Is Amazon FBA Really Worth It?

Fulfillment by Amazon or commonly known as Amazon FBA, is an e-commerce service and distribution network that enables independent sellers to make use of Amazon’s assets for their online selling business.

This is to market their products on Amazon’s platform, such as utilization of warehouses for product storage and container vans for delivery and shipping. Sellers who are FBA members don’t have to worry about product picking, packing and shipping since it will be handled by Amazon.  

Apparently, all service features provided by Amazon FBA are desirable services for sellers and businesses. Not to mention, the name itself — Amazon — is so popular. That means sellers will gain an advantage from their high service levels and rate of economies.

However, apart from all of the positive attributes provided by Amazon, do you really need it? Is FBA really worth a shot? Considering tons of new sellers are planning to utilize FBA for their online selling business. Perhaps, we will never know unless we will dig deeper. If you’re ready, then let’s get started.

The Pros

Return Process and Customer Service Management

Handling customer returns and other issues is one stressful occasion. The fact is, sellers don’t want to deal with all the hassles as it is indeed disappointing and takes most of the time. However, people will highly likely to buy your products if there is a good return policy, an Amazon has one great return policy in the market.

So, there is no need to answer calls, chats, or emails in the middle of night. No more problems with logistics being reversed. One more thing, you only have to pay for the returns processing fee for any returned product using such service. But, it is way more cheaper than hiring an entire customer service team.

Amazon.com warehouse and fulfillment center in Shakopee, Minnesota. Amazon FBA
Amazon.com warehouse and fulfillment center in Shakopee, Minnesota. | Image source: Tony Webster / https://www.flickr.com/photos/diversey/34043258624

A Boost in Sales

As per most sellers, Amazon FBA can definitely result to an increased number of sales and customer expansion. Since Amazon is very popular, you will have a greater opportunity for public recognition and exposure if your products are listed on their site. Most people prefer to purchase on Amazon, particularly those who are Prime members, because of its legitimate fast delivery and excellent customer service. Thus, this can leverage your business and boost your number of sales.


Absolutely No Need for a Website

For independent sellers who want to market products with less trouble, Amazon FBA will do the job for you. Since they will be the one to handle the product selling, then there is no need for you to create a website which can be pretty much time-consuming. Not to mention, you don’t have to pay for web developers at a pricey cost. With FBA, your business operations will be less troublesome and minimal.

Hassle-free Shipping Process

Shipping process can be very daunting and tedious. Thanks to Amazon FBA, shipping product to customers to different locations has never been this simple. Whether shipping from China to USA or any other countries. Although you are required to pay an extra fee, it is still reasonable and way easier to process 2-3 shipments of 90 items each than to ship 200 items independently. You will spend minimal time taping and boxing the products.

China COSCO Shipping
China COSCO Shipping | Image source: https://en.wikipedia.org/wiki/China_COSCO_Shipping

Workload will be Less Heavy

Amazon FBA users have more time to focus on their other business operations while Amazon takes care of the selecting, packing, and shipping process of the products as well as other major hard works. Customer concerns, refunds and returns, will be taken care of by Amazon FBA, too. This will surely make your workload five times easier now. You will have time to create more products for future sell.

Free Shipping for Prime Users

Your products will be eligible for free 2-day shipping for Amazon Prime users. Not to mention, the standard free shipping for product purchase over $25. Customers will highly likely select or order products with Prime tags or a free shipping for a certain amount of purchase. You see, this is mainly how most people are going to be enticed to purchase products. And, your products will benefit from all the public visibility which will eventually turn into purchase then converts into sales.

The Cons

Management of Your Inventory

You have to bear in mind that Amazon warehouses are not storage system for your products. You can’t simply send them all your products and let them watch on them until they all sell. If your products will not sell within a span of 6 months, Amazon will start to increase your storage fees. This is the side of Amazon FBA that you need to balance.

It is an imperative for you to keep enough inventory in the Amazon warehouse so that you can cover your product orders. However, it is difficult to afford storing products more than what you assume to sell during the next, let’s say 5 or 6 months. So, if you store hundreds and hundreds of items, and you are not sure if they will sell within 6 months, that is something you need to change.

Cost for Storage

Yes, you can store your products at Amazon warehouses, but this is not for free. There is a certain fee amount you need to pay depending on the amount of space you will utilize for your products and for how long they will sit in the fulfillment center. If your products are stored for longer periods but they are not selling enough, you will incur higher costs.

Amazon FBA will charge additional storage fee for anything that is beyond 6 or 12 months old, more than that will even cost you burden. In such scenario, sellers are sometimes forced to sell products off for a lower price just to avoid these distressing storage fees.

Accounting Concerns

Sellers often have a hard time reconciling Amazon FBA fees with other business management tools for payment, accounting, time-tracking, etc. Others dive into manual process of recording fees on excel sheets which leads them to spend hours and hours of extra work. This is because Amazon does not have connection to these management tools. Though today, there are modern platforms that help transfer automatically all your Amazon fees to your management tool. This will make the process hassle-free.

Abide the Amazon Rules

When it comes to product preparation, packaging, and safety, Amazon FBA has a strict requirements. Some products are even completely restricted, so you need to be very careful and make sure your product is packed properly and is acceptable with Amazon FBA’s rules. You don’t want to be blacklisted by Amazon, right?

Conclusion

Whether Amazon FBA is good for you or not, it all comes down to your decision. If it best fits to your business goals and products. For most sellers on Amazon, FBA is one convenient way to relieve stress in terms of running an online retail business. For some, it is not worth the cost. No matter which side we think of it, there is definitely no easy answer.

Every seller has different needs. Although yes, Amazon FBA is great to leverage business and gain more public visibility, but it is definitely not for everyone. Think about what you need and what your objectives are, then decide if Amazon FBA is worth it.

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