FBA means fulfilled by Amazon, and it has great benefits. Some of these benefits are:
- You don’t need to keep the inventory in your office or warehouse.
- You don’t need to ship the products to customers: Amazon does it for you.
- You don’t need to keep the inventory in your office or warehouse
You have a greater chance to get the buy box: which means more sales and higher price and profit.
So all of these reasons sounds really good in a way that you should do FBA for all products. Is that the case? Here are the things you need to know while you are doing or considering FBA?
Amazon handles the customer service.
Basically if all the products that you shipped are in good condition and acceptable by Amazon to ship, you can delete any customer complaints on the shipping delays or ASIN review summary, so you will have a higher customer rating.
FBA Costs
These costs might be high in products with high dimensions or weight. We seen in so many times that if you switch to USPS, UPS, FedEx on some products, you will have a higher margin than FBA. Yet you need to make sure that product good and answers to the customer demands and you are capable of handling the customer service.
Tracking your inventory
It’s again something that we have seen a lot over the years that Amazon sometimes loses your inventory or it stays under inbound for months; You will need to track your inventory carefully to avoid this issue and to be reimbursed for your money if it happens.
Other FBA sellers
It’s a risky decision to ship a lot of inventory with FBA because at any time someone can jump into the page and they might have better ratings / better price than you have. You might have a big inventory at multiple Amazon warehouses which won’t move for months. That’s why you should do medium size shipments for FBA. A simple way to calculate would be Daily Average Sale Quantity (looking at last 2 months) * (20 days + 4 days for Amazon receiving your shipment)
FBA Calculator and FBA Commissions
Amazon occasionally change their FBA commission and fee for an ASIN. This is why you will need to track these updates carefully. For an example, almost a year ago Amazon changed their per order commission which ended up changing business dynamics for some of our customers.