If you own a business in 2020, there’s a strong likelihood you sell on Amazon, or you’d like to.
Otherwise, if you don’t sell on Amazon you have to take on a lot more work in many ways.
For example, you have to worry more about the logistics of delivering your products to customers. Amazon has its own fleet of tractor-trailers, planes, and other delivery vehicles and they can offer much lower costs than you can get in any other way.
Amazon takes on the risks of their delivery trucks being on the road, and other benefits of selling on Amazon include the easy shipping process they facilitate overall and the fact they take care of a lot of the customer service elements.
With that being said, you need to use the FBA service to get the most out of these benefits of selling on the site. The following are some of the things to know about Amazon FBA in 2020.
What Is FBA?
Fulfillment by Amazon or FBA is a program that lets businesses dedicate less time to the administrative side of their business and more on the creative side. At its core, FBA is an outsourced shipping and handling service.
It works like this:
- You send your products to Amazon, which you do have to pay to do.
- Then, Amazon stores your products in their own warehouse.
- When someone orders one of your products, Amazon will pick it, pack and ship it. They’ll also track the order.
- Amazon handles refunds and returns.
- Every two weeks, Amazon totals your sales, takes out seller fees, and then your profits are deposited into your bank account.
While it sounds great, it comes at a cost.
What you’re doing is renting a space for your products at an Amazon warehouse.
You are also paying for the costs that come with fulfilling the order, but you don’t directly pay for shipping. Instead, shipping is included as part of the FBA fees as a portion of fulfillment costs.
When you’re an FBA seller, perhaps one of the biggest perks aside from convenience is the fact that you can offer your Prime customers free two-day shipping. That’s a massive selling point for buyers on Amazon.
Pros and Cons
These have been briefly touched on, but with FBA, the benefits include customer service and outsourced shipping, along with Prime offerings for your customers.
You don’t have to sell a certain amount of products each month to qualify for FBA.
However, you will have to pay fees based on the size of your products, how often you fulfill orders, and how many of your products you are opting to store in the Amazon warehouse.
Another big con of FBA is that since returns are so easy, you might get more of them.
You Don’t Have To Do FBA
While it seems that most sellers use FBA, you don’t have to.
It’s perfectly fine to keep selling on Amazon without it. If you’re just starting out, you may be able to handle everything on your own If and save yourself some money.
You Can Use FBA To Fulfill Orders from Other Websites
If you sell your products on other sites, you can also use FBA, and the orders will be fulfilled. You’re not limited to just Amazon listings.
What you can do is use FBA as your entire operations for shipping and customer service, no matter where an order is placed.
What’s Your Role?
If you use FBA, there are still things you’re responsible for as you grow your business.
First, you will choose the products you’re going to sell. This is a big one because of the obvious fact that you want to be selling and because you want products that sell quickly so you can avoid storage fees.
You’ll have to keep up with your inventory levels on Amazon regularly to ensure your products remain in stock.
You’ll also have to advertise and market your products. It doesn’t matter if you have FBA services or not if no one can find your products.
Finally, before you sell on FBA, it’s a good idea to put time into research. You need to look at competitors to find profitable products, but they can’t be so competitive and popular that you’re up against thousands of other sellers. What you can do to differentiate yourself on Amazon is to bundle your products, which is how your listings will stand out compared to others.