An online seller’s guide to Fulfilment by Amazon (FBA)
With Fulfilment by Amazon, much of the strain of online selling is taken care of by one of the biggest marketplaces in the world. Here’s our online seller’s guide to FBA
Not only does Fulfilment by Amazon (FBA) mean Amazon does all the leg work for you, it can also make your products more attractive to potential customers and that should mean more sales. Here’s our quick and easy guide to the ins and outs of FBA.
What is Fulfilment by Amazon?
Fulfilment by Amazon is a service for Amazon sellers. The idea is simple: you send your inventory to one of Amazon’s FBA warehouses and when someone buys one of your products through Amazon, the company sends the product out on your behalf. You don’t need to do a thing other than make sure you keep Amazon stocked with your product.
Whether you’re running a part-time business from your bedroom or building one of the greatest brands of the future, Fulfilment by Amazon helps you put your logistics infrastructure, reach and service levels on a par with one of the most successful businesses on the planet – Amazon itself.
1. More sales
If you use FBA, your products are eligible to be part of the Amazon Prime service. This is a badge of assurance that Prime subscribers can have your product the next day. Prime customers are big spenders and want to get as much value from their subscription fee as possible.
With FBA, Prime customers can immediately see that your product is available for fast-delivery. That makes your products more attractive than ones being sold by non-FBA sellers.
FBA also gives you a higher chance of “winning the Buy Box“. If several sellers offer the exact same product, they effectively compete for the Buy Box for that product. FBA is one of the main eligibility criteria.
2. It's more convenient
Why faff around packing up your product, sorting out postage and schlepping along to the Post Office when Amazon will do everything for you?
Cutting out these things gives you more time to run the productive parts of your business. It also gives you tremendous flexibility too: your business carries on uninterrupted even while you’re lazing around on a beach for a fortnight.
Amazon also handles most of the customer service for you – even processing customer returns.
3. It helps open you up to Europe
Tell Amazon to sell your product across Europe for you and never worry about the complexities of international postage rates ever again.
With FBA, you just send your inventory to an Amazon Fulfilment Centre in the UK and Amazon will distribute it “intelligently and automatically” throughout its European Fulfilment Centres based on anticipated demand. We’ll cover Europe in a bit more detail later.
How much does Amazon FBA cost?
Although Amazon’s FBA rate card currently runs to eight pages, one of the nice things about FBA is that the fee structure is nevertheless fairly easy to get your head round. It’s essentially “pay as you go” with no minimum requirements, no set-up charges and no subscription fees.
The fees vary according to the type of product you’re selling and the sales channel you’re selling through, but there are really only two types of charge:
- A fulfilment fee for each item that Amazon ships to a customer on your behalf.
- A storage fee for storing your inventory in the warehouse. Storage fees are more expensive in the run up to Christmas.
These fees are, of course, on top of the sales fees you pay to Amazon for selling your product for you.
The fees vary according to the nature, size and weight of the item. But here are a couple of illustrations:
- A t-shirt might attract a fulfilment fee of £1.77 and a storage fee of 4p per month
- An SD card might mean a fulfilment fee of £1.09, but as it’s so small, the storage fee is approaching zero.
How do I sign up to FBA?
If you’re completely new to selling on Amazon the first step is to register as a seller. You can then select the “Fulfilment by Amazon” option when listing your products. You’ll be guided through the process of getting your products to the fulfilment centre.
What else is involved?
Not much. You’ll need to print barcode stickers and add one to each of your products before you ship them to the warehouse. That said, if you really can’t be bothered, Amazon will even do this for you (for a fee). If you’re selling the exact same product as other people are, you can opt instead for your products to go into a pool of inventory at the warehouse. Amazon calls this option ‘Stickerless, Co-mingled’ and it saves you having to bother with sticky labels.
Where are these FBA warehouses?
Amazon has 20 fulfilment centres throughout Europe, including in the UK, France, Germany, Italy and Spain.
Are there any disadvantages to using FBA?
For most people the benefits of FBA outweigh any downsides. But if you’re selling large, slow-moving inventory, for example, then storage fees could gnaw away at your profit margins. The good news is that if you change your mind about FBA, you can withdraw from the scheme without penalty.
How easy is it to sell into the rest of Europe?
As we mentioned earlier, selling into Europe is one of the big advantages of FBA. But there are just a few more hoops you’ll need to jump through to sell across borders, even European ones.
Cross-border payment solutions for Amazon sellers
We help Amazon sellers to maximise their revenues through foreign exchange services. If you’re selling on one of Amazon’s global platforms, we can help you open local currency accounts so that you can collect your overseas revenues quickly and effectively.
