Fulfilment by Amazon is a great attraction for all the e-store owners and other retailers. Managing an online retail business is a great hassle. Packaging a product, shipping it and providing customer assistance round the clock is a long and tiring process. Spectrum internet simplifies this process by offering unperturbed connectivity to you and your business, similarly, Fulfilment by Amazon makes it easy for your platform to go international. This particular service by amazon takes care of all the processes of logistics and frees the sellers from the worry of storing, packaging, shipping and customer servicing. However, you must be wondering how one can leverage FBA service to earn a profit?
Well, in this comprehensive guide I am going to discuss all three of the following:
- What is FBA about?
- How can businesses leverage Amazon FBA’s potential?
- Pros and cons of Amazon FBA
What is FBA (Fulfilment by Amazon)?
Well, Fulfilment by Amazon is service mainly designed to lend a hand to the sellers. Generally, sellers get their products delivered on Amazon storage/warehouse or distribution centre closest to their customer base. The products are stored in these Amazon warehouses until their purchase and delivery to the customer who made the purchase.
We all know it that Amazon has a great repute for their exceptional global logistical services and capabilities. Amazon has set a benchmark high enough to reach when it comes to efficient and timely delivery. In short, Fulfilment by Amazon is a storage and distribution service for all the sellers at a very reasonable cost.
How does FBA operate?
FBA process is quite simple and hassle-free. I have broken down this process into five simple steps for you to enhance the understanding of the mechanism.
Seller shipping products to Amazon storage facility:
As you must have already guessed, the first step is to ship the products to the Amazon storage facility nearest to the major customer base of the seller. Amazon needs the sellers to follow the following steps:
- Label the products
- Choose a shipping plan from seller’s central dashboard
Storing and tracking of products:
After the products are shipped to Amazon warehouse/storage/distribution center, Amazon often sends out a portion of the products to other Amazon storage facilities keeping in view the geographical demand of those products. For example, Amazon can send out your products from New Jersey to Philadelphia because that specific product has better demand in Philadelphia as that in New Jersey.
This shifting of your product doesn’t have anything to do with the seller, nor does he bears the transfer cost. In addition, the seller also holds the right to revoke amazon of commingling their merchandise.
Amazon DB listing:
Once your product arrives and is settled down at the storage, Amazon will enlist the products into its database so that seller can find and market the products without any hassle. Moreover, the seller can also advertise the products internally as well as can use the potential of external marketing to drive sales.
Orders start flowing:
When someone orders the product which you placed in Amazon’s warehouse by FBA, the item is immediately processed to be delivered. That item is packaged with standard Amazon packing and shipped out to the destination. However, if you are a third-party seller (you own e-store or eBay etc.) the order has to go through multi funnel channel. This process can also be automated for convenience.
Shipping and tracing the products:
For shipping, the item is chosen from the geographically closest storage centre to the customer or client. While the item is being packed to be shipped, both seller and the customer can trak the product via information provided by Amazon at this stage of the process.
Pros of Amazon FBA:
- Amazon FBA helps you in outsourcing your logistics and shipping processes
- The seller can exploit reasonable shipping rates offered by Amazon as it holds contracts with all the major carriers and shipping companies.
- Amazon FBA manages returns on seller’s behalf
- It provides 24/7 customer service via email, chat and phone calls.
- With Amazon FBA, you don’t have to worry about the space for the products and items. The best thing is that there is no minimum or maximum thresholds, you can send as many or little products as you please.
- Fast delivery
- Amazon FBA also fulfils orders from multiple channels (orders from third-party sources).
Cons of Amazon FBA:
- FBA is slightly costly
- Storage fee can be a problem if the products sit in Amazon warehouses for long. As Amazon’s prime business is certainly to sell products and not store them.
- Amazon has strict guidelines for product preparation and shipping
- Customers return more impulsively because of the ease of returning process.
- It is hard to stay updated with the stats of the products (how many of them are available in stores, how many of them are shipped, returned etc.)
- The most important of all, sales tax! As every state of the US has its own sales tax collection policies.
- Comingling your product with other similar merchandisers can prove to be a nightmare eventually
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