Fulfilment by Amazon (FBA) is a way to remove the stress of dealing with fulfilment, enabling you to scale your business. Giving retailers access to one of the most dynamic fulfilment networks in the world, there are many reasons that this is a great method of fulfilment.
If you’re considering using FBA, here are some of the main considerations that you’ll need to know:
How does Fulfilment by Amazon (FBA) work?
Once a retailer has decided to use Amazon FBA, they send their products to one of Amazon’s warehouses to be stored. When a customer places an order, Amazon pick and pack the products, shipping it directly to the customer.
This simple process means that once Amazon receives the products, the retailer does not have to be physically involved in the fulfilment process.
Benefits of FBA
There are many reasons that FBA can be a suitable fulfilment option for retailers. Benefits include:
- Fast delivery
Products listed on FBA can qualify for free shipping and Prime badges, meaning fast deliveries are made simple. - Unlimited storage space
There is an unlimited amount of space that you can have access to through FBA, meaning you don’t have to worry about finding additional storage space when you increase your inventory. - Saves time
While it does cost to use Amazon FBA, it also saves significant amounts of retailers’ precious time, making it possible to focus on other areas of the business.
- Flexible
There are various options, meaning FBA is suitable for almost any type of retailer. You can reduce the cost of fulfilment if you ship small, lightweight items, you can offer discounts through ‘subscribe & save’ and you can even sell from third party ecommerce sites but still have Amazon take care of your inventory. - Customer service
Amazon offers customer service as part of FBA, including 24/7 support in various languages. This can significantly reduce the amount of time spent by retailers trying to deal with customers’ queries. - Easy returns
Retailers using FBA can tap into Amazon’s seamless returns processes, taking care of all aspects of returns on the retailer’s behalf.
- Hassle-free shipping throughout Europe
There are many different fulfilment options to choose from. As an example, you can store inventory in different countries, dispatching them from specified fulfilment centres, depending on the customer’s location.
Disadvantages of FBA
- Specific preparation requirements
To ship products to Amazon, they must be prepared in accordance with very specific guidelines. This can be time consuming to make sure all packaging, labelling and shipping is done according to Amazon’s instructions. - Cost
The fees for FBA can add up quickly per unit, making it a less viable option for lower priced items. Amazon has a calculator that allows you to see how profitable FBA is as a solution for your products. Fees include:
Inventory storage fees
These are charges on all items stored in an Amazon fulfilment centre, based on the space that your products take up.
Fulfilment fees
You are charged per unit when each unit is picked, packed, shipped, handled, returned, or requires customer service.
Unplanned service fees
If your products arrive at the fulfilment centre and are not adequately prepared or labelled, an additional fee is charged.
Long-term storage fees
Products stored by Amazon for more than 365 days result in fees, however this can be avoided by careful inventory management.
Returns processing fees
When a customer is given free return shipping by Amazon, a returns processing fee is charged.
Removal order fees
If a retailer wants their inventory to be disposed of, Amazon is able to do this for a specified cost per item.
How to get started with Fulfilment by Amazon
- Set up FBA
To set up FBA, create an Amazon selling account and head over to Seller Central. - Create product listings
After adding your products to the Amazon catalogue, specify your inventory for FBA.
- Prepare your products for transportation
The next step is to prepare your products for their journey to the fulfilment centre, making sure it meets all Amazon packing guidelines and adheres to shipping and routing requirements.
- Ship your products to Amazon
Finally, you need to create your shipping plan, print Amazon shipment ID labels and send all of this with your products to the Amazon fulfilment centre.
- Get selling
As soon as Amazon has received your shipment, your products are ready for purchase.
Click here to read more from Modern Retail’s June 2021 Guide to Fulfilment.
Holly brings a wealth of experience in both print and digital publishing. As Modern Retail’s Content Editor, Holly is passionate about helping independent retailers to thrive in today’s ever-changing market.
