What Are the Benefits and Drawbacks of Amazon’s FBA Program?
Amazon’s FBA program is an essential tool for many sellers and can assist with handling everything from shipping to customer service. The competitive landscape of Amazon eCommerce makes turning a profit from selling and reselling products through the platform a challenge, even for those with significant experience. Amazon seller tools, in addition to the services of Amazon’s FBA program, make the process of listing and selling products online as straightforward as possible. In this article, we’ll cover the pros and cons of fulfillment by Amazon, so you can decide if the program is a good fit for you.
What is Amazon FBA?
Amazon’s fulfillment program, which is more commonly referred to as FBA, is a service for sellers that manages shipping, logistics, and returns, in addition to all aspects of customer service. For many sellers and resellers on Amazon, the FBA program is essential to their success and makes it easy to avoid the hassles of managing every aspect of moving products online. The seller’s products are first shipped to Amazon’s fulfillment warehouse, where the items are then held until someone buys them. Once the seller makes a sale, Amazon packages and ships the item from the warehouse.
For anyone purchasing items on Amazon, products that Amazon fulfills are often the easiest to buy because of the shipping and return policies. Most of the items in Amazon’s possession are eligible for Prime shipping, or in the case of the customer having $25 or more in purchases, qualify for free shipping. Though these products often see significantly more sales in comparison with items fulfilled by the seller, they are also much easier to return.
Amazon offers reimbursement for a wide variety of reasons and credits the buyer as soon as the item comes back to the warehouse. For many sellers, however, fulfilled by Amazon is the most cost-efficient method of moving products online. To get started on the platform, you’ll first need a verified Seller Central account, which you can sign up for here.
Benefits of Amazon’s FBA Program
If you’re new to selling or reselling products on Amazon, it can be challenging to decide if the FBA program is right for you and your product offerings. The fulfillment program comes with a range of benefits and removes a considerable portion of the headaches associated with making a profit through the platform. However, there are also a handful of significant drawbacks that you’ll also want to understand. First, let’s cover the benefits of the program.
Shipping and Logistics Made Easy
Amazon’s fulfillment program takes the hassle of shipping logistics off your hands, so you’ll never have to worry about the costs of shipping and the time it takes to package an item when you make a sale. Instead, all you’ll need to do is make sure that the fulfillment warehouse has adequate product inventory.
For many sellers and resellers through Amazon, shipping and handling are the primary benefits of the FBA program. In addition, your customers will be significantly happier with shipping times and prices, and can easily bundle your items with the products they are purchasing from other sellers. The result for the seller is that they won’t have to worry about the cost of shipping and will get a more definitive answer as to when the products will arrive at their door.
When Amazon backs your products, you’re no longer on the front lines of customer service. In the event that there’s an issue with the product or the shipping process, your customers will speak with Amazon’s customer service team at their customer service center. You’ll be able to track the issues for which the buyer is reaching out, but you won’t have to worry about taking action related to the issue.
Inventory and Product Storage
Storing product inventory before it’s sold is tricky without Amazon’s fulfillment tools. Amazon will take care of the products that you’re trying to sell and then manage all aspects of the organization of that inventory. You’ll never have to worry about misplacing anything you have listed, and if something goes wrong regarding your inventory, Amazon will handle it at no cost to you.
Managing and verifying product returns can be more than a hassle without the assistance of the Amazon FBA program; it can easily turn into a nightmare of negative reviews when it’s poorly handled. Amazon’s return management policies make it easy for the buyer to return products, so even when the customer isn’t satisfied with the product, they will at least be satisfied with the experience of shopping through Amazon. Sellers that list products with the assistance of the FBA program will never have to worry about micromanaging the return process, which is often a significant weight off their shoulders.
Drawbacks to Using FBA
Though there are significant benefits to using the Amazon FBA program, there are also a handful of drawbacks that you’ll want to consider. The two major drawbacks, in this case, are the cost of the program and the increase in returns.
The cost of Amazon’s fulfillment services can make it inaccessible for many sellers who are just getting started. You’ll need significant inventory and sales to make FBA profitable at first. In addition, Amazon will charge you if your items are stored for more than 180 days. However, FBA is still a worthy investment for many sellers, despite the high initial price tag. The program’s cost is the number one reason sellers avoid the program.
Increase in Returns
Amazon’s FBA program makes it easy for sellers to manage returns, making it significantly easier for buyers to return their purchases. When you’re calculating the costs of purchasing the FBA program for your products, make sure you’re accounting for this increase in returns.
Conclusion- What Are the Benefits and Drawbacks of Amazon’s FBA Program?
Amazon’s FBA program essentially allows sellers to outsource inventory storage, returns, shipping, and customer service to Amazon, so they won’t have to lift a finger. For many sellers, this is an ideal solution for various challenges associated with turning a profit through the platform. However, before investing in the FBA program, it’s best to analyze the cost that comes with it carefully.