Are you thinking about selling your products on Amazon? If so, you’re joining millions of other retailers who want to join the Amazon marketplace. The good news is, Amazon wants you. The more people who sell their items on Amazon, the greater Amazon’s selection is.
But before you sign up and start shipping your stuff to their warehouse, it’s a good idea to familiarize yourself with the pros and cons of selling with Amazon FBA. Let’s dive a bit deeper and explore this retail powerhouse.
What is Amazon FBA?
FBA stands for Fulfilled by Amazon.
In the everyday e-commerce world, sellers assume 100% responsibility for giving customers their products.
From start to finish, sellers had to organize their packaging, returns, refunds, and shipping.
But with Amazon FBA, all a seller has to do is send their inventory to an Amazon warehouse. After that, Amazon takes care of the inventory and handles all issues related to the sale.
It’s a sweet selling process that has revolutionized the way online retail stores function.
Of course, there’s always upsides and downsides to every story, and Amazon FBA is no different.
Pros to Using FBA
Buy Box Priority
In addition to Prime, sellers using FBA are also higher up in the buy box. They’re also given the “Fulfilled By Amazon” logo. This separates FBA sellers from others who are offering the same product, and every inch you can move yourself higher in the buy box could equal hundreds more orders.
Perhaps the greatest advantage to using Amazon FBA is that they do literally everything for you!
Amazon branding and marketing strategies have earned them millions of loyal shoppers from around the world. That means they have the traffic to get people to see your products. They also store your goods for you and ship them out to customers.
This is a huge advantage whether you’re a new seller or someone who just doesn’t have the extra warehouse space for your items.
This convenience also means you can spend more time focusing on other aspects of your business. Less time learning about the platform, marketing your business, and building traffic means more time shopping for inventory and more money in your pocket.
Another killer pro to using Amazon FBA is the shipping. It’s cheap. Very cheap. All packing costs are included in your fees, and your product sells through Amazon you only have to pay about $1.04 per unit and roughly $0.50 to $0.60 for a pound for handling costs. But the shipping is free.
But say your item sells through another Amazon outlet besides Amazon, then your standard sized parcel will come in around $1.90 for standard shipping, plus $0.60 for packing and $0.45 per pound of weight for handling.
This difference is cheap enough to make a big difference in your overall profit margin.
Amazon is one of the most well known online retailers in the world. Perhaps, THE Most well know. Using their platform to sell your products guarantees more traffic than you’d get with any other platform.
Having that “Fulfillment by Amazon” logo next to your item’s name is tantalizing and makes it easier for buyers to click the ‘buy’ item button.
Amazon branding is nothing to shake a stick at. It will get you more sales than you could ever hope to have on your own.
Access to Prime Shipping and Fulfillment Network
Ah, Amazon Prime.
When you become an Amazon FBA seller you are automatically eligible for selling your goods through Amazon’s Prime shipping network. That network has over 85 million subscribers who make Amazon their first choice in buying an item.
Why does this matter?
Because customers hands down choose Prime items over any others in the Amazon merchant network. You can save money, earn more, and your customers can get the item within two days. It’s a win-win-win!
Custom Service & Return Management
Amazon FBA also gives you access to their customer service and return management. This means even if a customer is not happy with your item, Amazon will handle the returns process and you’ll never have to lift a finger.
Cons to Using FBA
Limited Access to Products
If a customer has an issue with your item, you have to rely on Amazon’s warehouse employees to double check the product inside fulfillment centers. This means you have limited control over your products and returns.
Amazon does have to charge for storage, which means you can expect to pay at least $35 per month for having an Amazon selling account. You’ll also have to pay for the square footage you use and more if your item sticks around a while in their warehouse. Long-term storage fees are accessed every February and August 15th. Items have been in storage for longer than 181 to 365 days are charged $11.25 per cubic foot. Items there longer than 365 days are $22.50 per cubic foot. Overall, new sellers can expect to pay about 30% of their sales to Amazon.
Another con to using FBA is that you have to deal with Amazon’s selling processes. You’ll rely heavily on their warehouse and the speed with which they fulfill orders by buyers. During the holidays this can make for some seriously delayed orders. This is where being a Merchant can be helpful, but you lose out on the other perks of the marketplace.
Lack of Branding Opportunities
Amazon FBA has built a relationship with its customers through branding. People trust them. However, this means you cannot brand your own business. There’s little wiggle room when it comes to packaging, so you lose out on the opportunity to build your brand awareness as well.
Ultimately, however, Amazon FBA has a variety of pros that make it worth the effort to use them. If you want to earn fast cash on items that are taking up space in your warehouse, then FBA could very well be a good fit for you.
Weigh the pros and cons and make a decision that benefits your brand and business.