When it comes to online retail, Amazon is king.
Using their FBA program (Fulfillment by Amazon) can be a great way to increase sales because it gives buyers confidence that they are buying from a trusted source, and it also makes shipping and returns easier for customers.
There are a number of factors to consider when deciding whether or not to use FBA – including whether or not the products you want to sell are eligible for inclusion in the program (Amazon has a list of eligibility requirements on its website) and how much it will cost you to use the program.
Amazon charges fees for storage, packaging, and shipping. These fees can add up, so it’s important to do your research and make sure that using FBA is worth the cost.
Despite these costs, using FBA can be a great way to increase sales and build trust with buyers. If you’re considering selling products online, it’s worth taking a closer look at Amazon’s FBA program to see if it’s the right fit for your business.
Use this outline to skip to any section of this page:
- What is Amazon FBA and how does it work?
- The benefits of using Amazon FBA for your business
- The downsides of selling with FBA
- Will using FBA increase my sales?
- Tips for increasing sales with Amazon FBA
What is Amazon FBA and how does it work?
FBA is an acronym for “Fulfilled by Amazon.” It is a service offered by the ecommerce giant that allows sellers to send their products to Amazon’s warehouses – where they will be stored, packed, and shipped out to customers.
The service has become popular among online entrepreneurs because it removes a lot of the hassle and uncertainty of shipping and fulfillment.
- When a seller signs up for the FBA program, they must send in a certain quantity of each product they plan to sell.
- Amazon will then store the products in one of their warehouses, and when an order is placed, the product will be packaged and shipped out by Amazon.
- This process removes the need for the seller to manage their own inventory or coordinate shipping.
In order to use the Amazon FBA process, merchants must first sign up for an Amazon Seller account and then create a listing for their product.
Once the product is listed, Amazon will provide the merchant with shipping labels that they can use to send their products to one of Amazon’s warehouses.
At that point, an Amazon seller arranges for their inventory to be shipped to Amazon’s warehouse(s). Once the products are received by Amazon, they will handle everything from there – storage, packing, and shipping out to the customer.
The benefits of using Amazon FBA for your business
Automates most of your supply chain and fulfillment
If you’re an entrepreneur with a great product idea, but don’t have the time or resources to handle fulfillment yourself, Amazon FBA may be a great option for you. We cover this topic more in our guide: Is Amazon FBA Worth It? The Benefits, Pros & Cons.
With Amazon FBA, you can outsource your entire fulfillment process to Amazon, and they’ll take care of packing and shipping your products to your customers. This can save you a lot of time and hassle, and it can also help you build a better relationship with your customers by ensuring fast and accurate fulfillment.
There are a few things to keep in mind here:
- Amazon FBA is only available for products that are sold through Amazon.com.
- If you’re looking to sell your products through other online marketplaces or brick-and-mortar stores, Amazon FBA may not be the right option for you.
- It can be expensive, so you’ll need to make sure that the extra fees are worth it for your business.
- Overall, Amazon FBA can be a great way to streamline your fulfillment process and improve your customer experience.
Easier to focus on marketing and growth
One of the biggest benefits of using Amazon FBA is that it allows you to focus on marketing and growth.
With your inventory taken care of by Amazon, you can concentrate on increasing awareness of your brand and products, driving traffic to your listings, and ultimately boosting sales.
- This allows you to scale quickly, without the hassles of supply chain and fulfillment.
- As your business grows, you can increase the number of products you sell on Amazon without having to worry about logistics and shipping.
- This can help you to expand your reach and attract new customers.
- Some Amazon sellers opt for using an Amazon marketing agency, but you need to evaluate the upsides and downsides to see if it’s worth it for you.
Overall, using Amazon FBA can be a great way to simplify your business and allow you to focus on what’s most important – growing your brand and increasing sales.
Higher sales and conversion rates
The popularity of Amazon FBA continues to grow as more and more sellers discover the benefits it offers. Higher sales and conversion rates are two of the biggest advantages.
- When shoppers see that an item is Prime eligible, they are far more likely to add it to their cart.
- FBA items often see a higher conversion rate than those that are not.
- This is because Prime members enjoy free two-day shipping on millions of items.
- Shoppers know that FBA items will arrive quickly and be properly packaged.
Plus, Amazon’s algorithms give FBA items a boost in search results, which can lead to even more sales.
If you’re not already selling on Amazon, or if you’re considering switching to FBA, there’s no time like the present. The benefits are clear, and with Amazon’s ever-growing customer base, there’s no doubt that FBA is the way to go.
The downsides of selling with FBA
That being said, you should be aware of the downsides to FBA – because there are rare cases where you might want to use a different selling method/channel.
Higher selling fees
When it comes to Amazon FBA, the high selling fees are definitely a downside.
For starters, you’re going to be charged a $39.99 monthly fee as well as a referral fee that’s based on your product’s category and weight.
Then, once your item sells, you’ll have to pay a fulfillment fee which is based on the size and weight of your product. So, if you’re selling a small item that weighs less than 1 pound, you’ll be charged $2.65 for shipping and handling.
