{"id":7781,"date":"2019-04-02T19:58:28","date_gmt":"2019-04-02T19:58:28","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/amazon-fba\/"},"modified":"2021-05-21T13:58:52","modified_gmt":"2021-05-21T20:58:52","slug":"amazon-fba","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/amazon-fba\/","title":{"rendered":"Pros and Cons of Amazon FBA"},"content":{"rendered":"<p><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/services\/ecommerce-fulfillment\/amazon-fulfillment-services\/\">Fulfillment by Amazon<\/a><\/span>\u00a0(FBA) is a service in which an online business can sell products via Amazon\u2019s online store, but online and outsource all the unglamorous and laborious tasks involved in the fulfillment process to Amazon. Whether you are a full-time seller or using Amazon as a side hustle, it is worthwhile to consider using FBA as part of your Amazon store.<br \/>\nOf course, this is done in return for fees, and there are some very specific requirements to qualify for Amazon\u00a0FBA\u00a0business. It\u2019s not right for every company, but since Amazon selling is the becoming the premier place for online shippers, it\u2019s an important consideration to make when selling online.<\/p>\n<p>First, you must have an amazon\u00a0seller\u00a0account in order to participate as an FBA Amazon\u00a0seller. You are required to prepare your FBA\u00a0products so they are ready to sell on Amazon. This included providing a upc bar code to identify each item you are selling. Following this, you will need to ship your parcels to an Amazon fulfillment center. From this point on, the product is out of your hands and Amazon handles it. Here is a step-by-step list of what Amazon does for FBA\u00a0sellers:<\/p>\n<ul>\n<li>Your products are unpacked and stored in an Amazon warehouse<\/li>\n<li>When a customer purchases your product their order is tracked through Amazon\u2019s warehouse<\/li>\n<li>Amazon picks and packs your product<\/li>\n<li>Amazon ships your product to the buyer<\/li>\n<li>Amazon provides customer service for the buyer after shipment<\/li>\n<\/ul>\n<h2>Costs<\/h2>\n<p>Amazon recently changed their fee structure for FBA\u00a0program (at the end of February 2019). Currently, to determine how much\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/understanding-fulfillment-costs-on-amazon-an-explanation-of-fba-fees\/\">FBA costs<\/a><\/span>, you must consider two sets of expenditures: fulfillment fees and monthly storage costs, which are ultimately contingent on the size of the item(s) and the time of year you plan to sell.<\/p>\n<p>Fulfillment fees cover picking and packing, shipping and handling, customer service, and product returns. Amazon\u00a0fees are charged per unit, but there are specific stipulations to calculate the price, it is based on the size classification of your product. There is also a slight increase in price per unit between the January \u2013 September and October \u2013 December \u2013 \u00a0timeframes to account for the spike in Q3 orders.<\/p>\n<p>You can find more details on\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/services.amazon.com\/fulfillment-by-amazon\/pricing.html\">Amazon\u2019s FBA pricing page<\/a><\/span>.<\/p>\n<p>Also on that page, you can find the specifics for the monthly storage fee. It is calculated by cubic feet and largely determined by time of the year.<\/p>\n<p>To get a clearer picture of how much FBA would cost for a specific product, there is a\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/sellercentral.amazon.com\/hz\/fba\/profitabilitycalculator\/index?lang=en_US&amp;ref=asus_fba_pricing_calc&amp;ld=NSGoogle\">Fulfillment by Amazon Revenue Calculator<\/a><\/span>.<\/p>\n<h2>Pros &amp; Cons of FBA<\/h2>\n<p>There are many factors that you must take into account when evaluating whether or not FBA is beneficial to your business, but we\u2019ve compiled a list of pros and cons based on our experience and the customers with whom we have worked.<\/p>\n<h3><strong>PROS<\/strong><\/h3>\n<p>As you can imagine, having the world\u2019s largest retailer handle fulfillment for your products comes with major advantages. What exactly are they?<\/p>\n<h4>Access to Prime customers<\/h4>\n<p>Aside from being able to list your product in the Amazon marketplace, many of FBA users cite qualifying for Amazon Prime as the most beneficial. By using FBA, your products automatically become Prime eligible for free two-day shipping. This is an especially great perk of the FBA Amazon business\u00a0model Prime single-handedly eliminates the primary reason for\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/Users\/michaelbrumm\/Local Sites\/dclcorp-phase-2-launch\/app\/public.barilliance.com\/10-reasons-shopping-cart-abandonment\/\">shopping cart abandonment<\/a><\/span>: shipping and handling costs. Put yourself in the shoes of your customers, if there are two nearly identical product listings online and one of the two are eligible for Prime, which would you choose? Access to the millions of people who use Amazon for their<\/p>\n<p>And to top it off, the seller account will be charged the same shipping cost regardless of whether or not the customer chose to ship via Prime.