Amazon FBA (Fulfillment by Amazon)– A Complete Guide

Are you an entrepreneur running a small or medium-sized business in India looking to expand your reach internationally? Or are you an established manufacturer or wholesaler exporting goods globally? With Amazon FBA, you can use Amazon’s massive global Fulfillment network and reach your customers without the hassle of managing shipping, allowing you to focus on sourcing great products and growing your brand.

When you first learn about selling on Amazon, you’ll encounter many acronyms. Perhaps the most common Amazon acronym is FBA, which stands for Fulfillment by Amazon—the unique fulfillment method Amazon provides to the sellers. Instead of storing, handling, and shipping all your orders yourself, Amazon takes care of it for the seller, but this service has a fee. Shipping with FBA costs 30% less per unit than standard shipping options offered by major carriers and 70% less per unit than comparable FBA premium options.

Whether you’re an experienced Amazon FBA seller or just starting, this comprehensive guide is tailored to meet your all needs. From understanding the fundamentals to optimizing your FBA services, we’ve got all the insights to the success of your business. So, without wasting time, let’s start.

What is Amazon FBA?

Fulfillment by Amazon (FBA) is a service that allows you to appoint Amazon to process your orders. Through FBA, you can also store your products in Amazon’s extensive network of fulfillment centers. Moreover, you can provide your customers convenient shipping options, from free two-days shipping for Prime members to free shipping for all.

Amazon takes care of everything from selecting the items to packing, shipping, managing and handling returns. The Amazon FBA program effectively reduces costs, boosts sales, and gives you more time to concentrate on growing your business.

FBA is a component of Amazon’s comprehensive automated services, which Amazon calls the supply chain. Also, Amazon offers an extension of FBA, which is known as Multi-Channel Fulfillment or MCF. Through MCF you can delegate order fulfilment for purchases made on your website or any other sales channel.

Also Read- Streamlining Payments for Indian Sellers on Platforms like Amazon

How Does Amazon FBA Work?

Let us look at how a seller can use Amazon FBA to meet their business goals.

 

Choose the FBA Delivery Options

First, the seller must choose from the different FBA delivery options provided. You can decide how you want FBA to handle your products, as a whole or only some of them. Moreover, FBA can help fulfil your multi-channel orders.

Add Products to FBA

Once you decide what products to send to the FBA center, it’s time to enroll your products from your seller account. Double-check the products you have ordered with dimensions to avoid last-minute issues.

Ready to Ship your First Order?

Suppose you have chosen to keep the products at your warehouse, and then it’s time to pack your first order. Start by labeling and packaging the product adequately to ensure products get transported safely and securely.

Ship Products to Amazon

Once your product is labelled and packed, it’s time to ship it to the Amazon fulfillment network. The staff at the fulfillment center will guide sellers’ step by step through the shipment workflow.

Track and Manage

Tracking your products and managing your inventory with FBA is accessible and helpful. You can start and scale your business efficiently with the help of the FBA dashboard. A seller needs to monitor their inventory to avoid long-term storage costs.

How to become an Amazon FBA seller?

Becoming an Amazon FBA seller involves the following steps:

• Start by signing up for an Amazon selling account and choosing the plan as per requirement.
• Enroll your selling account with FBA.
• Now you can create new listings for your FBA account and convert your existing listings to FBA.

Whereas to Register for FBA, you have to follow the below-given steps:

• First, the user needs to navigate to the seller’s central account.
• Now click on the gear icon and select the account info option.
• On the seller account information page, click on manage.
• Choose the option to register with FBA and follow the steps displayed on the screen.

The user must meet all the requirements outlined in the terms and conditions section of the Amazon FBA page. Moreover, a few other specific requirements for adding inventory in FBA are suggested.

Also Read- A Guide to Starting Your International E-Commerce Venture from India

Amazon FBA Calculator

Gaining insights into your business expenses and their influence on your earnings is crucial to choosing the right fulfillment strategy. And, being an Amazon FBA seller, you can leverage the Amazon FBA calculator to gain insights into the potential profitability of each item and sale. This can help you to compare the projected costs and profits between FBA and your in-house fulfillment approach.

Amazon FBA Benefits

• Cost Efficient- FBA shipping costs are typically 30% lower per unit than standard shipping options from major US carriers and 70% lower than premium FBA alternatives.
• Expand Your Fulfilment Across Channels- With Amazon FBA’s multichannel fulfillment options, you can broaden your market to other platforms like eBay. By using Amazon’s vast shipping network for order fulfillment, you can get major benefits from streamlined operations, cost savings, and quicker shipping for customers regardless of where they purchase.
• Boosts Sales- FBA offers two days of dependable shipping, which can significantly increase your visibility and sales on Amazon. Other programs like FBA Subscribe and Save foster repeat sales by providing customers with scheduled deliveries of essential items.
• Saves Time- FBA handles order processing, customer inquiries, and returns so that you can focus more on your business’s essential aspects.
• Operational Optimization- FBA provides various services to simplify your operations. One such instance is the Buy with Prime feature which helps provide your customers with Amazon checkout and Prime delivery experience on your website.

Amazon FBA Disadvantages

Since no two people are alike, it’s critical to consider why FBA services might not be the best fit for your requirements. The following are some points to consider:

• Fixed fee for Amazon FBA- Amazon FBA charges extra fees. Significant changes include picking and packing, monthly storage, and long-term and order fulfillment charges. This means you must pay based on how much inventory you have, for how long, etc. You must understand your sales volume and have the proper inventory to maintain a profit. You must also ensure that these fees are cost-effective for your business; otherwise, you may lose money.
• It’s hard to know your inventory- You can make as much of your product as possible, but it should sell slower than you think. So, it can be challenging to know about your inventory, like what you want and what you need to increase, especially when it is stored in fulfillment centers. If your products go out of stock, Amazon will lower its ratings and visibility, resulting in lower sales. Knowing what you have left to meet your customers’ demands can take time and effort.
• Prepare your product requirements- Amazon has specific requirements before shipping your products to distribution centers. Amazon’s ASIN/UPC system can be challenging, where you have to package and label your products individually, so you must ensure all this is done before submitting them to Amazon.
• No free trial for Amazon FBA- It won’t be ideal if you cannot start your FBA business with a free trial. If you sign up for Amazon FBA and later find out that FBA is a red flag for your business, you may have wasted your money.

Also Read- Top 10 Reliable International Courier Services from India in 2024

Final Words

In conclusion, Amazon FBA can be a powerful tool for businesses of all sizes looking to expand their reach and increase sales. It offers several advantages, including access to Amazon’s vast fulfillment network, improved product ranking, and trusted customer service.

However, weighing the pros and cons carefully before deciding whether FBA is the right fit for your business is essential. Potential drawbacks include the fixed fees associated with FBA, the challenge of managing inventory, and the specific product preparation requirements. If you’re considering using FBA, be sure to research and understand the costs involved before deciding.