How Amazon FBA Works

You have known Amazon for some time and since you realized that it could also be useful for your business, as well as for your personal shopping, you absolutely want to start selling products on the pages of the great marketplace founded by Jeff Bezos, however, it is not clear to you how you have to manage the logistics related to your business. No problem: this guide will give you the answers you are looking for!

In the following paragraphs, I will try to explain to you how Amazon FBA, the service better known as Fulfillment by Amazon, works. You will find that, if you have never used it yet, you can start using it hand in hand with the opening of your store on Amazon, taking advantage of many discounts and leaving the company all the costs related to the storage of goods, shipments, returns and customer service.

How do you say? Are you already thinking that this is the ideal solution to get your business on Amazon? Excellent: then, take a few minutes of free time and read what I have to tell you. You will see that, in the end, you will be able to understand what is the best method for managing the products to be offered for sale. I wish you a good read and wish you good luck for your business!

Index

• What Amazon FBA is and how it works
• Amazon FBA Usage Rules and Costs
• How to sign up for Amazon FBA
• Pros and Cons of Amazon FBA

What Amazon FBA is and how it works

You may have heard of it, however, you are not yet clear what Amazon FBA is and how it works: I am here to provide you with all the necessary clarifications.

Amazon FBA, where the acronym stands for Fulfillment by Amazon which, translated from English, means more or less for ” completed by Amazon “, is a service offered by the large online marketplace with the aim of lending a hand to those who sell on the portal for what concerns the management of the warehouse, inventory, shipments and customer service.

The Amazon FBA service, therefore, is aimed at those who have an active seller profile on Amazon: in this regard, I suggest you read my guides on how to sell on Amazon and how to do dropshipping on Amazon if you need to understand how open one.

In Italy, Amazon FBA is better known as Fulfillment by Amazon and, in essence, it allows sellers who decide to join the program to ship their goods to an Amazon fulfillment center, where they will be stored pending orders. When a purchase is made, Amazon’s warehouse workers will take care of packing and shipping the goods to the recipient and then providing him with a method to track the package. In case the buyer decides to make a return or needs assistance, the Amazon fulfillment center will always take care of it.

At the same time, the seller will be able to stay informed about the inventory, ie how many of his products are still available for sale at the distribution center.

The Amazon FBA service is paid, you will have more information on costs in the next chapter, but it is not binding if you want to start selling on Amazon. Alternatively, you can choose the Amazon FBM solution.

Amazon FBM, ie Fulfillment by Merchant, means ” managed by the same merchant ” and is the method by which Amazon allows sellers the freedom to independently manage all phases of inventory, storage of goods, shipping, return procedures and customer support. All this with advantages, from an administrative point of view, but with non-fixed costs, such as those of Amazon FBA.

Now that you understand what Amazon FBA is and how it works, you are ready to learn the details of the service.

Amazon FBA Usage Rules and Costs

Considering the fact that you really intended to start selling on Amazon, I bet that you are really very interested in the rules of use and the costs of Amazon FBA: here, then, is everything you need to know on the subject.

If you have not yet opened your Amazon store, you can do so, among other things by taking advantage of promotional initiatives often available to new customers: for example, the FBA new selection program, otherwise known as Amazon FBA, allows all users who register for the first time to access discounts and free services for the management of goods by Amazon. Here are, in detail, the points of the offer.

Since the core of the Amazon FBA program is the fulfillment center, you, as a seller, will need to ship your goods to us. In this way, it will be immediately ready for the final packaging and sending to the consumer, carried out by Amazon when the latter makes the purchase of one of your items. The first offer for new subscribers to the Amazon-administered logistics system, who operate as sellers in the system’s European marketplaces (i.e. in Italy, Spain, France, Germany and the United Kingdom), provides for the free shipping of up to € 90 for materials to a sorting logistics center, with Amazon-affiliated courier.

And there’s more: your top 50 products with standard dimensions will be stored on a monthly basis by way of free, up to 90 days of receipt of the first article. Furthermore, after the first supply received (inventory), the removal of one of the above 50 products will be free for up to 180 days. To make sure that the whole process “runs smoothly” and Amazon can arrange your goods in a safe place as quickly and efficiently as possible, read the rules for receiving and storing your inventory provided by the marketplace itself, by connecting to this link.

Does your merchandise include large products? If you sign up for the Amazon FBA program for the first time, you will be entitled to free storage of the first 30 non-standard products for 90 days, upon receipt of the first unit by the Amazon fulfillment center. Also for 180 days, starting from the storage of the first unit, the removals concerning the same 30 large products already stored will be free.

Do you sell full-sized clothing, shoes, bags and accessories? By subscribing to the Amazon FBA program, you can store the first 100 pieces in a fulfillment center for free for up to 120 days, starting from the receipt of the first package by Amazon. Under the same conditions, for 180 days, the removals of these 100 products will also be free. But that’s not all: you can have free processing of the first, if any, 20 returns from customers, who will return to the reference Amazon fulfillment center. within 180 days from the first item stored in the warehouse.

