FBA or Fulfillment By Amazon is just another intriguing strategy by the eCommerce giant which will lower your workload and increase your sales volume.
Just imagine the benefits of having the world’s largest online retailer list, ship, and manage your product. Fulfillment by Amazon, or FBA, enables the seller to sell their products with the help of Amazon and you let alone handles the business part.
When a customer places an order, it goes straight to the FBA warehouse, Amazon then picks out the order and delivers it to the customer.
FBA allows the seller of all types ranging from small retailers, to SMEs ship items to these centers and turn the customer service over to Amazon.
How can it help me?
As a seller, it requires your product first reaches to the Amazon Fulfillment centers and from there, Amazon takes over. Here is what they do for you:
- Amazon unpacks and stores the products in their fulfillment centres.
- Your product is now listed on Amazon.com
- A customer comes online and makes an order.
- Amazon picks and ships your products.
- Amazon provides customer service after shipment
Disadvantages of FBA
Well, it’s not the same every time so you must think twice before going for FBA. Here are few problems you could run into.
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Strict Guidelines
Now with Amazon in the driver’s seat, you will be having less control over your inventory because of Amazon ships and packs your products the way they want. In order to get your product stocked, listed, and sold on Amazon, you must first have your product arrive at their fulfillment centres. If you fail to adhere to their rules, they could even refuse delivery of your product!
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Cost
Everything doesn’t come for free, and if you are saving your cost in packing, shipping, and customer service, somewhere money will flow. You have to spend few bucks to keep your service going. The initial setup costs are nominal, however, as the time progresses you might have to spend well. It can eat up your profit margin if you sell large, heavy and/or inexpensive items.
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Brand Awareness and Customer Loyalty
Your sales are likely to increase, once you have decided to get listed on Amazon. However, with every purchase, your customer are gaining trust and awareness of Amazon instead of to your company. In fact, Amazon itself would be your prime competitor among the plethora of other similar sellers like you. Brands don’t get the same exposure and recognition they would if they sold directly to the consumer, and a lack of customer data makes re-marketing nearly impossible.
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Tax Compliance
The third-party retailers are unsure of where their merchandise is stored. This creates issues since different states have different tax laws and the sellers are unsure of where to register for sales tax compliance. This results in potential liability issues for the third-party retailers.
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Payments
Amazon settles payment with sellers once in every 14 days; until that time, the money is held in an escrow account. This means, you will not be paid for nearly two weeks, which can have an impact on your payment cycle.
Advantages of FBA
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Customer Benefits
Products sold through FBA automatically becomes eligible for Amazon Prime service offering free 2-day delivery. This, in turn, will further increase your sales graph. Customers appreciate this exceptional customer service and feel confident buying in the marketplace.
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Improved Customer Service:
Amazon’s customer service is revered for its quality, and by using FBA you have access to their 24/7 service.
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Buy box Labelling
The items shipped through the service will have better packaging with Amazon label on it, which associates your products with one of the most popular and trusted brands in the world.
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Return Management
The return management process can be difficult to manage, so Amazon FBA will take care of this for you as well.
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Storage Space
With Amazon FBA, you don’t need to worry about your house filled with boxes for packaging.
Strategies of how to use FBA
- FBA is not a thing for every seller, some people may lose money on it but if implemented with the right mindset, it can prove to be a boon for you.
- You should use FBA when you have a good stock of products and ship them in the large amount as packing and shipping a single product will cost you more than the bulk ones.
- Only use FBA when you don’t have enough resources for shipping and providing customer service. You can use automated tools like UVdesk Helpdesk to provide exceptional customer service.
- Always keep track of expenses while using FBA, as initially the cost might be low but further down the road it will increase.
- Better do a market research of products of yours which can bring more sale using FBA.