03/16/2024
What Is Amazon FBA? How to earn with this?
Amazon FBA is a handy service that gives sellers the opportunity to send their products to one of Amazon’s warehouses. Once there, any product will then be stored, packed, and shipped to customers who buy it.
This is in direct contrast to Amazon FBM (Fulfilled by Merchant) where sellers have to take care of the storage, packing, and shipping themselves.
How Does Amazon FBA Work?
Amazon FBA works by easily streamlining the selling process by allowing any FBA seller to simply send their products to Amazon. The e-commerce company will then handle the storage, packing, and shipping from then on.
This process helps sellers benefit from Amazon’s expertise in e-commerce selling and their impressive fulfillment network. Sellers should take advantage of this unique opportunity because it will allow them to spend less time storing and shipping their products, and more time focusing on key ways they can grow their business.
Specifically, Fulfillment By Amazon works as follows:
Product Storage: Amazon FBA sellers ship their products to an Amazon Fulfillment Center where they are safely kept until a customer buys your product.
Inventory Management: These Fulfillment Centers take care of the storage, packaging, and shipping of your inventory. Your products will be all ready to go whenever a customer orders one, allowing quick and painless deliveries.
Order Placement: Speaking of orders, whenever a customer orders one of your products, Amazon will automatically take care of the entire process. This also includes payment processing.
Find, Pack, and Ship: At an Amazon Fulfillment Center, Amazon staff members find your product, pack it up, and ship it to a customer’s home whenever it is purchased.
Shipping and Delivery: By effectively utilizing its huge logistics network, Amazon is (more often than not) able to ensure reliable delivery times. Some orders can even be received by the customer hours after it is purchased.
Fulfillment Fees: While there are many benefits of FBA, sellers will be required to pay storage, packing, and shipping fees for their products. The exact fee amount can vary depending on the specific dimensions of your inventory such as size, weight, and storage duration. Additionally, keep in mind that the per cubic foot fees can change based on the time of year.
Seller Dashboard: Amazon sellers can and should utilize the Seller Dashboard to help them easily keep track of their inventory, monitor sales, and even access important reports through Amazon Seller Central.
Prime Eligibility: When sellers use Amazon FBA, they are eligible for Amazon Prime, which can potentially lead to both increased visibility and customer trust.
Global Selling: Sellers can even start to create a global audience that loves their products thanks to Amazon’s international fulfillment network.
Understanding Amazon FBA Fees: How Much Does Amazon FBA Cost?
There are many costs and expenses associated with Amazon FBA that new sellers should consider before choosing this option. Keep in mind that these can vary depending on certain factors including product size, weight, per cubic foot charges, and storage duration.
Check out some of the most important fees Amazon FBA sellers can expect:
Fulfillment Fees: The particular fees cover the costs associated with storing, picking, packing, and shipping your inventory to customers around the world. They also can vary depending on the specific size and weight of the items. To make things easier for sellers, Amazon provides a useful fee schedule outlining the rates for each product category.
Long-Term Storage Fees: In certain cases, parts of your inventory may remain within a fulfillment center for a prolonged period of time. In these instances, you may be charged additional fees that help encourage sellers to manage their existing inventory more effectively. However, there are some cases where FBA Onsite can apply, allowing some sellers to avoid these particular fees.
Removal or Disposal Fees: If one of your products isn’t selling and you want to remove it from a fulfillment center, Amazon will charge you a fee that covers the cost of return shipping or proper disposal (if you want your product thrown away).
Inventory Placement Service (Optional): This optional fee allows FBA sellers to send their entire shipment (regardless of size) to one fulfillment center rather than multiple ones. This can be a good idea if you’re concerned about losing track of your inventory. Also, since it is optional, additional fees will apply.
What Percentage Does Amazon FBA Take?
Amazon FBA takes a percentage from each sale in the form of two fees:
Referral Fees: Referral fees are calculated based on your item’s sale price—but exclude any taxes or shipping fees—and are charged by Amazon for facilitating the sale. This fee can vary depending on the specific product category, although they usually range from 6% to 45% of the item’s sale price.
Keep in mind that different product categories have varying fee structures, so we recommend that you check out Amazon’s helpful fee schedule to discover more details.
FBA Fee: FBA fees cover any storing, picking, packing, and shipping costs associated with your product. These fees also include a fulfillment fee—based on the item’s size and weight—and a storage fee—based on the volume in cubic feet—of your stored inventory.
Is Amazon FBA Worth It?
Yes, Amazon FBA is definitely worth it. With a host of benefits that allow sellers to scale their business, it’s a great choice for new and old entrepreneurs alike.
Since Amazon boasts a huge customer base spanning the entire globe, it can be hard for sellers to take advantage of the many opportunities this affords without FBA. When you’re an FBA seller, you can make your products visible more easily to this audience, leading to increased sales.
Further, the convenience that Amazon FBA offers its sellers may make it a valuable choice for entrepreneurs, although it’s important to take the time to research every aspect of the fulfillment method before diving in.
