Amazon FBA – How Does It Work? A Detailed Guide
According to reports, Amazon served as the largest e-commerce retailer all over the USA with more than 38% of the total market share in 2022.
As of 2023, 56% of consumers have started to search for online products on Amazon alone. These stats explain how the Amazon market is growing more than ever for online shopping of a variety of products. It means anyone looking to start selling products online must opt for Amazon to come up with a successful business.
For entrepreneurs, the best way to start is to go through the Amazon Fulfillment by Amazon (FBA) Program. Under this program, retailers get a chance to ship their products directly to the warehouses of Amazon. These products are stored by Amazon unless retailers get an order for shipment. Most starters are afraid to know whether FBA is as simple as it seems or not.
To help such individuals, we have shared a detailed guide on the Fulfillment by Amazon Program.
Introduction to Amazon FBA
Fulfillment by Amazon is an official program offered by Amazon that helps different third-party sellers to outsource their fulfillment processes. It provides retailers with services like storage, packaging, and shipping of products. The program lets people secure their inventory through Amazon fulfillment centers, where FBA items are stored in warehouses. Hence, those working with Amazon can conveniently plan their selling practices.
While more than 73% of sellers take advantage of the FBA, it makes a perfect start for entrepreneurs. This is because listing products with the Amazon FBA grants prime badges to qualified offers. As a result, buyers are provided with 2-day free shipping of products, which turns out to increase customer traffic.
The program is extremely flexible for starters as individuals can store their products regardless of quantity and quality. It means you can store from a single item to a myriad of items with no restrictions. Also available are sub-programs and tools like the remote FBA program. It allows you to ship your products to other countries by keeping your inventory in the USA.
How Amazon FBA Works?
By creating an Amazon seller account, anyone can let the platform handle all kinds of shipping like deliveries, returns, and refunds. To go through the process of enrolling and shipping items, pay attention to the following steps.
1. Strategize Product Fulfillment
With FBA, users can easily fulfill all the products available for sale or a few of them as per requirement. Also, you are free to fulfill items that may be a part of different sale channels including websites you own or manage.
2. Add Items to FBA
By using your Amazon seller account, move forward to secure your products In Amazon fulfillment centers. You can enroll your products in FBA through two methods.
- When you plan to add new inventory, go to the ‘Offer’ tab, and look for the option “Amazon will ship and provide customer service.”
- In case you wish to convert already added products into FBA items, all you have to do is select the ‘Manage Inventory’ option through the main menu. Right-click on the product which you wish to enroll to FBA and click on ‘Change to fulfilled by Amazon’.
Keep in mind, whenever you wish to add any products to FBA; do recheck for their dimensions as it prevents usually occurring inventory issues.
3. Prepare and Pack Items
If you wish to come across an uninterrupted experience at Amazon fulfillment centers, then you must make sure of all the requirements.FBA shares a set of guidelines for packaging, preparing, and labeling to provide users with a smooth check-in. Give attention to things like product measurement, bubble wrap, storage boxes, containers, plastic, and shipping scale.
To distinguish your FBA items, you must print Amazon bar codes through a printer. For this reason, you must have the Avery 8160 or 5160 paper.
4. Transfer Inventory to Amazon Fulfillment Centers
To ship your products to the fulfillment centers, go through the seller central main menu and select ‘Send to Amazon.’ Doing so will help you come across the next steps and follow the procedure easily. Always select eligible partnered carriers to ship your products. These professionals provide you with printed labels and accurate tracking information.
Always try to keep track of your inventory as it helps you with further shipment and restocking of items. Monitoring your inventory is a great way to upscale your business like a pro.
5. Boost Your Sales
FBA enables discounted delivery and free shipping to different users. You can try to list prime badges on offers and make them attractive enough to entice buyers. Also, there are options through which you can apply sponsored ads and other advertising tools for more traffic. According to reports, more than 59% of brands invest a total of 60K dollars on Amazon advertising every month.