However, if you’re selling a large item that weighs more than 25 pounds, you could end up paying over $100 in fulfillment fees. Clearly, the high selling fees can quickly add up, which is why it’s important to do your research before choosing Amazon FBA as your selling platform (or use these strategies to reduce your FBA fees).
Less control of your inventory
When you use Amazon FBA, you are handing over a lot of control to Amazon.
They are in charge of storing your inventory and shipping it out when orders come in. This can be a downside because you lose a lot of control over your inventory.
- For example, if Amazon runs out of stock on one of your items, they may not be able to get more for you right away.
- This could cause you to miss out on sales and lose money.
- Plus, Amazon may not always have the best prices on the items that you sell.
So, if you are looking to maximize your profits, you may want to keep your inventory stored elsewhere and only use Amazon FBA for items that are not selling well elsewhere.
Will using FBA increase my sales?
Yes, most of the time. Remember – it can help increase a product’s visibility and CTR (click through rate) on Amazon.
Products that are sold through FBA tend to rank higher in Amazon’s search results than products that are not sold through FBA, and they also tend to sell more quickly than products that are not sold through FBA.
How much does FBA increase my sales?
There is no definitive answer to how much FBA will increase your sales. However, there are a few things to keep in mind:
- FBA can help you manage your inventory and orders more efficiently, which can lead to a smoother shipping process and fewer customer complaints.
- Using FBA can help you reach a larger audience since Amazon Prime members have free 2-day shipping on eligible items.
- This could result in more sales for your products, since shoppers have a strong preference for Prime-eligible items.
However, it’s important to note that using FBA may also incur additional costs, so be sure to factor that into your decision-making process.
Ultimately, the best way to determine whether or not FBA is right for you is to test it out and see how it affects your sales.
Is FBA still profitable right now?
Yes, there are many sellers who are making a good profit. FBA has become more competitive in recent months as the number of sellers has increased, but there are still many products that can be sold profitably through FBA.
- Keep in mind – FBA allows sellers to reach a larger audience than they could through their own channels.
- It’s also worth noting that Amazon’s customer base is growing rapidly.
- This means there is considerable potential for growth even in highly competitive categories.
Amazon will always keep their fees low enough to allow their sellers to operate profitably – otherwise if your business fails, Amazon’s business fails.
Can you lose money selling FBA?
Absolutely – and many Amazon FBA sellers lose money and fail. A few reasons for this:
They don’t do their research.
They may not know what products to sell, how to price their products, or how to market their products. They may also not understand Amazon’s policies and procedures. As a result, they may not be able to make a profit or they may lose their account.
They do not invest enough time or money into their business.
They may not spend enough time researching products or finding the right supplier. They may also not have a good marketing strategy, which means that they will not be able to attract buyers. Furthermore, they may not spend enough money on advertising or on improving their product’s quality.
They do not have the right mindset.
They may give up too easily or they may be impatient. They may also focus on the wrong things, such as making money instead of providing good customer service. As a result, they will not be able to build a successful business.
Tips for increasing sales with Amazon
Use an FBA prep center to automate + streamline
FBA prep services can handle all of the product preparation for you so that it meets Amazon’s standards. Head to our homepage for more details on inspections, packaging and labeling.
This includes tasks like barcoding and preparing for shipment – which can be a huge time-saver, because it’s one less thing you have to worry about. And when your product is meeting Amazon’s standards, it makes it more likely to be found by shoppers which can lead to more sales.
Perform strategic keyword research
Another important tip is to perform strategic keyword research. This means finding out which keywords potential customers are using to search for products like yours.
- Once you know this, you can include those keywords in your product listing title and description.
- This will improve your SEO, which means more people will see your listing when they do a search.
- The more people who see your listing, the greater your chances of making a sale.
Heavily prioritize great reviews
Another important tip is to heavily prioritize great reviews.
Potential customers trust online reviews just as much as personal recommendations.
- By having good reviews, you can increase conversion rate, meaning more people will buy your product.
- Ask friends and family to leave reviews for your product to get things started.
- Once you start getting sales, reach out to those customers and ask them to leave a review.
- The more positive reviews you have, the better chance you have of making future sales.
Bundle and kit to increase AOV
When it comes to selling on Amazon, there are a few different ways to increase your average order value (AOV). One way is to bundle products together.
- This means that you offer a package of products at a discounted price, as compared to buying the products separately.
- Bundling can be an effective way to increase sales, as customers are more likely to purchase multiple items at once if they are offered a discount.
- It also helps you stand out from the competition, as opposed to offering the same generic product.
Another way to increase AOV when selling on Amazon is by using kits. A kit is a package of products that are designed to work together.
- For example, you might sell a kit that includes a camera, tripod, and case.
- This can be an effective way to increase sales, as customers are more likely to purchase multiple items if they are all related.
- By using bundles and kits, you can increase your AOV when selling on Amazon. This can help you boost your sales and grow your business.
If you’re selling on Amazon, following these tips can help increase your chances of making a sale. Using an FBA prep center to automate + streamline your supply chain, performing strategic keyword research to improve SEO and generate more sales, and heavily prioritizing 5 star reviews to increase conversion rate are great strategies to achieve sustainable growth for your business.