Most people who use Amazon, either as buyers or sellers, have come across the company’s fulfillment program, FBA or Fulfillment by Amazon. Sellers in particular have found that since they started using the service, they have experienced a major boost in their business. Buyers too find that they gain through free and fast delivery.
If you have considered becoming a seller on Amazon, but feared it might take up too much of your time or cause too many logistical problems, Fulfillment by Amazon might encourage you to take the plunge. The way it works is that you send your inventory – the items you want to sell, new or used – to one of Amazon’s fulfillment centers, where they will be stored for you in their secure facility. You then list your items for sale on Amazon’s website. When orders are received, FBA take the items from your inventory, package them, and ship them to the customer.
Amazon do of course charge fees for doing this. If you only want to sell media products, you can register as an Advantage member for $29.95 per year. Otherwise, if you intend to market a full range of products, you need to have a Pro Merchant Account, costing $39.95 per month. There are also storage fees, but for Advantage members the first 60 days are free of charge. Amazon deal with all the proceeds from the sales, and deduct their fees and commission before crediting the money to your account. This means that basically the only work you have to do is shipping your items to the centers – everything else is taken care of.
The fulfillment center to which you send your products will be the one that is nearest to you. There are a total of 21 centers in the USA. These are located in Arizona (two), Delaware, Indiana (two), Kansas, Kentucky (four), Nevada (two), New Hampshire, Pennsylvania (four), South Carolina, Tennessee, Texas, Virginia and Washington. There are also two in Canada and several in Europe, including six in the United Kingdom.
For you as a seller, there are immense advantages in using the FBA system. First and foremost, obviously, you gain because Amazon handle all the work for you, including processing orders, shipping to customers, and collecting payments, leaving you more time for sourcing products and doing the actual selling. It has been estimated that this can increase profitability by at least 30 percent, compared with sellers not using the service. Additionally, of course, if you had to store all your stock yourself, the amount you could sell would be limited to the amount of storage space available in your own premises. However, as your stock is stored in the centers, there is no limit to the amount you can sell. You also benefit from the extremely low shipping costs which are available to Amazon.
Another major plus is that when you are selling items on Amazon using FBA, you can offer them at a higher price and they will still sell. This is because items sold this way are eligible for promotions such as Amazon Prime, and Free Super Saver Shipping, so that you can match your prices with those of your competitors who charge a lower price plus shipping. This means that even taking into account FBA fees, you are still likely to make higher net profits. Buyers tend to choose these items in preference to identical items from other sellers, because they know that, with Free Super Saver Shipping, delivery will be fast and reliable.
An additional factor which can benefit you when you are using the FBA service is the page on the Amazon site where you can work out what price you can charge, to make the profit you want. If you enter your suggested price for a particular item, it will tell you what part of that will be kept by Amazon, and what you will keep as profit. This enables you to calculate your prices exactly, rather than just guessing.
Of course, there are many other fulfillment companies around, also offering storage facilities and shipping services for products sold by their clients. However, what makes FBA unique is that Amazon is the marketplace as well as the fulfillment service for the products, so it is in their interest for the items to sell. All these factors make FBA an extremely powerful system, and you should find it is well worth your while to sell your products this way.
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When you use FBA, your items are eligible to win the Buy Box, so you’ll sell more.