As the largest eCommerce site, Amazon gives you access to over 2.5 billion buyers every month. It is also the most trusted online business platform by shoppers with 24+ years in the market. Useful articles and tips for Amazon sellers at Data Guide review site.
As such, selling on Amazon gives your website a better shot at success than on any other site.
Marketing your products worldwide is a good but risky idea. There are many things you need to consider before you start a global business. If not handled well, logistics such as delivery and storage can pose a major challenge to your business.
To address these challenges, Amazon created the Fulfillment by Amazon (FBA) program to help sellers. In this guide, we show how Amazon FBA can help you succeed in your online business even if you have no experience.
Why Use the Amazon FBA Program?
Amazon is the first place buyers go when they need to buy something. Statistics show that the site is frequented by more than 1 billion buyers every month. This high traffic makes the site an attractive marketplace for online sellers.
But Amazon is also a highly competitive and crowded online space. As such, sellers must provide quality services to their customers to remain afloat. This means:
- Offering quality products
- Ensuring timely delivery of items to customers
- Providing proper packaging
- Pricing items favorably
Meeting these parameters can be strenuous for many online sellers. This is why Amazon designed the FBA program. Online sellers who sign up for this program are able to sell items on Amazon with ease. This is because the program takes care of key business processes on behalf of Amazon FBA sellers.
Some aspects that this program takes care of at a small fee include storage, packaging and shipping of products. Sellers can use the FBA calculator to check how much it will cost them to sell products via Amazon FBA.
How Does Amazon FBA Work ?
Starting an Amazon FBA business is a pretty straightforward process. The first thing that a seller should do is to create an account and join the Amazon FBA Program. Registered sellers have access to the following Amazon FBA business services:
- Product storage services
- Product packing services
- Order shipping services
- Customer support services
- Product Return services
How to Start Selling on Amazon FBA
Selling items through the Amazon FBA program is a process that involves different steps. These steps are taken by both the seller and Amazon. Here’s what the process entails:
- Create a Seller’s account – to join the Amazon FBA program, one must have a seller account.
- Prepare a list of items that you want to sell on Amazon
- Send the items to Amazon warehouses for storage. Amazon employees sort and record each item upon arrival for easy retrieval
- Customers order your items and Amazon handles the financial process on behalf of the seller
- Amazon packs and ships items to the customer.
- Amazon handles customer service – confirming delivery and everything else
- Amazon reconciles sales for sellers and transfers earnings to their bank accounts every two weeks
Responsibilities of FBA Sellers
Though the steps in the Amazon FBA program may appear easy with Amazon doing most of the work, sellers have a key role to play in the selling process. Below are responsibilities that FBA are expected to undertake:
Identifying Items to Sell on Amazon
While Amazon caters for storage and delivery, it is the responsibility of the seller to determine what to sell on Amazon FBA . When choosing items to sell on Amazon, opt for fast-moving products to avoid extra charges on storage. Also, consider the demand, competition and choosing a product.
This means conducting comprehensive research on different items before settling down on the products. There are various product research tools that help sellers find the best products to sell on Amazon FBA .
Maintaining Product Inventory
Amazon will inform you when there is a drop in inventory levels. However, it is the responsibility of sellers to ensure that their stocks do not run out.
Sellers have the responsibility of ensuring that their items are visible on Amazon’s listing. Once this is done, sellers should promote their items on different platforms to drive traffic.
The Cost of Running an Amazon FBA Business
Amazon FBA charges depend on the services that Amazon offers sellers. Some of the costs that FBA sellers can expect to incur include:
This is the fee that a seller has to pay for all services that Amazon renders. Fulfillment fees range from picking orders, packing and shipping to customer service and managing product returns. Fulfillment fees are based on item size and weight and are charged for each unit sold.
Inventory Storage Fee
This fee is charged on a monthly basis and is charged per cubic foot that a product occupies. Storage charges vary throughout the year based on the seasons.
Seller’s Account Fee
This is the cost of keeping an Amazon account active. There are two types of Amazon seller accounts – the individual plan which is free and the professional plan that costs $39.99 per month.
Amazon charges a 15% referral fee on items that are sold via affiliate marketing.
FBA selling works well for most individual sellers because of the convenience it accords them. The biggest challenge of using Amazon FBA however is the fees. To keep abreast of the charges, it is important that sellers use the FBA calculator to get a sense of the total fees before launching a product. A common mistake that most people make is underestimating the impact of FBA fees on their profits. Make an effort of calculating FBA fees and profits before launching an Amazon business.