By now, most Amazon sellers are familiar with Fulfillment by Amazon, or FBA. Whether or not FBA is advantageous for all Amazon sellers has been a point of contention online for years now. FBA isn’t ideal for every Amazon seller, but it does make sense for anyone seriously interested in scaling their business. FBA sellers are able to sell across multiple channels, including their own website, and fulfill all the orders from one inventory pool.
Today 44% of all online shopping takes place on Amazon
74% of Amazons 60 Million Prime members shop on the site
The average Amazon Prime member spends $1,500 per year
Unless you’re an FBA seller Amazon Prime customers are mostly outside your reach!
One of the most important aspects of the FBA program is that it qualifies sellers’ products for Amazon Prime, giving them access to the most active shoppers online. Consumer researchers found that nearly 50 percent of U.S. households now use Amazon Prime, and Prime customers typically spend nearly twice as much as standard customers. Once an ASIN is on an FBA listing, the seller gets exposure to Amazon’s biggest shoppers. In addition, many of these shoppers have grown accustomed to using the Prime search filter, which prevents all the non-FBA ASINs from even appearing on the Amazon search results page anymore.
Becoming an FBA seller also allows Amazon to handle picking, packing and shipping the products for you so you don’t have to worry about spending resources on hiring and training employees. As an FBA seller, you also benefit from the expertise Amazon has already developed in this sector, making you less susceptible to many of the headwinds individual sellers deal with during the initial learning curve.
As an FBA seller, you will also save time because Amazon will handle the customer service returns and queries so you don’t have to deal with them directly. Researchers have learned that FBA sellers actually receive 33 percent fewer returns than Amazon sellers who fulfill their own orders. When customers are dissatisfied with a product that has an Amazon Prime logo on the packaging, they’re far more likely to contact Amazon than file an A-Z claim or post negative feedback against an individual seller.
The charges assessed to FBA sellers by Amazon are fixed pick & pack handling fees and fees based on the product’s weight and size. Sellers who specialize in high-priced products that are lightweight and smallish in size may benefit the most from joining the FBA program. Items like jewelry, small firearm accessories and Bluetooth devices are exemplary of the type of items that work best for FBA sellers. Becoming an FBA seller can help improve your sales and afford you more time for expanding your existing catalog of Amazon products.
Sellers who do take on fulfillment themselves learn that this strategy can only work for so long. As the business grows and becomes more successful, the individual’s limitations with hiring employees, processing sales and fulfilling orders becomes far more apparent on a day-to-day basis. That dynamic alone is a significant challenge, but there are still management issues, complaints and requests that have to be addressed as well. Sellers who are able to get passed the fear of losing control over their own inventory are handsomely awarded when the sales begin to increase substantially, sometimes by up to 300 percent.