If you are a seller at Amazon and ever sold an item on Amazon, Then there are some chances where you have heard about the Amazon FBA. Amazon FBA make the sellers relax and feel them to sit back and left the heavy lifting for the Amazon.
Sellers could now access to Amazon’s Warehouses present in all over the World and in these warehouses Amazon’s staff packs and sends out all the orders placed for your products. When it comes to FBA even the customer care is also handled by the Amazon.
All these features and benefits are because of the Amazon’s FBA Program. While all of these services and features are not free at all they have some cost but it can value your online business. So if you are new to Amazon FBA then this blog will help you to understand the Amazon FBA program from the very basic.
What is Amazon FBA?
When a seller is selling some product on the Amazon then three kinds of options comes to ordering the fulfillment for the seller. They can choose to pack and ship the product themselves or they can choose to outsource storage, packing and shipping to Amazon by using the program FBA.
How the Amazon FBA does works?
During selling or listing some product sellers have to decide the fulfillment method. They can switch the fulfillment method or strategy whenever they want to.
FBA Process detail:
There are some keys which help you to understand how a FBA processes:
- Sellers buy the product and then ship them and store them to Amazon Warehouse. Then Amazon will give you the necessary contact details and address about that product where it is present or stored.
- After the product stored in the Amazon Warehouse it will store, until some customer place some order. Amazon gets some storage fee which is probably based on the volume or size of the product that how much it obtains the space.
- Your inventory is automatically updates when an order is place and Amazon takes care of all the transactions.
- Then after all of these procedures order is packed and shipped by the Amazon.
- Returns and refunds and customer care and follows up all of these are handled by the Amazon.
- After Every two weeks duration Amazon sends you the profit from your sales.
- Sellers also have to know that their shipments to Amazon fulfillment centers follow the online retail giants’ strict packaging guidelines.
This is an incredible way to expand your online business through this logistic service. As I mentioned above that this service is not free it gets some cost and depends upon the size of the product.
If we open our own store and deliver it by ourselves then in compare to this these charges are cheaper. As Amazon takes care of most of the logistic but still FBA Seller have access and responsible for choosing the product, inventory maintenance and marketing of their product.
FBA Inventory Fee Charges:
If customer is using this service then he has to pay only for that space which he is using it as compare to real storage or warehouses where he has to pay for all empty places but here he has to pay only for what he consumed. Amazon charges monthly fee for all inventory in its fulfillment centers. Storage fees are hiked during the holiday season which is from October to December.
But for Goods in US, Amazon monthly storage fees are charged between the 7th and 15th day of the month by following the month for which fee applies.
We can categories the goods in between dangerous and non-dangerous goods.
In the time span for January to September the standard charger for non-dangerous goods are 0.75$ per cubic foot and oversize is 0.48$ per cubic foot. While for the span of October to December the standard size rate is 2.40$ per cubic foot to oversize is 1.20$ per cubic foot.
While for some dangerous goods the standard size rate for the span of January to September is 0.99$ per cubic foot and the Oversize rate is 0.78$ per cubic foot. While for the span of October to December the standard size rate is 3.63$ per cubic foot to oversize rate is 2.43$ per cubic foot.
As shown in the table dangerous goods have higher fee rate the reason behind it is that they need special handling and storage space. If your product is stored for a long time in the Amazon warehouse then they charge long term fee which is for yearly base storage which may be $6.90 per cubic foot of the storage use or $0.15 per product. This fee is deducted from every month and can quickly add up if you are not careful about your inventory so you have to be very careful about the FBA fulfillment centers. And if the stacked product turnover is low than it might be wrong deal for you.
Advantage and Disadvantages of Amazon FBA:
Amazon FBA is very beneficial for your online business needs so there are some pros and cons of Amazon FBA. Let’s start with some pros.
Advantages:
- Provide Logistic Support and Scalability:
You don’t need to spend a lot of money for storage space as through this FBA program Amazon takes care of the shipping and storage of the product. If your business is kicking off and you are selling more than ever Amazon will take care of the extra shipping duties. All you have to do is to make sure you replace the stock.
- Provide the Facility of Fast and Free Shipping with the Amazon Prime.
- Provide the Facility of Buy Box advantage:
If you have a professional seller account and sell your product using Amazon FBA program than there is a chance for you to win a Buy Box. It takes very importance and the reason is that about 80% of the Amazon’s sales are from the innocuous yellow button present on the product listing.
Winning the buy box may cause the results in massive boost to your sales.
- Provide you the Facility of Discounted Shipping Rates.
- Provide you customer care or support on both level seller and buyer.
Disadvantages:
These are some disadvantages of Amazon FBA program as well as the advantages;
- This program is not free you have to pay for it if you want to support your online business.
- Inventory Management sometime be very difficult for someone as tracking some such inventory in which what products have available when you are not directly involved in the sales process. If your product is out of stock Amazon will reduce its product ranking and visibility.
- Limited Brands are Available:
As Amazon is packing and shipping your products and orders through this FBA fulfillments centers so you are losing the good opportunity of creating your own business brand. While you have control on the product packaging but still Amazon has always there Amazon’s Logo and brand name. So if you are thinking to start your own brand name then this FBA option is limited for you.
