Introduction

Back in the day, Amazon sellers used to prepare, pack, and ship their products to customers. But, that was changed when Amazon introduced its Fulfilment by Amazon service.

If you are an Amazon seller, you have probably heard about the fulfillment by Amazon service. In short, it is a service that allows sellers to run their businesses without needing to worry about order fulfillment.

FBA fulfillment has a lot of advantages and that is why it is used by a lot of sellers all over the world. However, this service comes at a cost. You have to pay a little FBA fee in order to get the leverage of this service. Fulfillment by Amazon FBA can change the way you conduct your business. However, it is important to know about the key insights of this service.

In this blog, we are going to talk about Fulfilment by Amazon in detail so that you can figure out whether it is for you or not.

What is Fulfillment by Amazon?

AMAZON FBA 2023

There are a lot of steps that are needed to be done if you are into an eCommerce business. For instance, there is negotiating with a supplier, MOQ, and sampling. That is one side of the business.

The order side is preparing the items, packing them, and shipping them to the customer. Before the release of the Amazon FBA, a seller had to do all of that stuff by himself.

But, now, that thing has evolved into something that hasn’t been seen before and is named Amazon FBA (Fulfillment By Amazon).

Fulfillment by Amazon allows sellers to focus on the quality of their products while Amazon handles order fulfillment. Amazon will pack and ship your products to your customers while you can concentrate on other parts of the business.

How Amazon FBA works

So, the question is “How does Fulfillment By Amazon work”. The steps to Amazon FBA are pretty straightforward.

  • Sellers will buy the products from their supplier and send that inventory to the Amazon warehouse. Amazon will provide you with important details and sticker labels.
  • The products are stored in an Amazon warehouse. Amazon officials will start preparing the products as soon as an order is placed. (Note: Amazon charges a storage fee that is dependent on product size and weight)
  • After an order is placed, Amazon will update the inventory and start preparing the products for shipment.
  • Amazon will also handle customer care and will answer the questions of the buyer. That also includes the returns in case there is any fault in the fulfillment process.
  • Amazon will send you the after every two weeks.

Amazon FBA is becoming the game changer for every seller because it handles the logistics part of the business. A seller only has to make sure that the inventory is stocked up.

Keep in mind that there is a term called FBA fees that Amazon charges to the sellers. However, this fee is a lot cheaper than using your own or third-party fulfillment service.

Amazon taking the load of delivery off your shoulders does not mean that you should sit on your sofa. While Amazon takes care of logistics, you still have to choose the product, talk with the supplier, do the paperwork, and start making a selling strategy.

But, the bottom line is, that Amazon FBA is the service if a seller is looking to optimize his/her eCommerce business. This service is a good option if you have all the analytics of the business.

Reasons for Using Fulfillment by Amazon

using fulfillment by amazon

There are a lot of benefits of using Fulfillment By Amazon services. We are sure that you have heard about such advantages. But, in order to decide whether Amazon FBA is good for your business, you have to take a look at the reasons why Amazon FBA is good when compared to other third-party fulfillment services.

Earnings from starting the business

Amazon has a huge customer following. That means whenever a new seller has started his/her business on Amazon, there is a chance that he/she will start earning the money as soon as they have started the business.

Amazon customers have this frenzy of buying anything that is unique. Now, if you have a product that is unique, then a customer will always buy it from you.

That is not the only case. See, Amazon is known for providing quality services to its customers. If your brand name is associated with Amazon, that means the customer will also trust your brand. These customers will expect quality and quick delivery. Hence, that will also lead to more earnings at an early stage of your eCommerce business.

Free from managing storage,delivery,and customer services

One of the most popular reasons any seller tries to opt for Amazon FBA service is that it frees from the order fulfillment process.

See, order fulfillment is a long process and can go wrong if not taken care of properly. There are steps involved like checking what the customer ordered, what is the quantity, preparing the paperwork for that order, packing that order, and shipping it to the customer.

Fulfillment By Amazon saves a seller from such steps. In FBA, Amazon will prepare, pack and ship the order to your customer. It will store the products in its own warehouse. Not only that, but Amazon will also handle customer returns and queries.

Customer management is free of cost and is included in the FBA fees. However, if there is a product that needs special treatment, then Amazon will ask you to pay the return processing fee.

New chances for finding customers

Amazon is known all over the world and is providing services in more than 50 countries. It has over 2.1 Billion active users.

With Amazon FBA service, a seller has access to these countries and users. If you are selling products in America using the FBA service, you can also sell your products in order countries using the same network. All you have to do is select the right options in FBA settings.

However, there is a catch to that. Although Amazon is providing the FBA service in these countries, you still have to plan the selling and marketing strategy. That is because each country has a different set of customers and each set of customers requires promising and convincing pitches.

Leverage of Amazon Prime Service

Amazon Prime delivery service allows users to get their hands on products in one or two days. That is the main reason why customers order from Amazon. They want quick delivery.

