The eCommerce boom has made waves throughout the world. Everyone with half an inkling of online retail wants to dab their toes in these waters, and get soaking wet in cash. However, that aim is easier said than done. The online retail market is not just about listing a product on Amazon and having it sold immediately with a lucrative ROI. It is a cut-throat market, with a brutally competitive atmosphere involving many complex variables, which every prospective seller needs to consider to have any hope of success. One of those variables is the fulfillment of the product. Fulfillment involves all the processes that begin after a seller procures their product, and starts mulling their options on how to actually have it delivered to their customers. There are two popular methods of achieving that goal on Amazon. Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). FBM method involves the product fulfillment being handled by the manufacturer or seller themselves, which involves them procuring, storing, packaging, and shipping the product by using their own means, and using Amazon’s platform only to reach out to its large customer base. Fulfillment by Amazon method is popular in many regions of the world, but the FBA method is the most popular one throughout the world for a variety of reasons.
Let’s take a look at what the FBA method is and what makes it a better option.
Table of contents
How Does Fulfillment by Amazon (FBA) Works?
Fulfillment by Amazon is the fulfillment service offered by Amazon to all aspiring sellers, who want to send their products to Amazon, tell them where to ship those products, and let Amazon take care of the rest. Guess what? FBA does exactly that. Once you sign up for FBA on Amazon and pay their fees, Amazon takes over the remaining process. It will store the product in its own warehouses, ensure the product’s safety, package the product, and ship the product to the desired seller whenever, and wherever, you ask them to. This method allows a seller to focus on branding and marketing their products, without having to worry about the handling and shipping aspects.
Explore In-Depth detail about FBA (Fulfillment by Amazon)
Any aspiring sellers who want their products to be fulfilled by Amazon need to create an Amazon Seller Central account first. Users will have to choose one of two plans: the ‘Individual’ plan allows a subscriber to sell up to 40 items per month, for a fee of $0.99 for each item sold.
Serious FBA sellers on Amazon are recommended to choose the more robust ‘Professional’ plan, which costs $39.99 per month (disregarding other selling fees Amazon will charge when you start selling products). The professional plan allows its subscribers to access many benefits of fulfillment by Amazon sells more than 40 items each month, opens up many advertising options, allows sellers to have their high-quality products featured in the top ranks, provides access to many useful tools which will help sellers compete better in the market, and enables access to sell items in select few restricted categories.
Amazon FBA Fees
For those sellers who were heaving a sigh of relief after paying the monthly subscription fee for their seller central account, we have bad news: that wasn’t the only fee Amazon was going to charge for selling on Amazon FBA. But you already knew that, didn’t you? Gaining access to the huge customer base of Amazon had to come at a price, after all. Amazon charges seven kinds of fees for people who wish to utilize its FBA program to reach out to its huge fan-following a.k.a customer base.
Without further ado, let’s dive into those fees and see what they are:
- Fulfillment Fee
Fulfillment by Amazon FBA fee is charged for labeling and shipping products to customers on the seller’s behalf. The exact amount of this fee is not static and depends on the item’s weight, size, and product category.
- Storage Fee
A monthly storage fee is charged by Amazon for storing products sent by sellers. This fee depends on the size of the product, which determines how much space it will occupy in Amazon’s warehouses until it gets shipped to a customer. This fee is also not static, and fluctuates wildly, especially during the holiday season.
- Long-Term Storage Fee
For those people who want to send their products to Amazon, and then expect the world’s biggest platform to take care of that product till the end of times, we have bad news: Amazon is not a charity or a foster home to nurture your products. FBA on Amazon comes with a price for long-term inventory storage, and you will be charged a long-term storage fee for your products if they have spent more than 365 days (or 1 year) in an Amazon warehouse.
- Disposal Order Fee
Some items used to be hot, but just don’t sell anymore. If you are tired of keeping inventory at the FBA program that is not selling, Amazon can dispose of those items for you; for a fee, of course. But be careful, disposal order means Amazon can go ahead and break apart your product back into atoms if they wish so.
- Removal Order Fee
In case an FBA Amazon seller has developed strong feelings for their failed product and doesn’t want Amazon to ‘dispose’ of it after all, then they need to submit an FBA Removal Order to Amazon, pay the removal order fee, and have Amazon return the item back to them.
- Unplanned Service Fee
If you’ve sent your items to Amazon FBA, but wish to modify them in any way, Amazon will charge the unplanned service fee to do that for you, this fee will be charged for each item, so be careful about it.
- Return Processing Fee
Amazon handles the shipping of items returned by dissatisfied users for free. But it’s ‘free’ for the customer, not for the seller. Prepare to pay a processing fee for each item returned by customers, which varies from category to category.
Frequently Asked Questions
Amazon is a great platform to reach out to a huge customer base, and provide a new brand with much-needed exposure. However, Amazon is also a business, which exists to make money, and any aspiring sellers should prepare themselves for all kinds of fees when they send their products to an Amazon warehouse for Fulfillment by Amazon (FBA).
I hope you had explore much more about the FBA. Please share your feedback by comments. Contact us now for any kind of help you want relevant to your Amazon account to get rid of technical issues.