In the fast and ever-evolving e-commerce world, businesses are continuously finding new and innovative techniques to streamline operations, enhance customer satisfaction, and reach a huge number of target audiences. And this introduced Amazon FBA, which stands for Fulfillment by Amazon. It is a game-changing service that has revolutionized the way sellers operate on the online marketplace.
However, the question is the working of FBA, its uses, and other details. Well, in this article, we have created a comprehensive guide and deep dive into the key features, benefits, limitations, steps to create a seller account, and other important details about Amazon FBA.
Table of Content
- What is Amazon FBA?
- Amazon FBA as Service
- Amazon FBA - How Does It Work?
- Amazon FBA - Benefits and Limitations
- Amazon FBA - How To Create a Seller Account?
- Wrap Up
As we have discussed above Amazon FBA stands for Fulfillment by Amazon. So first we will understand the fulfillment.
Basically, fulfillment is known as the process of getting orders from customers. It includes related tasks of getting inventory, storage or packing products, managing returns, shipping orders, customer communication, and more. Some sellers* handle fulfillment tasks in-house, however others use e-commerce fulfillment services such as FBA or a combo of third-party and in-house fulfillment options.
*The seller is a person who usually sends all the required products to Amazon warehouses for the fulfillment of orders. And Amazon stores that product till a customer places their order.
- Role of Amazon in Fulfillment of Order
If Amazon is responsible for the fulfillment of orders, it denotes that Amazon will store the products in their warehouses, they will pack and then deliver the orders to their customers, offer customer services as well as handle the product return.
FBA service is provided by Amazon, which allows the sellers from third-party to leverage the vast network of Amazon fulfillment. With FBA services, a seller can store their products in the warehouse or storage of Amazon. The most important thing is that the seller doesn't need to worry about packing, shipping, or delivering the product to the right address.
FBA services include storing products in warehouses, packing them, shipping them, and delivering them to the right customers.
In short, the FBA service allows sellers to stay focused on marketing and sourcing their products, whereas Amazon will manage all the logistical complexities of the seller.
Once you have understood the FBA, it’s time to know the workings of the FBA.
Step 1 - After taking FBA services, sellers are allowed to send their inventory to the nearest Amazon fulfillment centers.
Step 2 - Once Amazon receives the inventory, the team will sort it, make entries in their records, and store it safely in the fulfillment centers.
Step 3 - Using the Amazon platform, the customers will order a particular product (sent by the seller).
Step 4 - FBA will be responsible for picking, packing, and shipping the product to the right place, once the order is placed by the customer. Furthermore, Amazon FBA will completely take care of customer service. Even if a customer wants to return the product, the seller will not follow for the same. The Amazon FBA will be responsible and take care of all the return formalities.
The below image is a simple and concise way to represent the working of FBA.
Just like every successful model, the Amazon FBA also has its benefits as well as limitations. This section will explain the benefits and limitations clearly.
Benefits of Amazon FBA
It is one of the most prominent benefits of getting FBA services. These services help sellers to scale their businesses at a good pace. The best part is the seller doesn’t need to be concerned about selling, return, and other issues. Amazon will manage shipping and logistics so sellers can easily focus on sourcing new products and expanding their service at a high level.
2. Reach Globally
As you know, Amazon has a vast global customer base, which indicates that with the FBA services, sellers are enabled to reach a high audience. Amazon has fulfillment centers all over the world, and with FBA services, sellers can easily reach the international markets. The seller just, needs to propel and advertise their brand. As well as build and gain the trust of the target audience with their product and services.
3. Easy to Gain Customer Trust
It is a well-known benefit of FBA, as Amazon is popular for its commitment to the best services to customers. So, if a customer witnesses that a particular product is fulfilled by Amazon, there are more chances that the customer will show more trust in the quality and quantity of the product as well as its timely delivery.
4. Save Time
Adapting the Amazon FBA process saves time for sellers. It is because FBA itself manages services right from placing orders to returns. So, a seller can invest their time to create better strategies for marketing, customer engagement, and product development.
5. Less Hassle
As it's understood, the seller doesn’t need to interfere in between the customer and FBA team conversation. So, it is automatically less hassle, the seller doesn't need to worry about the order delivery, return by the customer, pickup of returned products, etc,.
Limitations of Amazon FBA
Fess is the main concern for many sellers because Amazon charges different charges for FBA services, consisting of storage, fulfillment, and referral fees. Also, these fees might impact the profit of the seller of a product.
2. High Storage Price
There are some products that don’t sell quickly, so long-term charges for those products could be a burden for a seller. It is not always the case that inventory has a steady flow of sales.
3. Control Limitations
The seller doesn't have full control over their products once they start using FBA. Also, a small human error can ruin the reputation of the seller’s brand.
4. High Competition
As we all know, the Amazon marketplace is very highly competitive. So, there are chances that sellers using FBA services might find themselves competing with many other sellers providing similar products and services.
5. Return Issues
No seller likes returns or exchanges, however, in the FBA process, Amazon handles returns on behalf of sellers, which might disturb the seller.
6. Restrictions and Policies
Sellers need to be well-known with the policies of restrictions or require approval to be sold through FBA.
Once a seller is ready to get FBA service, they must know the process to create a seller account for the same. Well, below we have mentioned a stepwise guide to create a seller account.
- Get ready with your details - Collect details like, your name, legal business name, address, and tax identification number (mandatory).
- Visit Amazon Seller Central at sellercentral.amazon.com.
- As per your sales volume, choose your seller plan between the ‘Individual’ or ‘Professional’ plan.
- Enter the business information and verify your identity.
- Now, read the details carefully and click on the ‘Review and accept Amazon's terms and conditions’ tab.
- Create a seller profile (must include the seller’s display name).
- Start listing all the products you want to sell on Amazon.
- Ensure choosing ‘Fulfillment by Amazon as the preferred method of fulfillment.
- Navigate to ‘Fulfillment by Amazon’ under Seller Central and ensure completing the process for account setup.
- Now, make a shipment plan and send your products to the designated address of the Amazon fulfillment center.
- Once your products are available on Amazon for sale and you have got approval from FBA, Amazon will handle customer service and shipping for FBA orders then and there.
- Ensure following Amazon's seller policies and guidelines to enjoy a successful FBA journey.
Following these steps will help customers to create a seller account. If the seller is still facing issues, then they can consider connecting with the concerned person related to this Amazon FBA service.
Nowadays, as e-commerce business is growing, customers are becoming smarter, they are trusting only reliable and reputable sources to shop online. So, in this technology-driven world, it is important to gain high-level trust from your customers. Undoubtedly, Amazon is one of the most trustable platforms to shop online.
So, if a seller is facing issues in distribution of their product or services, they can directly go for FBA services. The FBA service charge varies product to product, and sellers can confirm that by connecting to the Amazon FBA customer service provider.
Additionally, Amazon FBA can help sellers to get rid of shipping, storing, return worries and just focus on growing their brand name or product. Simply a seller can concentrate the strategies to be followed to get the targeted profit.