One of the ways you can save on shipping is to use Amazon FBA. But what is it and how does it work? Here are the 9 things you need to know about FBA.
The booming eCommerce industry shows no sign of slowing down anytime soon. Ecommerce businesses generated nearly $2.3 trillion in sales during 2017 and researchers predict it will reach almost $4.5 trillion by 2021.
As more eCommerce businesses open up online, major retailers want to get a piece of the action, so they start things like Amazon FBA. But what is fulfillment by Amazon and how does it work?
Keep reading to find out.
How Does Amazon FBA Work? 9 Important Things to Know
Are you an e-commerce business interested in using Fulfillment by Amazon to ship to your customers? Learn more about how Amazon FBA works by going over how to sell through the program as well as some pros and cons to keep in mind.
- Creating an Account on Amazon Seller
The first step to using Amazon FBA is to create an Amazon Seller account. Two options exist for account type: Individual and Professional. So how do you choose between the two?
As a Professional Seller, you pay a flat monthly subscription fee of $40 per month, so choose that if you plan to sell more than 40 items in a month. As an Individual, you pay no monthly fee and Amazon charges you $0.99 for every sold item. (This does not include the other selling fees described below.)
Be aware, you need to provide certain information during the registration process, including your business’s name, a public display name, physical address, and a contact number. You must also provide your billing or deposit method and tax information for a Professional account.
- List Items for Sale
Once you finish registering for the Amazon FBA program, you will want to start listing your sale items. Select the “Inventory” drop-down from the menu bar across the top and choose “Add a Product.” This will bring up a product search to identify the product.
Once you choose the correct product, enter in the following information:
- The sale price
- The item’s condition
- Select between having Amazon ship the item, or you shipping it
Be honest about the item’s condition to avoid any returns. Finally, remember to click “I want Amazon to ship and provide customer service for my items if they sell.” This lets Amazon know you want to sell through Amazon FBA.
- Convert Items to FBA
Amazon allows you to choose whether or not you want to use Amazon FBA with every item.
Choose the “Inventory” drop-down again and select “Manage Inventory.” Find the specific item you want to change and click “Actions.” In the drop-down menu, choose “Change to Fulfilled by Amazon.”
Do not panic if the item disappears from Amazon’s website. It will reappear once it arrives at the Amazon fulfillment center. Once you select FBA, you then need to choose between two more preferences: using commingled inventory and the FBA label service.
Commingled inventory means if a customer purchases a specific product from you, you give Amazon permission to ship the exact same product provided by a different seller in a warehouse in closer proximity to the customer. Amazon does this to fulfill the order faster and improve customer service. Be aware of the risks, however, since if the seller provides counterfeit products, your customer may receive the inauthentic product before Amazon realizes the problem.
The second preference, the FBA label service, refers to when Amazon provides the white sticker label for you rather than doing it yourself. It will cost about $0.20/item for each label, which can add up.
Next, choose between “Convert Only” or “Convert and Send Inventory.” Choose the latter if you have no other items to add and the former if you need to add more to the list. The item will now show up under “Amazon Fulfilled Inventory” in “Manage FBA Inventory” under “Inventory.”
- Create a Shipping Plan
Time to send your items? You need to create an FBA shipping plan. Enter the address from which you plan to ship the items and choose between two packing types: case-packed products and individual products.
A case-packed product refers to when you ship multiples of the same item, like 30 copies of one single book.
After you select a shipping plan, you need to choose what items to include from your list of product names. Feel free to add more items after creating the shipping plan.
- Shipping and Selling Items Through Amazon FBA
Next, select the “Inventory” drop-down again and choose “Manage FBA Shipments” then “Continue with shipping plan.” Here you can enter the number of units for each item you plan to send. If the item needs prep before sending, you can find the option for that here as well.
Finally, choose if you want to label the product or leave that up to Amazon. You can also buy Amazon shipping from here, but you need to know how much your package weighs. Print and stick your labels then drop off your package at your nearby UPS.
Once Amazon receives your item(s), they appear on the Amazon marketplace ready for purchase. Now, you just wait. You do not need to do anything else.
- Pay Attention to the Fulfillment by Amazon Policies
Amazon does not hesitate to ban or fine sellers that violate their consumer policies. Do not leave your items at a fulfillment center for too long or mislabel an item. Selling counterfeit goods can also get you banned from Amazon FBA.
Be aware. Amazon watches newer sellers very carefully. Aim to get lots of positive feedback as soon as possible to legitimize your account.
- General Fulfillment Fees
The general fees Amazon charges for fulfillment services cover packing, shipping and handling, customer service, and product returns for all your items. They charge per unit based on two categories: standard size and oversized.
Expect to pay less than $5 per unit for standard-sized items up to 2 pounds. Small, light items will only run you $2.41 while a large item over 2 pounds costs $4.71 plus an additional $0.38 per pound above 2 lbs.
Over-sized items cost significantly more and may range from around $8 up to 1 pound to $137.32 for special over-sized items up to 90 pounds. Expect an additional $0.91 for every pound greater than 90 lbs.
- Monthly Storage Fees
Another fee to consider if you use Amazon FBA is the month storage fee for holding your items at a fulfillment center. Amazon charges based on how many items you move through the center and the time of year.
Standard size items cost $0.64/cubic foot from January to September, but $2.35/cubic foot from October to December. Over-sized items surprisingly cost less with Amazon charging only $0.43/cubic foot from January to September and $1.15/cubic foot from October to December.
- Access to Prime Shipping
Did you know 64% of U.S. households use Amazon Prime? No Prime shopper will willingly choose a product that isn’t eligible for Prime. Fulfillment by Amazon makes all your items Prime eligible to increase your chances for sales.
The Best Way to Outsource Fulfillment and Distribution
Amazon FBA offers businesses an easy way to connect with more customers across many different online merchants. However, not every business owner wants to relinquish that much control of their products. And some small businesses cannot afford the extensive fees.
E-commerce businesses with customers along the East Coast looking for a reliable fulfillment service need to check out Fulfilltopia. Their packing experts handle every order with care to help you impress customers with quick, dependable shipping services.