Amazon offers a perfect platform to start your online business. FBA makes that business hassle-free and convenient for the sellers. FBA means Fulfillment by Amazon. This is how FBA system works on Amazon;
- Sellers send their products to Amazon fulfillment centers.
- These fulfillment centers are the warehouses where Amazon stores the inventory.
- After you receive an order, Amazon packs the product and ships it to the customer.
And it’s done!
The sellers registered with FBA program have time to focus better on building their brand name because Amazon does all the work related to packing and shipping the products to their customers for them.
Advantages of using Fulfillment by Amazon (FBA)
- Managing the purchase orders and shipping them might be time consuming if you do it on your own. Selling through FBA or Amazon marketing agency is an effortless process where Amazon manages packing the purchase orders, storing them in warehouses and shipping making it a convenient selling procedure.
- Reduced shipping prices or huge discounts on shipping costs. Many products on prime or FBA program are even eligible for free shipping. This can bring a lot of orders to the sellers.
- Amazon FBA offers a hassle-free and easy management of the return orders from taking up return requests to picking up the product from customers and shipping new products.
- FBA provides easy management of the refund process.
- Amazon is responsible for providing 24×7 customer service assistance to the customers or potential buyers via chats, phones and e-mails.
- Fulfillment centers offer unstressed storage space for inventories. You can have as much or little storage space as you need as per your requirements. The sellers with increased performance score are eligible to get unlimited storage.
- With hundreds of fulfillment centers across the globe, Amazon provides faster delivery service to its consumers irrespective of their geographical locations.
So using FBA can be quite the game changer for your online business on Amazon. But at the same time there are certain challenges that sellers should be prepared for.
Disadvantages of using Fulfillment by Amazon (FBA)
- Availing FBA services is chargeable. Amazon takes a fee for both storages in the warehouse and providing fulfillment services.
- The sellers need to pay the storage fee of the fulfillment centers even if the products are not selling. That means, the sellers might end up paying more money to Amazon than getting back the profits.
- The sellers can experience more return requests due to easy return policies in FBA program. This can cause a little inconvenience to the sellers because they have to comply by Amazon rules and guidelines.
- The sellers are required to manage the inventories and keep stock at all times. Failing of which can eventually lead to suspension of your seller’s account.
- There can be additional sales tax or GST depending upon the country and location.
- It is time consuming for the sellers to correctly label the products, enter into Amazon’s database and ship them to the right warehouses.
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