Amazon Fulfillment by Amazon (FBA) allows sellers to leave the logistics of their products in the hands of Amazon. With FBA, you can store your products in one of their many storage options, and Amazon will pick, pack, and ship orders on behalf of your business.
What are the advantages of FBA?
There are various advantages to using FBA for your business: you don’t need a warehouse or fulfillment center, you don’t need an extra employee, and customers will receive products within two days without incurring any additional fees.
With FBA, you are effectively letting Amazon do all the work for you.
What does FBA cost?
However, FBA requires additional costs upfront. You will have to pay a small fee to “rent” one or more storage units, and will also need to pay an additional fee per unit per month (RMP). A unit is anything that requires storage, such as a book. The fee is not based on the size of the product, but on how many units are in one box.
You will also be charged for picking and packing fees; these fees depend on the size of your product and the selling price of your product.
Amazon takes an additional percentage from every sale made from your products. This is called Commission. In general, with FBA you get to keep more of your sales than you would if you used FBM (Fulfilled by Merchant). Amazon offers an overview of your provisions.
With FBA, you are effectively allowing Amazon to do all the work for you. This can be very beneficial for new sellers who may not have the money to invest in warehouses or sorting centers and want to kickstart their business quickly. However, it may be difficult to get started with FBA without first having established your own e-commerce presence on Amazon.
What are your requirements for FBA?
You do need to meet certain criteria for your products for FBA. On top of that, your product must comply with all national and Amazon regulations. Amazon regulations are often even stricter than just the legal regulations.
Your product must also fit into one of Amazon’s categories. If you want to sell books online, then you will also need to sell your books within the Amazon Kindle store. You may also be able to sell certain types of products in a certain category – such as electronics or appliances.
If you have a lot of products like this, you may have trouble moving your products from one category to another.