Amazon FBA has been a game changer for many online sellers. By leveraging Amazon’s vast distribution network and fulfillment capabilities, sellers can reach a wider audience and tap into Amazon’s well-oiled logistics machine. This can free up time and resources that can be better spent on other aspects of the business, such as marketing and product development.
Of course, there are costs associated with using Amazon FBA, but for many sellers… these costs are offset by the benefits by a wide margin. And as Amazon FBA continues to grow in popularity, it’s likely that more and more sellers will join the program – which could lead to economies of scale that further reduce costs.
So if you’re considering whether or not to join the program for your business, this article will cover if Amazon FBA is worth it – along with the benefits, pros and cons.
Use this outline to skip to any section of this page:
- What is Amazon FBA?
- Pros & benefits
- Cons & downsides
- Is Amazon FBA worth it?
- Amazon FBA tips
What is Amazon FBA?
FBA (Fulfillment by Amazon) is a business model in which Amazon acts as a retailer for third-party sellers. Under this arrangement, sellers ship their products to Amazon’s fulfillment centers, where they are stored, packaged, and shipped to customers on the seller’s behalf. This hands-off approach to fulfillment has made Amazon a popular platform for entrepreneurs and small businesses.
In addition, Amazon FBA offers a number of other benefits, including access to Amazon’s massive customer base, Prime shipping, and customer service support. For these reasons, Amazon FBA has become a popular way to sell online.
When an order is placed, Amazon will pick, pack, and ship the product to the customer on behalf of the seller. Amazon FBA can be a great way to scale your business, as it frees up your time (instead of being stuck handling shipping and logistics yourself).
Additionally, Amazon’s massive customer base and well-oiled fulfillment operation can help you boost your sales and reach new customers. However, there are a few things to keep in mind before signing up for Amazon FBA.
- You need to factor in the cost of storage and shipping when pricing your products.
- You need to make sure your products are eligible for Amazon Prime shipping.
- You need to be aware of competition from other sellers, who are using the same Fulfilled by Amazon service too.
Pros & benefits
Faster shipping (and free)
In today’s world of instant gratification, people have come to expect immediate results. And when it comes to online shopping, that means receiving their orders as quickly as possible. Amazon has become a leader in providing fast shipping – and as a result, their conversion rates are through the roof.
So when it comes to online shopping, customers want two things: fast shipping and low prices. Amazon FBA (Fulfilled by Amazon) offers both of these things, which is why it is such a popular option for both sellers and customers.
This also makes it easier for FBA sellers to ship out products
With FBA, Amazon takes care of storage, packing, and shipping for you. This means that your products will be sent out faster and you won’t have to worry about managing this whole process yourself. In addition, customers who see that your product is FBA-eligible will be more likely to buy it, since they know they can get it quickly and without having to pay for shipping.
And when it comes to Amazon, customers aren’t just expecting fast shipping – they’re demanding it. In fact, Prime members are so accustomed to quick delivery that they now expect even faster shipping times than non-members.
It’s clear that fast shipping is no longer a luxury – it’s a necessity. If you want to stay competitive in the e-commerce world, you need to make sure your customers can receive their orders as quickly as possible. So if you’re looking for a way to increase sales, signing up for Amazon FBA is a great option.
Streamlined supply chain
Fulfillment by Amazon (FBA) program is a boon to ecommerce businesses of all sizes. By utilizing FBA, businesses can take advantage of Amazon’s world-class logistics network to store, pack, and ship their products. This streamlined supply chain allows businesses to focus on what they do best – sourcing and marketing their products – while leaving the fulfillment process to Amazon.
With FBA, gone are the days of managing a warehouse, organizing, storing inventory, and worrying about having a physical location at all. You can fully manage your FBA operation from a laptop – without needing to hold or manage any physical inventory in your hands.
As a result, businesses using FBA can focus on the more important aspects of their operation – which includes improving their customer service and order fulfillment times, leading to increased sales and 5-star reviews. Amazon sellers can take advantage of Amazon Prime’s 2-day shipping guarantee, which further enhances the customer experience. Ultimately, FBA provides a powerful competitive advantage for businesses that are looking to succeed in today’s ecommerce landscape.
Greater trust and confidence from customers
Improving customer trust and confidence is a nice boost when it comes to FBA. This boost in trust leads to more sales and conversions for sellers – because when customers see the Amazon FBA “Prime” logo on a product listing, they know that the item is going to be well-packaged, shipped quickly, handled by Amazon and supported with customer service (in addition to your own pre-sale and post-purchase support).
They also know that they can rely on Amazon’s customer-friendly policies if there are any problems with their purchase. This peace of mind is worth a lot to customers, and it’s one of the main reasons why they are willing to pay slightly higher prices for items that are fulfilled by Amazon. In today’s competitive ecommerce landscape, anything that gives sellers an edge is worth considering – and Amazon FBA is definitely an advantage worth having.
Cons & downsides
Amazon FBA is a great way to get your products in front of millions of potential customers, but it comes with some downsides to consider as well. One of the biggest is the cost.
Amazon charges hefty fees for storage, fulfillment, and even customer service. And if you have a large or heavy product, those costs can add up quickly. In addition, Amazon has been known to change its policies and fees on short notice, leaving sellers scrambling to adjust their prices. As a result, sellers need to be very careful when choosing to use Amazon FBA, as the costs can easily eat into their profits.
