E-Commerce

How Does Amazon FBA Work?

Making sales is only one aspect of being successful in the Amazon marketplace. You must also figure out how to fulfill orders to an acceptable standard, which is especially difficult if you want to sell to Prime customers.

There’s an alternative to let Amazon complete the task for you by utilizing their Fulfillment By Amazon (FBA) program.

What is Amazon FBA?

FBA is the process of sending items through the Amazon Fulfilment Centre. You control your seller account and determine what products to offer as well as when you need to refill stock, however, Amazon manages the fulfillment and storage aspect of the process.

Imagine owning shelves in a well-known department store.

In short, FBA will handle all of your storage, packaging, and shipping requirements, and will offer an amazing amount of assistance through customer service. Don’t worry about dealing with angry customers or costly warehouses.

They employ a group of employees who physically pack, prepare and then ship your product on your behalf.

What is the process behind Amazon FBA work?

Amazon has a reliable system that allows it to offer FBA. Amazon has a system in place to provide FBA services to sellers. Here’s how it works

  1. Open an Amazon seller account. If you haven’t already done this you’ll need to create an account called Seller Central to account on Amazon for the market region you’d like to sell your products in.
  2. Set up FBA. When your Amazon Seller account is active then you’ll be required to connect FBA to your account.
  3. Create Amazon listings. You’ll be responsible for making and managing your product listing(s) for Amazon with descriptions and images and pricing.
  4. Send your products to Amazon. It is necessary to have stocks of your product in an Amazon Fulfilment Centre to begin selling. 
  5. Amazon stores products. When you arrive at the Fulfilment Centre where you’ll pay an amount for storage to Amazon to store the items until they are sold. This will depend on the space used by your products as well as the length they stay there.
  6. Customers purchase. If you’ve set up your listings properly, you’re now ready to begin selling your products through Amazon’s marketplace. Amazon will take the payment and other details for these transactions.
  7. Amazon selects the products. Once the order has been placed and payment verification is completed after which the item is identified to be picked, then packaged by Amazon employees who adhere to the shipping guidelines.
  8. Amazon delivers its items. Amazon will ship your product to you and ensures it is delivered. Not only that should you decide to make use of FBA, but Amazon will also take charge of follow-up for you, to make sure the delivery goes smoothly.

Why use Amazon FBA?

There are many benefits to making use of FBA as a fulfillment solution for your to sell on Amazon.

Some of the most popular ones include:

Ratings

Ratings can be the difference between success and failure for an online shop. If you allow Amazon to handle fulfillment and customer service, you won’t have to be concerned about meeting deadlines for delivery or customer service. So, bad ratings are virtually non-existent.

Shipping costs are low.

If you select FBA Amazon, you can enjoy the best deals that they offer with various shipping companies for any order they aren’t able to handle.

Prime audience

Qualified FBA listings can be screened to be eligible for Prime and show their Prime Logo, and this could be enormous for sales. Prime customers typically spend greater amounts of money through the website, and they also tend to purchase more frequently. These are the kinds of people you want to attract with your offering.

A study discovered that the average user spends $700 annually on Amazon and that figure increases to nearly $1,300 for Prime members.

All Amazon.com customers will also enjoy free shipping on eligible orders.

International shipping

Amazon provides Global Export, so you can offer worldwide shipping for your goods – helping you expand your reach to new markets.

Multi-Channel Fulfillment (MCF)

It’s important to note that you don’t have to sell exclusively on Amazon for the benefit of FBA. Through multi-channel fulfillment, Amazon picks, bundles, and then ships your items regardless of the platform or marketplace your purchase was made on.

Pro tip: A tool like SellerApp can assist in automating this process even more with the help of its Amazon FBA Calculator.

Subscribe & Save

Additionally, you’ll be able to give customers who shop on Amazon the option to subscribe and Save’. This means that you’ll have customers automatically purchasing your products every few weeks or even months and Amazon can then deliver them to you.

Savings on referral fees

Amazon provides limited-time rebates on fees for referrals that can help expand your business. This means you can expand your selection and enjoy higher-quality pricing.

What do you need to do as a vendor?

If it seems that everything will be handled by Amazon but the question remains question what exactly are you responsible for? your own business as an Amazon seller?

There are three things that matter:

  1. The catalog of products. It’s your business, and you can decide what products to offer as well as any additional products you’d like to add when your initial offerings are selling successfully. 
  2. If you’re not familiar with selling your items on the internet, you might decide to begin with the well-known ones and try them initially.
  3. Management of inventory. You’ll have to monitor the levels of inventory at the FBA location(s) in addition to being alert to the time when you need to replenish your stock. 
  4. Be sure to find a middle ground between having excessive (and spending too much on storage costs) as well as having too little (and running out of stocks) in terms of Amazon the management of inventory.
  5. Marketing and promotion. It is your responsibility to increase traffic towards your Amazon listings, whether that is via ranking in Amazon search results, or through other ways. 
  6. Spend time creating an effective digital marketing strategy that will increase the visibility of your business.

Recommended Guide: How to make money on Amazon in 2022.

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