Amazon FBA: The Pros and Cons

FBA is one key service that allows online sellers to run a global marketplace business. FBAallows you to operate an international Amazon business.

What is FBA?

FBA stands for Fulfillment by Amazon. Amazon will warehouse your inventory in their fulfillment centers. They will then pick, pack, and ship orders to you as they arrive. They can handle returns and provide customer service.

FBA is a great service. It takes the hassle out of searching for warehousing options. You’re also partnering with a trusted brand with a strong reputation. This is especially beneficial for sole traders or those selling internationally. Amazon will handle your orders so that you can concentrate on other aspects of your business.

FBA allows sellers to offer free and fast shipping to customers. This opens the door to Amazon Prime members. Amazon Prime is a monthly subscription service that offers free shipping, including same-day and two-day shipping. Amazon Prime customers can filter by Amazon Prime partner, which gives sellers the best chance to win the buy box.

What is the cost of FBA?

FBA fees will vary depending on the size and weight of your product. Sellerapp’s FBA calculator Chrome extension can be used to calculate the FBA costs for your products.

Amazon FBA: The Pros and Cons

Pros

Exposure to the vast network of the retail giant:

Amazon FBA sellers have access to all the advantages that other retailers enjoy when they sell their products. You also get all the benefits of Amazon in North America.

Placement:

Amazon’s algorithm favors FBA customers and ranks their products higher on search results. You not only get a shelf in Amazon’s store but also prime real estate that will help you become more visible as the product you want to purchase in your category.

Operational excellence

Amazon has become the benchmark in eCommerce retail. Its impeccable operational efficiency has helped to drive change in dozens of industries. Amazon FBA allows retailers to offer two-day shipping for Amazon Prime members and to build a long-lasting relationship with customers through the Subscribe & Save subscription service. This Amazon service automatically replenishes goods directly to the consumers.

Convenience:

Your products and packaging materials will be shipped to an Amazon warehouse, not your store or warehouse. Amazon will handle any issues that may arise during fulfillment, and not you or your staff.

Cons

Cost:

It is important to determine if Amazon FBA offers a better business service than the cost of your business. The cost of selling a product is determined by its size, weight, and profit margin. Products that are left in stock for too long or certain product categories (DVDs and books, flammable, risky, etc.) will be subject to additional fees.

Amazon has made changes to the Amazon FBA fees. Check out our guide on Amazon FBA fees to help you estimate your costs.

Branding opportunities lost:

Amazon FBA agreements give you the advantages of Amazon’s network. To stand out from your competitors, however, you will have to give up some branding opportunities such as your brand name on shipping boxes and storefronts or your large warehouse with your logo.

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