However, keep in mind – these fees would transfer over to your own in-house operations expenses anyway, with the added burden of running and managing the systems and processes. Amazon already has this entire infrastructure built and systemized down to a T – which means you can jump right in and cruise off the momentum already built and perfected by the retail giant. Just make sure to run the costs and price your products accordingly – along with using our strategies to lower Amazon FBA fees.
While FBA can be a convenient way to outsource order fulfillment, it also comes with a few drawbacks – especially when it comes to preparation requirements. In order to use FBA, you must package and label your products according to Amazon’s strict guidelines. This can be time-consuming and expensive, particularly if you have a large inventory.
Meeting this demand can be daunting for businesses that are new to Amazon, or who do not have the resources to dedicate to Amazon preparation. Thankfully, you can use an FBA prep center for packaging, labeling, warehousing, and logistics that will help you meet all of the necessary requirements.
FBA prep services will handle tasks such as product labeling, barcoding, and packaging so that you can focus on the needle-moving aspects of your operation. In addition, FBA prep services can provide valuable guidance on how to navigate the Amazon platform. Using an FBA prep service is an excellent way to set your business up for success on Amazon – so while FBA has strict requirements, it’s important to weigh the pros and cons before making a decision.
While there are many advantages to using Amazon FBA, you should also consider the disadvantage of having less control over your inventory and shipping. Here are a few examples where this might backfire:
- Amazon may decide to stop carrying your product or change its shipping policies, which can create a big headache for sellers.
- Amazon FBA storage, handling, and shipping prices can fluctuate, without any room to negotiate with shipping carriers or warehouse leasing companies (if you run everything in-house).
- You will have to pay referral fees and closing fees on each sale, which can add up over time.
At the end of the day… most business owners simply prefer to have full control over their company and assets. However, most Amazon sellers still choose FBA over running everything in-house – which is a strong indicator that FBA is likely your best move. So while Amazon FBA has many benefits, it’s important to weigh the benefits, pros, and cons before you decide if it’s right for your business.
Is Amazon FBA worth it?
For most Amazon sellers, yes – FBA is overwhelmingly worth it (and it’s often the only way to grow and scale to 7, 8 or 9 figures in annual revenue). It allows you to effectively outsource the mundane busywork of your supply chain and fulfillment – which you can focus on the strategic aspects of your online retail operation that allows you to expand.
On top of that, FBA allows your products to appear as a Prime shipping option (which many customers strongly prefer over non-FBA products, due to the guarantees provided with services and shipping). This adds more confidence and security for customers – knowing Amazon will be at their side when it comes to fast shipping, added customer support, easier returns, and money-back guarantees.
Amazon FBA tips
You might be wondering – since I’m new to Amazon FBA, what are the best tips and strategies to get the ball rolling? Here are 3 actionable pieces of advice you can use to improve your bottom line and make the most out of Fulfillment by Amazon:
Use an FBA prep service
As mentioned above, your items need to meet Amazon’s strict packaging guidelines. If your products are not properly inspected and prepared for shipment, they may be rejected by Amazon and returned to you at your expense. Fortunately, an FBA prep company like ZonPrep can help you to avoid this costly mistake.
In fact, most high-revenue FBA sellers strongly prefer to outsource their prep needs. Prep services will inspect your products and ensure that they meet all of the necessary requirements for FBA fulfillment – along with providing valuable guidance on how to properly pack and ship your items. By using an FBA prep service, you can rest assured that your products will arrive at their destination safe and sound.
The process of getting products ready for Amazon FBA can be time-consuming and expensive. If you’re not familiar with the process, it can be difficult to know where to start. That’s where using an FBA prep service can save you both time and money.
A good prep service will have a team of experienced professionals who can take care of everything from product research to sourcing to packaging and shipping. This means that you can focus on other aspects of your business, knowing your products will be prepared correctly and sent out on time. In addition, using a prep service can also help you to get your products listed at a competitive price, as they will often have access to bulk discounts and other offers. So if you’re looking to save time and money on getting your products ready for Amazon FBA, consider using a prep service.
Learn to negotiate with suppliers
If you’re a business owner who uses Amazon’s Fulfillment by Amazon (FBA) service to sell your products, it’s important to understand how to negotiate with Amazon suppliers. After all, the prices you pay for goods will directly affect your bottom line.
When negotiating with suppliers, there are a few key things to keep in mind. First, know what you’re willing to pay for the product and be prepared to walk away if the supplier is unwilling to meet your price. Second, don’t be afraid to ask for discounts or extra incentives. Many suppliers are willing to offer lower prices if it means securing your business.
Finally, remember that the goal of any negotiation is to reach an agreement that is fair for both parties. By following these simple tips, you can ensure that you get the best possible deal when negotiating with suppliers.
Optimize your supply chain
As an Amazon seller, you know that having a well-optimized supply chain is essential to your success. But what exactly does that mean? In short, it means having a system in place that allows you to get your products to Amazon’s warehouse(s) as quickly and efficiently as possible.
There are a number of factors to consider when optimizing your supply chain, but one of the most important is freight and logistics. This is the process of getting your products from your supplier to Amazon’s warehouses, and it’s crucial that you get it right.
There are a few key things to keep in mind: first, you want to make sure that your cash flow allows for large bulk orders. This means having adequate inventory levels and a robust system for reordering stock when necessary. Second, you need to ensure that your logistics contacts are reliable and responsive to your business’s transportation needs. And finally, you want to have multiple suppliers and transportation contacts that allow you to use multiple options – especially when one person or company drops the ball on occasion.