What is Amazon FBA and Why Should You Invest in It?

what is amazon fba

Last updated on January 11th, 2023

Written by Ken Zhou

If you're looking forward to starting an online business, you might have come across articles talking about "what is Amazon FBA?" This goes to show that you're not the only one interested in selling on Amazon, and that's a good thing! It's a solid testament that it's a great place to sell products and reach your target audience. 

But before indulging yourself in the realm of the e-commerce industry, you first have to understand what comes with it.

This article talks about the Amazon FBA program and why you should invest in it. Try to gauge if enrolling in this program will be worth it for you. Read on to know more about it:

What is Amazon FBA business?

Amazon FBA stands for "Fulfilled by Amazon." The program enables sellers to store their products in Amazon's fulfillment centers, and when an order comes through, they will pack and ship items directly to the customer. This is a huge convenience for sellers as orders arrive on time without worrying about shipping.

Amazon FBA aims to offer online shippers on the day they deliver it or the next day, depending on where the customers live. Selling on e-commerce platforms such as Amazon has become extremely profitable since more people choose to shop online. 

More people are also opting for products that are available with Prime shipping (Amazon's paid membership program) due to the two-day free shipping benefits that come with it.

What does Amazon FBA business mean?

You might ask why you should invest in the Amazon FBA program? Why not just stick with your online store and take care of shipping yourself? The reason is that you're going to need a lot of staffing to handle orders, inventory management, among other things. 

So in order to give your customers an uninterrupted shopping experience, you should focus solely on creating products. Let Amazon deal with product storage and delivery. With their fulfillment center network constantly expanding, it will be harder for other e-commerce stores to keep up.

How does it work?

Fulfilled by Amazon works like this: When a customer purchases from your website or Etsy store (if applicable), they can select "Ship my items using Fulfillment By Amazon." Then all you need to do is ship the items to Amazon as they come in. 

Once a shipment arrives, Amazon will pick and pack your items, then sort them for shipping. They even have a program where you can schedule shipments so that it's not sitting in their warehouse for weeks or months on end.

How much does it cost?

The good news is that there are no fees to sign up for Fulfillment By Amazon. However, an Amazon seller does need to meet certain criteria before they can enroll. For example, you'll need to be selling at least $10 million worth of products every year from all product categories combined. There is also a monthly storage fee based on the size of your inventory. 

The FBA monthly storage fees depend on two things: the season and size of the product. These fees are updated and will take effect starting February 1, 2022. Here's a quick rundown of the fees:

January to September (off-peak season)

  • Standard size: $0.83 per cubic foot
  • Oversize: $0.53 per cubic foot

October to December (peak season)

  • Standard size: $2.40 per cubic foot
  • Oversize: $1.20 per cubic foot
amazon fba program

Advantages of Amazon FBA

We already mentioned how it helps you create products instead of shipping orders, but what else can you get from enrolling in this? There are a ton of advantages that come with selling through Amazon:

Huge reach

Have you heard the saying "go where your customers go"? Well, as one of the largest retailers in the world, this is especially true when it comes to online shopping. Amazon has over 300 million customers worldwide. With these numbers, you're almost guaranteed that you won't run out of potential customers to buy your products. 

Plus, because they offer high-quality customer service and easy return policies (within 30 days), shoppers know they're getting a good deal.

Prime Shipping

Don't you wish that the item will be at their door ASAP when a customer orders from your online store? With Amazon FBA, you're in luck! In addition to offering free shipping for Prime members, they also offer "Free No-Rush Shipping" on orders with a value of $25 or more. 

You can also choose between two-day and standard shipping. Global reach

Fulfillment By Amazon is available worldwide in five marketplaces: the United States, Europe, Canada, Japan, and China. All you need to do to sell in a specific country is register with them but each comes with its own set of requirements. This opens up your digital products to even more customers.

How to Get Started With Amazon FBA

Once you've decided that selling through Amazon is right for your e-commerce business, here's a simple guide on how to get started:

1. Sign up for an Amazon Seller account

If you already have a professional or individual Amazon seller account, go ahead and log in. Otherwise, click the "Sell Your Stuff" button in the top right corner of their homepage. From there, click on "Start Selling." 

From there, you'll need to add a product by clicking on the "+" sign next to "Add a Product," then enter your product information into their search term bar. You will also need to choose if it qualifies for Fulfill By Amazon (FBA) shipping.

2. Ship your products to Amazon

Once you've added all of your products, it's time to send them to Amazon! Luckily, they offer several ways for you to do this. However, if you're shipping large items like furniture or heavy boxes, there are additional fees that can apply. If your product is small enough (under 50 pounds), the easiest way is through their pre-paid shipping label. 

You can also send it yourself following their instructions here and have Amazon reimburse you when they receive it for larger shipments. There are also several other options available, so be sure to check out their Shipping & Handling page for more information on which one would work best for what type of product you're selling.

3. Wait for Amazon to fulfill orders (for FBA)

Once the product has shipped, all you do is sit back and let Amazon take care of the rest. You can track your order through their "Your Orders" page and be notified via email whenever a buyer purchases something from your store. 

Note: if you want to get paid faster, then choose "Make Money with Us" and select "Use Fulfillment by Amazon" before clicking on "Get Started." This will automatically link your account to them so that when someone makes a purchase, you don't have to worry about sending anything out! 

They'll handle everything. How's that for easy? Of course, other sellers are offering the same product that you are, so it's important to stay competitive by making sure your listings are seen. This can be done through proper Amazon keyword research, keyword listing optimization, high-quality product photography, and compelling Amazon product description.

Final Thoughts: Is It Worth Investing in Amazon FBA?

After knowing what the Amazon FBA program is, the question now is if it's worth investing in it. We've outlined above how the whole program works, its costs, its advantages, and how you can integrate it into your listings. With all of these taken into consideration, it's safe to say that it's worth enrolling your business in Amazon FBA. It won't only give you more time to focus on product development and marketing, but it also leverages your business against your competitors.

Not yet sure on how your business will do under Amazon FBA? Let us help you with that! At Seller Interactive, our expert account managers can guide you on starting under the FBA program. We'll help you grow to greater lengths that you could never have imagined. Reach out to us today at [email protected].

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