize its benefits as long as you're able to gauge if enrolling your products to FBA is really for you. So before enrolling, calculate your costs first and see if it will be more beneficial for you to hand off your fulfillment and shipping to Amazon.
It's advisable to switch into an Amazon FBA account if you are:
After everything, getting on Amazon FBA doesn't seem so bad, right? Contact us today at [email protected] to know more about it and how you can maximize it to grow your business!
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