What is Amazon FBA? Fulfillment By Amazon (FBA) is a service provided by Amazon that provides storage, packaging, and shipping assistance to sellers. This takes the burden off of sellers and grants them more flexibility in their selling practices. The program allows sellers to ship their merchandise to an Amazon fulfillment center, where items are stored in warehouses until they are sold. When an order is placed, Amazon employees physically prepare, package, and ship the product(s).
What is Amazon FBA?
Fulfillment by Amazon, or FBA, is a service provided by Amazon that takes care of inventory storage, order fulfillment, returns, and even customer service for Amazon sellers. FBA allows sellers to focus on other aspects of their business while having Amazon handle storage, picking, packing, and shipping out orders. It’s a favored business model: 86% of third-party sellers use FBA.
Amazon fulfilment: Pros & cons
By leveraging its own logistics and consumer trust, Amazon has allowed thousands of ecommerce entrepreneurs to grow and scale their businesses through its FBA program.
It’s pretty incredible how a single person with little ecommerce experience can sell their own products on the biggest marketplace in the world and have their products delivered to customers within just two days.
While FBA is a powerful fulfillment service that has many upsides, there are some downsides, too. Let’s go over the pros and cons of FBA.
Benefits of using Fulfillment by Amazon (FBA)
- Prime shipping. If you are an Amazon customer, you are familiar with Amazon Prime. The Prime badge signifies that you are entitled to receive free one- to two-day shipping when you purchase a product. It also allows you to easily return it if needed. When sellers use FBA, listings will have the Prime badge and access to Amazon’s nearly 200 million Prime members.
- Inventory storage. To sell your products using FBA, all you need to do is create a shipping plan in Seller Central and ship your products to Amazon’s fulfillment centers. Amazon will receive and store your inventory until customers make a purchase.
- Customers trust Amazon. When customers see the Prime logo, they know they are entitled to fast shipping and easy access to Amazon’s customer service if something goes wrong. Your products will also typically arrive at your customer’s address in an Amazon-branded package, increasing the perceived value of your product.
- Amazon handles shipping. Manually packaging and shipping out orders each day is a very time-consuming and tedious process. Using FBA is like having your own warehouse employees who handle everything for you.
- Amazon handles customer service. Amazon will take care of any customer service issues associated with orders that are shipped out via FBA. If orders are shipped via FBM (fulfilled by merchant) on the other hand, the seller must handle their own customer service.
- Amazon handles returns. Not only will Amazon pack and ship orders for you, but they will also process returns. If the item is still in new condition, Amazon will return that item back into your inventory.
- Multi-channel fulfillment. Did you know that you can use Amazon FBA to fulfill orders for other marketplaces or ecommerce stores? Sellers have the ability to create a fulfillment order and ship a product to a non-Amazon customer.
Amazon FBA sellers: How to get started
Now that you know what Amazon FBA is and its pros and cons, how do you get started?
Once you have your Amazon seller account set up, using Fulfillment by Amazon is as simple as shipping your products into an FBA fulfilment center. When Amazon receives your inventory, your products will automatically go live for sale and become Prime shipping eligible.
Here’s how to get started with Amazon FBA:
- Create a shipping plan in Amazon Seller Central
- Use Amazon’s partnered shipping carrier to create a heavily discounted shipping label (done in Seller Central)
- Package your products according to your shipping plan and Amazon’s packaging and prep requirements
- Drop off your package(s) to a UPS location or schedule a pickup
- Wait for Amazon to receive and process your inventory shipment
Is FBA right for your business?
Now that you know the pros and cons of using FBA, is it right for you?
You may want to use FBA if you:
- Sell small and lightweight products, making your FBA and storage fees lower
- Run your business out of your home where you don’t have any storage space for inventory
- Don’t have the time or capacity to package and ship orders
- Want your products to be Prime shipping eligible
- Want Amazon to handle customer service and returns
- Cannot afford your own warehouse space or employees to package and ship your orders
You may not want to use FBA if you:
- Sell very large and/or heavy products
- Want control over how your products are shipped to your customers
- Have your own warehouse space with storage and fulfillment capabilities
- Want to process returns yourself
- Use a third-party fulfillment service
- Handle your own fulfillment but are enrolled in Seller-Fulfilled Prime
It comes down to what works best for you and your business. Make sure to account for all of Amazon’s fees and variable costs before deciding to use FBA. Also, keep in mind that you can sell some products using FBA and others using FBM. It’s doesn’t have to be one or the other — in fact, 22% of third-party sellers use both!
Amazon FBA success stories
Want to read about sellers who have found major success selling Amazon FBA? Check out our Amazon Seller Success Stories to learn about how other sellers make money on Amazon!
- Ben Wood & Logan Rogers of Angora
- Kim Meckwood of Click & Carry
- Morgan of Cajunventures
- Maricia Magaña & Brian Meert of LITTIL
Use FBA to grow your Amazon business
We hope this article gives you a better understanding of FBA, how it works, and if it is right for your business.
If you’re looking for a full in-depth guide about how to sell on Amazon, check out our How to Sell on Amazon FBA for Beginners guide.
Have more questions about FBA? Let us know in the comments!
Want to learn more about how you can use Jungle Scout to launch, grow, and run your Amazon business? Click the “Learn More” button below!
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