Basically, with the new Fulfillment Amazon program, the entire startup phase of your business as a seller will be free, as regards the management aspects of the goods. On the contrary, with the “traditional” FBA program, the expense would amount to € 96.92. Find more info here.

How to sign up for Amazon FBA

After receiving the necessary information, what you need to know is how to sign up for Amazon FBA – here are the instructions.

To start, from PC, connected to the official page of the Program for the new Fulfillment by Amazon selection, read the instructions and scroll to the bottom: you will find two buttons. Choose the Subscribe now button, if you already have an Amazon profile eligible for sale, otherwise choose the Register button to create your Amazon store, deciding whether to sell throughout Europe, at a cost of € 39 per month: read my guide carefully on how to open a shop on Amazon, to know all the steps to take.

I remind you that, in order to sell on Amazon as a professional, you will need to be in possession of the VAT number, in addition to the other personal data required. In addition, new sellers and those already active with an inventory performance index score greater than 400, to be maintained (or increased) even after enrollment, may participate in the FBA new selection program, under penalty ‘exclusion.

Once your Amazon store is active, from the section of your profile called Seller Account Information, locate the Your Services tab and click on Manage.

On the page, that opens, select the item Fulfillment by Amazon and then click on the Register button. On the next screen you will find a summary of your details: check that they are correct, then click on the Complete Registration button.

Next, to sell your products using Amazon FBA services, you will need to create an FBA offer: to do this, choose the Manage your inventory tab, select the products you want to sell, then click on the arrow symbol next to it. under Edit, in correspondence with each selected article. A drop-down menu will open in which you will have to select the Add offer with other condition items.

Once this is done, from the Advanced View section, complete the Share your available inventory tab, selecting the Single Offer item, entering the product SKU preceded by the term FBA_ …, selecting a truthful item that describes the conditions and entering the price including expenses shipping. Finally, check the item In case of a sale, I want Amazon to manage the shipment and provide customer support and click on the Save and Finish button.

The last steps you will need to take to take advantage of the Amazon FBA service concern the labeling of the packages to be sent to the Amazon fulfillment center, from the Manage Inventory and Labeling Service panel. Well, if your products have a clearly visible EAN code, you can choose the items Refuse the labeling service > Yes, I accept. Otherwise, you will have to check the items Accept the labeling service and No, reject and print the labels that Amazon will provide you in PDF format. Click on Confirm selections. Finally, on the Convert to Fulfilled by Amazon tab, click on the item Completed.

The game is done: send the products to the Amazon sorting center and, if deemed suitable, they can be enabled for the Amazon Prime service, for registered users and when they are purchased it will take care of everything Amazon, from shipping, to customer assistance up to a possible return.

After registering as a professional seller on Amazon from PC, I remind you that you can manage the same flow just described also from the Amazon Seller app, available for Android devices on the Google Play Store (or on an alternative store, if you do not have the Google) or on the App Store for iPhone or iPad.

Pros and Cons of Amazon FBA

To conclude, now that you understand how the service works, I would like to invite you to do some evaluations on the pros and cons of Amazon FBA.

Choosing to join the Amazon FBA program has undeniable benefits. Starting with the fact that you will be able to concentrate to the maximum on the activity and on the selection of products to sell, since Amazon will take care of everything else.

Another not secondary aspect is the possibility of using Amazon fast shipping, in particular, the products managed with Amazon FBA can be shipped according to the Amazon Prime formula, to all those users who have signed up for the service. This will only increase your authority as a seller and customers will likely start buying from your shop more and more often.

Furthermore, the latter will also be able to enjoy an assistance service active 24 hours a day and a facilitated service for returns, again thanks to Amazon. Not to mention that those who join the Amazon FBA program will be favored by the algorithm inside the marketplace, which will make its offers appear before the others, making them easily identifiable by potential customers.

However, there are also some less exciting aspects, which could represent disadvantages: for example, once the discounts and promotions for newcomers to the Amazon Fulfillment Program have ended, it will be necessary to pay a percentage to the marketplace, calculated based on the time each product remains stationary at the distribution center and its size.

You must follow the instructions given by Amazon to send the goods to the logistics center, otherwise the employees will think about standardizing the packages, but with an additional cost. The goods must be sent to the buyers in the boxes with the Amazon logo, always remaining somewhat anonymous.

In addition, you will have to take into account any delays in packaging and shipping during the high season (for example around Christmas) or during promotional sales organized by Amazon, in which the amount of work to be managed exponentially grows, due to the increase in orders.

Finally, you will not have available the data of the buyers, such as their email: this will not allow you to carry out marketing operations and to draw up a mailing list. In this regard, read my guides on how to do online marketing and how to do email marketing.

At this point, I hope I’ve been helpful and made you understand how Amazon FBA works and I hope your business gets a boost, thanks to Amazon’s Fulfillment Management Service, universally known to be one of the best in existence.