The reason behind telling you this is that if you are using the Amazon FBA service, your products already qualify for Amazon Prime shipping. Meaning that customers will order your product more often just because they will get it in one/two days.

Non-FBA customers are also eligible for Amazon Prime. However, they have to prove quality and customer satisfaction.

Buybox Benefit

If you have a professional seller account and are using Amazon FBA services, there is a chance that you will win the Buybox. Buybox is a yellow button that allows customers to instantly buy the product. It rotates among different sellers of the same product/niche. According to the statistics, 80% of the sales are generated from Buybox.

Multi-Channel Fulfillment

FBA does not mean that Amazon will only provide the service if you are only selling on Amazon. If you have a Shopify Store or online website, Amazon will also provide the order fulfillment service for these stores. With that, a seller can target a larger customer base, allowing them to make a profit from any channel.

Discounted Shipping

Another reason why you should opt for Fulfillment by Amazon FBA is discounted shipping. Amazon has links with major shipping companies. That means these shipping companies offer lower shipping rates. That is a benefit for all FBA sellers. Sellers will have to spend fewer charges on shipping, allowing them to keep a larger ROI (Return On Investments).

Downsides of Fulfillment by Amazon

disadvantage of amazon FBA

Now that, you have an idea about the reasons and benefits of Amazon FBA, let’s talk about the downsides that come with this service.

Inventory Management

It is hard to keep track of your inventory when you are not involved directly in the process. Yes, Amazon will tell you about the remaining stock, but that is not helpful. And, if you go out of stock, Amazon will reduce the product ranking, meaning you won’t have good sales.

Sending the inventory is also a hard step. You can directly send the inventory to the FBA warehouse or can hire a middleman. There is also an option of asking your supplier to send the inventory directly to the Amazon warehouse. Regardless of the method, Amazon asks you to follow the guidelines and sticker labeling. If that is not done correctly, there is a chance Amazon won’t accept the shipment.

Limited Brand Awareness

Since fulfillment by Amazon FBA is packing your products, you are missing out on the opportunity of getting more brand recognition. The boxes that Amazon uses contain its own logo and a few details about your brand name and product. If you are looking to gain more brand awareness, you have limited chances with Amazon FBA service.

FBA service comes with a Fee

While Amazon FBA has its own benefits, these benefits come with a price known as the FBA fee. The greater downside of this fee is that it is not fixed. FBA fee is dangling on the product type, its size, and its weight.

How to Start Fulfillment by Amazon?

fulfillment by Amazon 2023

Starting Amazon FBA business is a one-time process and if not done correctly, it can lead to losses that you weren’t expecting. Equator Shipping has enlisted a detailed guide on how to start fulfillment by Amazon steps. Let’s move forward and discuss those steps.

Step 1: Select Your First Product

The first and most important step in the fulfillment by Amazon business is selecting your first product. See, selecting the right product will either make your business or end it. So, selecting a product is pretty time-consuming.

If there is no demand for your product, you will probably not get that many sales. If the production cost of that product is too high, it will give you less profit.

A seller can avoid such related problems by doing market research, brainstorming product ideas, and going to different suppliers.

Start finding products by using your passion

The best way when searching for the right product is to use your own passion. It will give you a head start. The idea behind product hunting is not limiting yourself and thinking out of the box.

If you already have a social media page, try introducing your product to your audience. For instance, if you are a traveler and your followers know that, consider launching a survival kit or backpack. Like this, you will get an idea of where to start.

Do the paperwork and market research

Market research is an important step whenever you are doing product hunting. It gives you a detailed insight into what your competitors are selling.

Moreover, the research also shows the pain points and problems in existing products. With that, you can improve and remove such problems and launch a product that everybody loves.

Avoid competing with established brands

One point with product hunting is avoiding crashing with established brand names. See, such brands have already created trust among their customers. So, the customer will always prefer their products rather than yours. So, try to find a product that does not relate to any brand or company. In simple words, pick an existing product and improve it in some way.

Step 2: Source the product

Sourcing your product is relatively easy than product hunting. However, it is still an important step. There are a lot of steps involved whenever you are trying to source a product.

Find the supplier

Now that you have a product, it is time to find a person who can make that product. There are two ways you can do that

  • Go for domestic suppliers
  • Go for suppliers outside the market you are targeting

If you are trying to make a profit, the best option is to go for Chinese suppliers. First, they are creative and will help you in developing a product from scratch. Second, they have the resource and can help in bulk production. Third, they offer lower production costs, when compared to US suppliers.

Ship out the Sample

After getting your product manufactured, it is time to check the sample. See, the sample gives an idea about how well your product looks when it reaches the customer. Ask for multiple sample products because some suppliers will scam you by giving samples from A grade lot and bulk production from B/C grade lot.

Analyze the samples and see whether they meet your requirements.

