Amazon grew from a small online bookshop to the largest online store in the world. It is listed among the leading technology brands, such as Google, Facebook, and Apple, which are referred to as the Big Four. The company does not stop evolving and continually comes up with innovations. One of the services ran by the website is Amazon FBA. What is the Amazon FBA, and who can use it?
What is Amazon FBA?
Amazon offers access to a wide range of buyers from all over the world. Fulfillment by Amazon (FBA) makes it easier for sellers to manage their products. It is like dropshipping, a logistics model in which responsibility for the shipment goes from the seller to the deliverer. It makes it possible thanks to a large number of wholesalers and warehouses run by Amazon, in which FBA users store their merchandise.
What are FBA’s advantages?
Fulfillment by Amazon lets store products in Amazon’s warehouses all over the world. They can be rented by subscription. The only things the seller has to do are to coordinate the orders and communicate with the clients. Because the products are in Amazon’s warehouses, international shipping is simpler. The service also works with orders from outside the platform, so you can use FBA when running a store on a different website. Altogether, Amazon is trusted by the customers, and dropshipping makes the products arrive faster. The sellers do not need to worry about logistical matters so that they can reach more consumers. They also do not need to be concerned with returns, as Amazon also handles them.
Companies in the UK and Germany have been using dropshipping for quite a while. It lets businesses focus on expanding consumer bases instead of organizing shipping.
How does FBA work? – step by step
The first thing that needs to be done is to register as a seller on Amazon and subscribe to the service. Next, find out whether you need to register as a VAT payer to sell on the target market. The third step is to send the products to an Amazon warehouse using a forwarder accepted by the service. They will be kept there no matter how much merchandise you have. In the warehouse, the product is packed and shipped to clients all over Europe. Amazon is also responsible for customer service and returns. As the seller, you pay to complete every order and keep the products by ft³ per month. You are also responsible for monitoring the amount of product and restocking.
Amazon FBA – disadvantages
Dropshipping is not a perfect system. FBA subscription costs and additional costs might be a burden for a new business. Amazon takes from 15% to 18% of the sales worth. The sellers also need to pay for getting rid of faulty products and the ones that did not sell. Another thing is that all the shipping and returns are run by Amazon. It means that the client cannot set terms with the seller, as they are all dependent on the intermediary. The seller also loses control over where the merchandise is. The articles can be stored across the globe, and they cannot do anything about it. There are high requirements for FBA sellers, and if they are not met, the store can be banned. Moreover, if the seller is not familiar with their product, they cannot answer customers’ questions. It can negatively affect the brand’s reception among consumers.
Amazon FBA when importing from China
Shipping products directly from a Chinese factory to an Amazon warehouse would surely optimize the costs. The packaging should be stiff and coated with plastic to minimalize distortions and damage to the product. They need to fit Amazon’s requirements, for example, have the FBA mark. Then you would need to gather all documents, such as customs clearance certificates and those required by the service. If there are not many items or the shipment is light, express transport is the best option. Airfreight is the best for cargo weighing 21kg and more. If the whole shipment weighs more than 100kg, it is better to pick sea or rail freight. Only properly packaged and documented cargo is accepted in the Amazon warehouse.
Amazon FBA – is it worth it?
The Amazon FBA sales model is undoubtedly innovative and brings profit. It has its flaws, but when taking into account the potential business growth after outsourcing logistics matters, it can turn out very profitable. If you are planning to or already are running an online store, get yourself acquainted with the FBA service.