Pro's & Con's of Amazon Fulfillment aka Amazon FBA
Have you started selling through Amazon? Perhaps you are seeking out a new fulfilment option for your ecommerce store? Fulfilment by Amazon (or FBA) is a fantastic possibility and one of the benefits of selling on Amazon. But before you choose this path, it’s important to be aware of the pros and cons of Amazon fulfillment services. In this article, we’re going to cover both FBA benefits and downsides to help you make the right decision for your business.
If you decide to use the Amazon FBA service, you will automatically qualify for Amazon Prime. As such, you will ensure that your items qualify for Amazon Prime shipping. In doing so, you will guarantee that every member on prime will be able to get two-day shipping for free on all your products. This is one of the major Amazon fulfillment center benefits because it's certain to make buying from you more attractive to customers, as they will be able to get orders from you fast and often with no extra cost for shipping. Furthermore, you will now be seen as a trusted and reliable seller that they can count on.
Low Shipping Cost
One of the biggest advantages that you are going to find when you opt for Amazon fulfillment services is that the packaging and shipping costs are very low. If you are selling via the Amazon website, then shipping is not going to cost you anything at all. If you want to look at packing costs, it is going to be around $1.04 for any packing necessary. Further than this, you are only going to have to pay around $0.60 per pound for any handling costs that are needed.
It is slightly different if you are not going to be selling your items through Amazon. If this is the case, Amazon fulfillment rates are $1.60 shipping, $0.60 for packing, and $0.45 per pound of weight handling cost for a standard sized package.
No Hassle For Shipping And Returns
The packing and shipping process is a lot of work, even if you have employees to do this for you. It requires a shipping label, a packing slip, packing the box, taping it and so on. The process is quite long and when you have more than one or two orders to sort out, you could be losing a large portion of your day to the packing process. But, if you decide to use Amazon FBA, all you have to do is send the items to Amazon, and they sort everything else out for you.
When it comes to returns, you are going to have to talk to your buyer to see what the issue is and how it can be sorted. The logistics of this aren’t the problem, even though there isn’t that much to do, it’s the communication side that can get tricky. Amazon deals with all of this for you!
Gain The Benefits Of The Buy Box
Have you heard of the buy box? Here, customers can add new items to their shopping carts. Business owners selling the same or similar products to you will be seeking out this space. With Amazon Fulfillment you are far more likely to win this space for your products rather than see a self-fulfilled seller instead. You’ll certainly have an increased chance of coming out ahead here. Remember, on Amazon you will be constantly be competing against different businesses selling the same products as you. As such, winning the buy box is an essential advantage.
Money, Money, Money
As a business owner, it’s always going to be crucial to keep your costs under control. There’s no getting around the fact that Amazon FBA isn’t free. Indeed, your Amazon fulfillment costs will be based on the level of inventory stored and the duration they store it for you. So, you do need to make sure you understand the sales volumes to guarantee that you stay within the boundaries of profitability.
Mixed Up Inventory
Due to the number of people that Amazon works with, it is not possible for every merchant to have their own individual place for their stock. It is often the case that the products that you sell are going to be grouped together with the same product, but from other sellers. The issue with this is that if someone orders one of your products and they receive one similar from another seller due to the mixed up inventory, it could be the case that the item is lower quality than the one you offer. Your company then gets a bad reputation for low-quality items, when it wasn’t your item at all.
Losing Track Of Stock
If you have thousands of items in Amazon FBA, it is likely going to be the case that they won’t all sell. As such, you are spending money on the rent to Amazon, when your items are sitting there and not moving. Further than this though, once you get to a certain number, keeping track of what you need more of, what you can cut back on and so on becomes a greater challenge. It is going to be easy to track the items that are selling well, but everything else will have an extra layer of difficulty attached to it.
Getting It To Amazon
Last but certainly not least, you need to think about how difficult it can be to get items to the Amazon warehouses. Amazon has an incredibly strict ASIN/UPC system. Through this system, each product needs to be labelled individually and you will need to arrange multiple shipments. That’s going to drive up your bottom line. You can consider the service which ensures Amazon will complete labelling for you, but this is still another cost you’ll have to contend with.
This covers most of the major pros and cons of Amazon FBA. We hope this helps you determine whether the Amazon fulfillment service is the right choice for your needs and indeed your business. It’s clear from this that FBA benefits outweigh the issues and many businesses find the system to be an incredibly smart decision for their company.