Amazon is one of the largest eCommerce businesses in the world right now, with customers from all walks of life. Amazon has created a platform that makes it easy for anyone who is looking for a general product to see thousands of options, and filter them by price, shipping costs, and anything else they may need.
Fulfillment by Amazon (FBA): Is it Right for Your Company?
Many consumers price check with Amazon after visiting their local big box store, and with faster shipping times they can still receive those products within a few days, or even the same day in some markets.
Thousands of sellers use Amazon as well, to help them move product and use Amazon’s customer base to build their own profits. Fulfillment by Amazon is a way that business owners can sell their products, without having to worry about shipping or logistics. While you still need to send Amazon your product, which means there can be hefty up-front costs, Fulfillment by Amazon could be an option your business needs to succeed.
To start your Fulfillment by Amazon (FBA) partnership, you’ll need a seller account, which is easy enough to obtain. Then you’ll need to ship your products to Amazon, and you can either package your products yourself, or Amazon can do this for you. If you’re just starting out, the latter may be your best bet, though it will cost money. After that, you’ll need to set up shipping to Amazon fulfillment centers through a few different options, but at that point they’ll take over the shipping to the customer, so your part is done.
You'll need a Seller Account, then you'll need to ship your product to Amazon, then you're set.
If this sounds like something you think your business needs, it’s worth it to delve deeper into what FBA can offer. Since your products are sold through a trusted website, they can sell easier, and with 2-day shipping for Prime members, customers are more likely to purchase your products. As with any business model, you need to consider your bottom line, goals, and expectations. There are always going to be things that perhaps you aren’t a fan of, or wish was different, but the good should outweigh the bad.
1. Amazon's Warehouse
The number one benefit of using FBA, for many merchants, is not having to house your own inventory. Warehouses can cost a lot, depending on where you are located and what type of product you need to house. For example, if you are selling computer parts you’ll need to pay attention to climate control, and electric costs can rise substantially during hotter months. With FBA, Amazon takes care of the warehousing, and they’re experts at it.
2. Amazon's Shipping and Name Recognition
Using FBA, in place of a Seller Account on Amazon, means that users are more likely to choose your product. These products are especially good options for users who subscribe to Amazon Prime, so they can get free shipping as well. Even if your product is slightly higher priced than the competition, the Prime option will win over most of the time for most customers.
3. Amazon's Customer Service
If there are any problems with the order, Amazon will swoop in and save the (customer’s) day. This is also a great way to save your day too, since you aren’t responsible for customer service, or for returns either. This means you can work on building your business, and finding new products that customers will really enjoy. With Amazon acting as one of your main “employees”, this also frees up some of your budget for other ventures you’d like to explore.
FBA provides wharehousing, shipping, brand recognition, and customer service.
Does your Product belong on Amazon?
Fulfillment by Amazon sounds great doesn’t it? Well, mostly. There are some things you need to consider before you sign up and start shipping your inventory out. First, think about shipping your items. What type of product you sell will dictate if shipping it elsewhere is a good idea. For example if your product is heavy, and is a low-margin product, selling it on Amazon may not be worth it. Your product may not be something that would sell well on Amazon either. You know your products best, so do your research on comparable items on Amazon to see how often they sell, and see what other options are available to you so your business is more profitable at the end of the day.
Will Your Company Stand Out?
Another issue can arise when customers don’t realize that your business is actually providing them with the product, not Amazon. Why is this a problem? If the customer relies solely on Amazon, they won’t seek out your business when they want to find products similar to what they purchased. While you may sell many products on Amazon, you won’t really know very much about your customer, and they won’t know much about you. While this is fine for some, many online business entrepreneurs want their business to thrive as just that, a business, not a smattering of items across a platform.
From shipping to their fulfillment centers to packaging your product, you’ll end up paying more than some other companies, but the amount of customers you’ll reach each day can far outweigh the initial costs.
Can You Afford Not to Sell Your Product on Amazon?
Another downside of working with Amazon are the costs associated with it. There are fees for almost anything you can think of, and sometimes these are much more than you may have hoped to spend right off the bat. With drop shipping, you can put forth a minimal amount of money to set up shop, but since Amazon is doing a lot of the leg work for you, it makes sense that they would want their cut of your profits. From shipping to their fulfillment centers to packaging your product, you’ll end up paying more than some other companies, but the amount of customers you’ll reach each day can far outweigh the initial costs.
If you’re ready to take the leap and use the fulfillment service from Amazon, you’ll not only have one of the world’s largest selling platforms at your fingertips, but also a large community of sellers who have years of knowledge and experience. As with any option you decide to take to sell your products or set up an online business, there will always be some compromises you’ll need to make. The biggest one with Amazon comes with less personalization, and higher fees, but it comes with high visibility and a more hands-off approach to your inventory. If these are things you can get on board with, Fulfillment by Amazon may be a great option.
Amazon comes with less personalization, and higher fees, but it comes with high visibility and a more hands-off approach to your inventory.