What is Fulfillment by Amazon (FBA)?

What is Fulfilment by Amazon (FBA)?

Fulfillment by Amazon (FBA) is a service from Amazon that provides sellers with support with storage, packaging, shipping, and local customer service. This can make selling through Amazon a lot easier for you as a seller.

FBA stands for Fulfilled by Amazon. It is Amazon's storage and fulfillment service that serves Amazon sellers for orders that come from the Amazon marketplace.

There, your items are stored in warehouses until they are sold. When an order is placed, Amazon employees prepare the order and ensure that the right order reaches the end customer in the right quantities.

As a seller, Amazon can ship orders on your behalf through the Fulfillment by Amazon (FBA) program, or you can take full ownership of the shipping yourself through the Fulfillment by Merchant (FBA) program.

How do I start selling through Fulfilment by Amazon (FBA)?

To use Fulfilment by Amazon as an Amazon seller you need a number of things.

What do you need?

  • An Amazon Sales Account;
  • Products
  • EAN Codes / UPC Codes.

The benefits of using Fulfilment by Amazon (FBA):

Sellers can take advantage of all of Amazon's resources and benefits when they sign up for Fulfillment By Amazon (FBA). All advantages at a glance:

  1. Link the Amazon name to your assortment: By using Fulfilment by Amazon (FBA) you can link the name "Amazon" to your products: This is a quality guarantee that your customers will appreciate. The fast customer service that is included with Fulfilment by Amazon (FBA) will also be appreciated by your Amazon customers.
  2. Cheaper international shipping costs: because Amazon has a good relationship with various shipping parties within Europe, they can deliver your package cheaper to your customer. You can also consider offering free shipping above a certain amount.
  3. No more doing customer service yourself: If you use Fulfilment by Amazon (FBA), Amazon will also take care of customer service at the same time. This way you don't have to answer everything every time.
  4. Standardized shipments: All Fulfillment by Amazon (FBA) orders are processed in the same way amazon would with their own stock of products. This means that when someone buys an item, Amazon takes the item from their inventory, packs the item, and ships it to your customer.
  5. Sell directly internationally: Because Seller Central takes place on a European level, Amazon can also ship your stock that you can offer on different platforms in different countries.
  6. Better Buy Box positioning: Because products are stored and shipped locally, the end customer can receive his orders much faster. That is why your Buy Box position improves if you use Fulfilment by Amazon (FBA).

The disadvantages of using Fulfilment by Amazon (FBA):

  1. A pricey overall picture: The costs for fulfilment and storage by using Fulfilment by Amazon can add up fairly quickly in the long term. Especially if you have products in stock that do not sell quickly.
  2. Accurate product guidelines: Amazon has specific requirements for delivering some products to ensure they arrive at Amazon fulfillment centers in optimal conditions. Amazon can also do this after your products, but there is a considerable price tag here.
  3. Problems with product handling: Sometimes inventory can get lost or damaged during the execution process. Often this error lies with Amazon and not with the seller so that the customer is refunded by Amazon. However, some cases can go unnoticed, damaging inventory and losing sellers' money.
  4. More returns (and the cost thereof): Amazon, like Zalando, makes returns very easy. This way your customer can easily return any product if it was purchased with Fulfilment by Amazon. The fee you paid for the returns is just as high as the fee you paid for FBA.
  5. Confusion of identical products: Amazon's default inventory setting is to merge the same products from one manufacturer. That means that if you sell the exact same product as another seller, your inventory can be confused with your competitor's. Of course, that is not very convenient.

What are the costs of Fulfilment by Amazon (FBA)?

  1. Standard seller fees: Amazon takes about 15% of the product price as a selling fee when your item is sold. Exactly how much that is varies per product. Amazon communicates on their platform that they charge 15%.
  2. Stock Storage costs: Based on the calendar month and the daily average volume, sellers are charged monthly storage costs per cubic meter. These costs also vary by product type. Long-term storage charges apply to products stored in an Amazon fulfillment center for more than 365 days and added to the monthly inventory storage fee.
  3. Fulfilment by Amazon (FBA) fees: The cost of FBA in addition to the standard selling fees differs quite a bit. The amount of the costs depends on the size, weight, shipping and handling, the amount of customer service that comes with your product and the number of returns you receive.

About the Author: Dan Boom

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