With its strong global presence, most people have at least heard of Amazon. Currently, Amazon is the largest online marketplace by market cap. It has grown immensely from its founding days as an online bookstore to selling all kinds of products. Consumers can purchase everything from electronics to gardening equipment to fashion to digital media in over 190 countries worldwide. It’s speculated that every minute $150,000 is spent on Amazon and that around 38% of U.S. citizens live in a household with an Amazon Prime membership. Worldwide, Amazon has over 183 million unique visitors per month.
Online sellers are utilizing Amazon’s popularity to increase their own financial gains through FBA. What is FBA Amazon? We’re glad you asked! Read below for the answer along with other FAQs related to selling on Amazon.
What is FBA Amazon?
This wording is a bit redundant as FBA actually stands for “Fulfillment By Amazon.” But a lot of people use these phrases – “FBA Amazon” or “Amazon FBA.”
As part of their mission to become the biggest online marketplace in the worldwide and as a necessary requirement to actually deliver purchases to customers, Amazon has built up an impressive and almost ubiquitous delivery and warehousing infrastructure network. This network is made of thousands of Amazon “fulfillment centers” that warehouse merchandise and ship it to customers.
Through FBA, this network is now available to online sellers. People can sell their merchandise in the Amazon marketplace and use Amazon’s infrastructure to ship their products instead of doing it themselves.
What is the advantage of using Amazon FBA for sellers and why is it so popular?
Sellers that leverage FBA to take care of their fulfillment needs can look forward to many advantages. Most of them relate to huge savings in terms of time and money.
For one thing, because Amazon’s fulfillment network is so widespread, established, and perfected, they can offer shipping rates that are very competitive within the industry as a whole. Amazon fulfillment centers are usually located conveniently so that it will be cheap for you to deliver your products to them.
If you use Amazon FBA, they take care of warehousing, shipping, returns, and customer care. They also provide you with inventory management tools to help you focus on your business and not on fulfillment.
This is why it’s so popular among sellers. Now, you can let someone else take care of a very time-consuming, yet necessary, part of your daily business that often holds back new business.
What are the costs involved with Amazon FBA?
First of all, you’ll need to pay to be an Amazon seller. There are two account options. The individual seller account is billed at $0.99 per item you sell on Amazon. The Pro Seller account is a flat $39.99 per month no matter how much you sell. This means that if you plan to sell more than 40 items the latter is more economical. The Pro Seller account also comes with more tools and features.
There are then a lot of secondary seller fees associated with selling on Amazon relating to the type of product that you sell.
Lastly, the shipping rates are based on the size and weight of your products and any irregular dimensions. There are also monthly warehousing fees. Amazon takes the amount it charges buyers for shipping and uses this to pay your FBA fees so you usually end up paying very little if anything.
How does the Amazon FBA process work as a seller?
The Amazon FBA process is very easy and straightforward, in keeping with Amazon’s principles of providing world-class fulfillment services to everyday sellers.
- You create an Amazon seller account and start listing your products for sale on Amazon.
- You register for Amazon FBA and choose which of your product listings you want to be fulfilled by Amazon.
- Amazon provides you with packaging and labeling instructions along with labels. You complete their instructions before delivering your products to them.
- Once Amazon receives your products, they add them to their inventory management system and store them until they are bought and shipped. You can view all your inventory movement with the online tools they provide.
- Amazon ships your products to buyers. They take care of any returns, customer service, and shipping problems that occur.
- You get charged a monthly fee for items that are stored in Amazon warehouses as well as extra penalties for items that don’t sell for 6 months or 1 year.
Where can I find products to sell on Amazon FBA?
There are 3 main business models that people follow when sourcing their products and selling them on the Amazon marketplace.
1. Retail arbitrage
Through this model, you buy products that are on sale from stores and sell them online at regular prices. People that might not have these stores (or who have the stores but the items are not on sale) will search for them online. Amazon Prime also gathers up people who are too lazy to shop in person to make up your main customer base. Read here for more about retail arbitrage.
2. Private labeling
Also called white labeling, this is the process of buying items that have no branding. These items are mass manufactured and then branded, or “labeled,” with your own brand or business identity. You sell these products at marked-up prices. Sites such as Alibaba are a good place to look for these kinds of items. You will need to haggle for good prices and arrange to have the products shipped to you.
3. Sell your own product line
On Amazon, you can also sell products that you have invented or have made yourself. You need to create a brand new type of product listing on Amazon. You can also register your brand on Amazon to get additional protection from others trying to profit off your products.
So, should I use Amazon FBA?
Yes! Definitely! If you are looking to break into the online retail market, there is simply no better way to get started than through the Amazon marketplace and by using Amazon FBA for your fulfillment needs.
So what is FBA Amazon? In short, it allows you to put all your energy into growing your business and living your life and not on packing boxes, responding to endless queries, and dealing with warehousing hundreds or even thousands of items.