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Amazon FBA - Tips, Pros and Cons

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amazon FBA - sell on amazonAmazon’s fulfillment program –  Fulfillment by Amazon is an awesome tool for eCommerce owners. Basically speaking, you don’t need to worry about inventory storage, or shipping to customers. For small business owners who make a living selling stuff online, storage and shipment are the two main headaches to tackle each every day, and that could hinder their expansion and profit growth.

How to use FBA

If you have your own products manufactured by factories, you can directly have the products sent to Amazon warehouse for storage. Amazon will scan and record your products for storage, you can then monitor your inventory using amazon’s tracking system online.

 
After customers decided to purchase your products, they will order them from Amazon’s fulfillment center. If the purchase is over $35, the shipping cost is free, because because your products are qualify for free shipping on eligible or Prime.

According to a survey conducted with Amazon sellers, over 70% of FBA participants confirmed that their sales increased a lot (20% and more) since they join the program.

If you get a few orders a day, rushing to the post office, or UPS stores may not sound like a big hurdle, then imagine when your sales go up and you are dealing with hundreds, or even thousands of orders in one day, Amazon FBA can easily manage the order volume for you and send all the products out as quickly as possible.

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Amazon will take care of the after-sale customer service for you. If anything goes wrong, customers will contact Amazon for solutions, so that you don’t have to be waken up midnight by an angry customer, lol.
amazon FBA fulfillment by amazon

Register as professional seller when using FBA

If you are a professional seller on Amazon, you are charged with less commissions by Amazon due to the bigger volume you are supposed to have. Your goal is to sell at least 40 or more items a month, then you are saving money on commission.

Professional sellers have more options and freedom when it comes to listing products. As a professional seller, you can list products that aren’t being sold on Amazon currently, if the product has good demand, you are in a great brand new market with no competition. Also you can bundle your products and list them, this usually is a good way to increase sales. You can also sell products in some categories that not available to individual sellers.

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Above all these benefits, one very good reason to register as a professional seller is that, your listings can be placed on top of the listing page rather than being pushed down and buried at the bottom.

Pros of FBA -Fulfillment by Amazon

There are many good reasons for Amazon sellers loving FBA, among them one important reason is that, more than 50% Amazon customers prefer to purchase items through FBA over other third-party merchants. This is because they trust Amazon to deliver their packages to them quickly, they also know that there is an extensive return policy in place to take care of those unpredictable events. They can buy worry-free from FBA participants.

Customers also adore “Free Shipping” products. Since products shipped through FBA are eligible for free ground shipping or free two day shipping for prime members, this is another reason FBA sellers can increase sales after joining the program.

Without FBA in place, small business owners may have to spend more upfront to hire helpers when their sales grow, but with Amazon FBA, sellers can now make more money without having an additional overhead.

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Cons of FBA – Fulfillment by Amazon

There are not many cons of FBA except the fees. However, the free shipping feature can leave a good room for sellers to increase the price and still be able to compete with other listings, the fee expenses can be compensated in some way.

The return policy of Amazon FBA is a good reason to attract more sales for you, but some customers may take advantage of it at the expense of your inventory. If you found the rate of return is unreasonably high, you may have to reconsider using FBA for that specific product.

In all, Amazon FBA pros clearly outweigh the cons, and it is definitely a solid business model that many Amazon sellers are very happy with.

So now you can see that smart eCommerce owners can make great success with FBA program if they are also smart about niche selection and product procurement. Amazon has built up a solid system for them to make profits from.

 

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**Disclosure of Material Connection:

Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally or believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials.”

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