<\/p>\n<h4>Customer Service and Return Management<\/h4>\n<p>Amazon\u2019s customer service is revered for its speed and accuracy, and by using FBA you have access to their 24\/7 service. As retailers also know, the return management process can be difficult to manage so Amazon will take care of this for you as well. Know, however, there is a returns processing fee that varies based on product size and type.<\/p>\n<h3><strong>CONS<\/strong><\/h3>\n<p>Why would you think twice about choosing Fulfillment by Amazon, and what are some problems that you might run into with FBA that you wouldn\u2019t with another fulfillment service?<\/p>\n<h4>Strict Receiving Guidelines<\/h4>\n<p>In order to get your product stocked, listed, and sold on Amazon, you must first have your product arrive at their fulfillment center(s). This is a process called \u201creceiving.\u201d Amazon\u2019s receiving standards are astonishingly strict. They lack flexibility, in that they require your products to be ready for fulfillment upon arrival at their fulfillment centers. There can be no non-standard shipping methods. If you fail to adhere to these rules, you run the risk of being charged for noncompliance. Perhaps even more damaging, they could refuse delivery of your product.<\/p>\n<h4>Branding and Customer Loyalty<\/h4>\n<p>If you do decide to be listed on Amazon, your sales will likely increase. However, with every purchase, your customer is establishing loyalty to Amazon instead of your company. Some buyers may not even know your company after they use your product. If you decide to sell on Amazon, you could be losing brand loyalty. Also, it may be challenging to distinguish your product from other similar products Amazon has listed. As the seller, you only have jurisdiction over the product photos and description.<\/p>\n<h4>Missed Opportunities for Growth<\/h4>\n<p>You may have customers that love your products and brand from selling through Amazon, but since you are not in direct contact with you customers, you won\u2019t have any of their information\u2014for example if they opt-in to an email subscription or follow you on social media channels. This can limit the marketing, news, and promotions you can get to your already existing customers and you may miss out on opportunities to promote \u00a0new products to them. This can lead to long-term sustainability issues.<\/p>\n<h4>Sales Tax Compliance<\/h4>\n<p>Sales tax is a reality for all sellers, and selling through FBA is no different. But to comply with the sales tax rules under FBA is a bit more complex because your products will be housed in Amazon fulfillment centers, which may vary depending on your customer base at any given time<em>.\u00a0<\/em>The issue arises in that different states have different tax laws, leaving \u00a0sellers unsure of where to register for sales tax compliance. This results in potential liability issues for the third-party retailers.<\/p>\n<h4>Long-term inventory storage fees<\/h4>\n<p>Since Amazon\u2019s fulfillment centers are structured to ship at a high-volume, units that are stagnant for longer than 6 months are subject to a semi-annual long-term storage fee. Amazon hosts a complete explanation of\u00a0FBA\u2019s long-term storage, and many frequently asked questions and a list of other FBA\u00a0fees\u00a0<a href=\"https:\/\/sellercentral.amazon.com\/gp\/help\/external\/200684750?language=en-US&amp;ref=mpbc_201101150_cont_200684750\">here<\/a>. FBA might not be worth it for you if their fees cut too much into your profit margins.<\/p>\n<h2>Bottom Line<\/h2>\n<p>Now that you are armed with the knowledge and understanding of what FBA is, you can decide for yourself if that is the best option for your ecommerce business.<\/p>\n<p>If you are interested in FBA prep, or you are looking for a fulfillment center to handle your online order, we\u2019d love to chat!\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/company\/get-started\/\">Send us a note<\/a><\/span>\u00a0to connect about how we can help your company grow. You can read\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/services\/ecommerce-fulfillment\/\">DCL\u2019s list of services<\/a><\/span>\u00a0to learn more, or check out\u00a0<span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/resources\/integrations\/\">the many companies we work with<\/a><\/span>\u00a0to ensure great logistics support.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fulfillment by Amazon\u00a0(FBA) is a service in which an online business can sell products via Amazon\u2019s online store, but online and outsource all the unglamorous and laborious tasks involved in the fulfillment process to Amazon. Whether you are a full-time seller or using Amazon as a side hustle, it is worthwhile to consider using FBA [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[25,19,6],"class_list":["post-7781","post","type-post","status-publish","format-standard","hentry","category-amazon-fulfillment","tag-amazon","tag-fulfillment","tag-3pl"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Learn about the pros and cons of using Amazon FBA order fulfillment - DCL Logistics<\/title>\n<meta name=\"description\" content=\"This article discusses the pros and cons of using Amazon FBA service to help you decide if that is the best option for your business.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Learn about the pros and cons of using Amazon FBA order fulfillment - 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