Ask for bulk shipping

After the samples have been approved, ask the supplier to send the inventory to the Amazon FBA warehouse. Do send the suppliers the necessary labels (FKNSU codes, Marking Labels) and marking guidelines as specified by Amazon.

Step 3: Market your product

Now that you have a product and that product is stored in an Amazon warehouse, start marketing your product.

See, in order to get the customers, you have to make them trust your brand. And, tell them that your product will help them.

Optimize your product

Listing your product is one part of the Amazon environment. It will get you a fair amount of traffic. However, to get more traffic you have to optimize it according to the standards. For instance, keywords should be placed. Relevant images should be added. And description should be done in bullet points.

SEO plays an important role in the Amazon keywords listing. Let’s say you are selling women’s shoes in the market. The keywords for this product will be Women’s shoes, Heels, Girl shoes, etc. There are keyword generators available for Amazon listing. Consider taking the help of such tools.

As for images, Amazon asks you to take images that have a white background (It is a strict guideline and you must follow it). You can take pictures and edit them accordingly. Or, there are services available that will help you in creating optimized images for listing.

Make social media page for advertising

Targeting your potential customers on Amazon is one way. Another way is to use the power of social media platforms such as Facebook or Instagram. TikTok is also an option.

Such social media platforms have huge followers and you can convert these followers into your customers. The images you were using on Amazon, add those to your social media page (With tweaks and ticks). Describe the product, create eye-catching videos and answer the questions asked by your followers. This is the best way to gain more followers and it will also create brand awareness in other markets, allowing you to easily launch the product in those markets.

Amazon also has its own advertising program known as Amazon PPC (Pay Per Click). It features your product in areas where your niche is popular. It will help you in gaining more audience.

Costs of Fulfillment by Amazon

costs of fulfillment by Amazon

The above sections cover the details related to what Fulfillment by Amazon is and what advantages it offers. Moreover, we also added a detailed section on how to start an Amazon FBA business.

However, in the above sections, we listed a term called FBA fees and storage fees. In this section, we are going to talk about the costs that are involved in Amazon’s FBA business.

Amazon Core costs involved in the FBA program

Standard size product

Product Size
Small (6 oz or less)$3.07
Small (6 oz to 12 oz)$3.22
Large (6 oz or less)   $3.72
Large (6+ to 12 oz)    $3.96
Small (12+ to 16 oz)   $3.77
Large (12+ to 16 oz)  $4.75
Large (1+ to 2 lb)$5.40
Large (2+ to 3 lb)$6.08
Large (3+ lb to 20 lb)$6.44 + $0.32/lb above the first 3 lb

Large Standard Size Product

Product SizeCost
3+ lb to 20 lb$6.08 + $0.30/lb above the first 3 lbs

Oversize Products

Product SizeCost
Small oversize
(70 lb or less)
$9.39 + $0.40/lb above first lb
Medium oversize
(150 lb or less)
$13.37 + $0.46/lb above first lb
Large oversize
(150 lb or less)
$86.71 + $0.83/lb above first 90 lb
Special oversize
(Over 150 lb)
$158.49 + $0.83/lb above first 90 lb

If you are going for clothing items, remember, there are different types of FBA costs related to that. Take a look at this.

SizeShipping weightCost
Small standard6 oz or less
 
6+ to 12 oz
 
12+ to 16 oz2
$3.43
 
$3.60
 
$4.15
Large standard6 oz or less
 
6+ to 12 oz
 
12+ to 16 oz2
 
1+ to 2 lb
 
2+ to 3 lb
 
3+ lb to 20 lb
$4.43
 
$4.62
 
$5.32
 
$6.10
 
$6.83
 
$7.01 + $0.32/lb above first 3 lb

If you are going for clothing items, remember, there are different types of FBA costs related to that. Take a look at this.

Amazon FBA Monthly Storage Fee

We also mentioned that you have to pay a storage fee if you are opting for the Amazon FBA program. Storage fees are what Amazon takes from you if your items are stored in the Amazon warehouse. The giant charges storage fees between the 7th and 15th day of the month.

Non-Dangerous Goods

Storage MonthStandard SizeOver-sized
January – September$0.75 per cubic foot$0.48 per cubic foot
October – December$2.40 per cubic foot$1.20 per cubic foot

Dangerous Goods

Storage MonthStandard SizeOver-sized
January – September$0.99 per cubic foot$0.78 per cubic foot
October – December$3.63 per cubic foot$2.43 per cubic foot

There is another catch to this storage fee. If your products are sitting in the Amazon Storage warehouse for more than 1 year, Amazon will charge you a fee that is described as

  • $6.90 per cubic foot or $0.15 per unit

Conclusion

Now that you have started your Amazon business and your products are flying off the shelves, it is time to optimize the business. Consider hiring a virtual assistant who will help you in managing the inventory. Moreover, look for more ways to gain customer attraction.

If you need any help, consider talking to the Equator Shipping representative by visiting the official contact page.

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