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Pros and Cons of Amazon FBA

If you run a store on Amazon, you’ve probably heard of Amazon’s FBA service. FBA, which stands for Fulfillment by Amazon, allows your online store to take advantage of Amazon’s logistics and shipping empire. There are many advantages to using this service, but many online sellers also have questions. Do I have to pay Amazon FBA fees? Is it simple to join? What exactly does this service do for my store?

Amazon is truly a giant in the world of online retail. For both suppliers and buyers, this is where e-commerce happens. Amazon currently has over 2.5 million individual sellers, who account for roughly half of all sales on Amazon. Considering that Amazon sells 4,000 products each minute, this is an impressive amount of sales. Amazon’s FBA can enable your store to make even more sales and help your products land in that valuable buy box.

Here, we take a look at Fulfillment by Amazon and consider some of the pros and cons of enrolling your store in this service. There are many advantages of using Amazon’s FBA, but it might not be right for every member of the e-commerce community. Read this article and then do your own research first to see if FBA is right for you.

HOW DOES AMAZON FBA WORK?

Like most services through this tech giant, Amazon FBA is surprisingly straightforward and simple. In four steps, you can be up and running with Amazon by your side. First, you need to set up your Amazon sellers account. This will lay out the guidelines and fees for this service. Next, you create your product listings—making sure to specify them as FBA inventory. All that’s left for you to do is prepare your items and ship them to the nearest Amazon fulfillment center. From there, Amazon handles the rest.

PROS OF AMAZON FBA

1.                  Shipping and Returns

Arguably, the greatest advantage of joining Amazon FBA is letting this e-commerce giant handle all your shipping, fulfillment, and return needs. In many ways, the fulfillment process is what has made Amazon as successful as it is today. Constantly shipping products and handling returns can be very time-consuming, especially if you operate your online store on top of a full-time job. Amazon FBA makes the selling process easy so you can focus solely on your inventory.

2.                  Save on Shipping

As one of the world’s largest companies, Amazon has special relationships with most of the top shipping carriers. This means that they receive special discounts on shipping costs, due primarily to their sheer volume of shipping needs. With Amazon FBA, you’ll also benefit from these discounted shipping rates.

3.                  Prime Customers

In 2017, Amazon announced that it had eclipsed 100 million Amazon Prime users. As a member of Amazon’s FBA, you have access to these prized customers. Amazon Prime users are not only more consistent online shoppers, but on average, they spend roughly double what non-Amazon Prime users spend.

4.                  Multichannel Fulfillments

Most people are surprised to learn that Amazon’s FBA isn’t limited to selling on Amazon.com. The service, in fact, is good for any channel you sell products on—so if you sell products across many channels, this could be incredibly advantageous for you.

5.                  Easy to Use

Amazon climbed to the top of the online retail ladder, in part, due to its relentless focus on customer experience. Amazon strives to make its site as easy to use as possible and the same holds true for their FBA service. Despite the fees, Amazon’s fulfillment service will make your life as an online seller a lot easier. At the end of the day, can you put a price tag on more free time?

CONS OF AMAZON FBA

1.                  Cost

Like most things in life, Amazon’s FBA isn’t free. Taking advantage of the service requires you to pay various FBA fees to Amazon, including seller, fulfillment, and inventory storage fees. These additional costs will vary depending on your product line and inventory, which makes it important to determine if this service is right for your store. If you move high volume, there’s a better chance you’ll benefit from Amazon FBA.

2.                  Stale Inventory

As previously mentioned, one of the fees associated with Amazon’s FBA is an inventory storage fee. While this makes sense, especially if you have substantial inventory and no place to store it, it can become a needless expense. If your inventory isn’t moving, or moving quickly enough, you can end up paying storage fees without seeing any profit in return. Amazon can ship, store, and return your items, but they can’t guarantee they’ll sell.

3.                  Tracking Inventory

When Amazon takes over your shipping and fulfillment needs, it can make your life much less stressful and free up time to focus on selling your products. However, by taking advantage of Amazon’s logistics network, you’re also handing over the controls to a degree. Some sellers with Amazon FBA find it more difficult to track and manage their inventory throughout the process, which can make an Amazon seller useful.

4.                  Amazon Takes Over the Customer Experience

Every seller on Amazon is different. Some are focused on maximizing profits while some truly enjoy the customer relations experience, working with people to ensure they get the products they desire. If you use Amazon FBA, you will inevitably lose some of this interaction with your customers. Again, for some this is great news, while others may feel like they’re losing out.

CONCLUSION – PROS AND CONS OF AMAZON FBA

If you’re looking to sell products online, there’s no other digital marketplace like Amazon. With competitive prices and an almost endless selection of products, online shoppers know that Amazon will have what they’re looking for—often at the best price.

Reports show that every second, Amazon records over 4,000 dollars in sales. Don’t you want to get your own slice of this e-commerce pie?

Depending on the size and product volume of your store, partnering with Amazon through their fulfillment service could be incredibly advantageous. Amazon’s FBA handles all your shipping and return needs, provides access to Prime customers, and can make your life a whole lot easier. However, this service does come at a cost and can make it more difficult to manage your own inventory. Consider the needs of your online store and Amazon FBA app could be right for you.

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