What Is The Requirement Of Amazon FBA Inventory?
On a basic note, most of the products that are compatible for sale on Amazon can be listed in the FBA inventory. However, all the products sold on Amazon are categorized as dangerous or non-dangerous goods according to the FBA inventory. Dangerous goods are the ones that include inflammable or toxic parts. For instance, magnetic materials, chemicals, or lithium batteries.
These items cannot be considered eligible for FBA. Furthermore, if you’re about to add products to the inventory with expiration dates, make sure to update their shelf life before enrolling them.
How Much Does Amazon FBA Cost?
FBA does not cost any kind of flat fee for inventory and enrollment. The program's charges vary according to operations and inventory fulfillment. It includes,
The cost of fulfillment includes the picking and packing of items, along with their size and weight, customer service and returns, and shipping or handling of products. This type of fee is further categorized into apparel and apparel products.
Monthly Storage Fees
Amazon charges storage fees on the basis of product size, month of the year, status of goods, and volume. These rates differ in the period of January to September and October to December.
Inventory surcharges are the cost that is applied to products that are stored in FBA inventory for a period of over 271 days. These charges depend on any applicable fees that may be per foot or per unit, the total number of units, and storage duration.
Unplanned Service Fees
This is the fee chart for products that remain improperly packed and require extra preparation and packing at the Amazon FBA fulfillment center.
What Are The Benefits Of Amazon FBA?
There are plenty of benefits that sellers can receive by signing up for Fulfillment by Amazon program. These include,
Easier Access to the Audiences of Prime
All the qualified listings of FBA are considered eligible for prime and further receive the FBA prime logo. It helps sellers connect with high-quality audiences who particularly look for free one or two-day shipping and prime-eligible products. Such audiences may convert only if your product owns a Prime badge.
Amazon’s Customer Assistance Service
The customer support service by Amazon handles all kinds of refunds, inquiries, and returns on behalf of FBA. It is a free service for all the sellers except for the fee that it may charge under the name of refund processing fees that may be applied to particular products.
Association of Amazon with Products
By connecting with FBA, sellers can associate the name of Amazon with their products and earn customer trust. Buyers looking to buy FB items will expect better service and quick delivery due to association with Amazon. As a result, the quality of products becomes more promising with FBA.
Amazon is capable enough to handle and fulfill different inventories that may be sold on multiple channels other than the official marketplace of Amazon.
Subsidized Shipping Fees
Sellers using the FBA service can earn higher discounts on shipping companies due to their relationships with Amazon. Also, FBA sellers get an opportunity of discounted shipping over a particular price range because FBA items are eligible for Amazon Prime Shipping and Free Super Saver Shipping.
Taking your business to the Amazon FBA world can easily boost your sales and upscale your business. All you have to do as an Amazon seller is to give attention to the guidelines and stick to particular rules and regulations.
The fulfillment by Amazon program is considered as an overall benefit for sellers.
There are different ways to earn through this program and you can easily learn about it to know more.
Frequently Asked Questions
1. Is Amazon FBA good for beginners?
Getting started with Amazon FB is a great way to upscale your business and connect with a higher number of audiences. Beginners can start as Amazon sellers or enroll in an e-commerce business on the Amazon marketplace.
2. What is the inventory limit for Amazon FBA?
There is no minimum requirement for Amazon FBA inventory. Users can easily place a single unit and keep track of their inventory. However, there is a maximum limit for the number of products in the inventory.
3. What is the minimum budget to start selling on Amazon FBA?
On a minimum rate, sellers require $40 to earn an Amazon seller account professionally. After the fee of $30 is required to earn a unique barcode that is added to each item enrolled in the FBA.
4. What products sell best on Amazon?
General categories like clothing, electronics, toys, games, pet supplies, home products, kitchen essentials, and jewelry are considered as most popular and best-selling on Amazon.