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How does Amazon FBA work?



Amazon FBA is a fulfillment service provided by Amazon. How it works? Just! You send your product to Amazon's warehouse and they take care of all the packaging, storage, and shipping of orders to your customers.


Benefits of Amazon FBA:


  • Worries about logistics: You don't have to worry about packing items, arranging shipping, or tracking orders. Amazon takes it upon itself.

  • Prime Access: Your products qualify for Amazon Prime, making them available to millions of subscribers with free shipping.

  • Scalability: You can easily scale your business as Amazon takes care of order processing and you focus on growth.


Steps to use Amazon FBA:


  • Create an Account: Sign up for Amazon Seller Central and select the FBA option when creating a product listing.

  • Ship Items to Warehouse: Pack up items in boxes and ship them to Amazon's warehouse. Here they will be stored until they are sold.

  • Sell: When your product sells, Amazon handles every step of the order process, including packaging and shipping.


Amazon FBA Cost:


Keep in mind that there are certain fees for using Amazon FBA, such as storage and order processing fees. However, many sellers believe that it is worth it due to the convenience and scalability that this service provides.

Monthly FBA Fee


Fees are charged on all units stored in the Amazon Fulfillment Center based on the calendar month and your average daily volume.


Regular season (January – September)

  • $0.69 per cubic foot – Regular Size Products;

  • $0.48 per cubic foot - Oversized Items.

High season (October – December)

  • $2.40 per cubic foot – Regular Size Products;

  • $1.20 per cubic foot – Oversized items.


These tariffs clearly show that in the case of trading Oversize products, the commission for fulfillment increases sharply. Even for the Small Oversize category, it is almost 3 times higher than the commission for a standard product, not to mention for products in the Large Oversize and Special Oversize categories, where it becomes simply ruinous.


During the high season of October - December, storage fees literally skyrocket. And the fact that the fulfillment fee is slightly reduced is a small consolation.



And now a comparison of the advantages and disadvantages between Amazon FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant):


Amazon FBA (Fulfillment by Amazon):


Advantages:


  • Convenient order processing: Amazon handles packaging, shipping, and returns processing, reducing your operational burden.

  • Prime Access: Your products may be available to Amazon Prime members, increasing your chances of selling through free shipping.

  • Scalability: Easily scale your business without having to worry about logistical details.

  • Customer Support: Amazon handles customer questions and concerns related to shipping and returns.


Flaws:


  • Additional Costs: There are additional costs for FBA services, including storage and order processing.

  • Limited control: You lose some control over the process of processing orders and storing goods.

  • Warehouse Competition: During peak periods (such as holidays), there may be competition for warehouse space.


FBM (Fulfillment by Merchant): This is an order fulfillment model on the Amazon platform in which the seller handles, packages, and ships products to customers themselves. In this case, Amazon is not involved in the fulfillment process and all operations are carried out by the seller.


Advantages:


  • Process control: You have full control over packaging, storage and order processing.

  • Lower Costs: May be more economical for smaller sellers with low sales volume.

  • Flexibility in inventory management: You determine how much product to keep in stock.


Flaws:


  • More operational work: You have to take care of packaging, shipping and processing returns.

  • No Prime: Your items won't be available to Amazon Prime users, which may reduce their appeal to some shoppers.

  • Limited scalability: Managing large volumes of orders can become more difficult without fulfillment support.


The choice between FBA and FBM depends on your business strategies, sales volume and the level of convenience you are willing to sacrifice in favor of control over the process or vice versa.


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