Amazon FBA-Fulfillment by Amazon
Amazon FBA stands for Fulfillment by Amazon. It is merely a process where sellers send their products to Amazon warehouse and the goods delivered to the required customer. Amazon registers the ordered products with Amazon Prime. Therefore, they are sold and shipped with zero cost delivery to customers enrolled in Prime. Due to the fast growth of e-commerce, aspiring entrepreneurs’ have leaped in joining FBA, and approximately 80% have become Amazon sellers through the Amazon FBA. As a seller, you always focus on the profit margin, which helps in determining whether the products sold have a stable growth rate.
Therefore, Amazon FBA offers a bridge to new sellers regardless of the volume of their investments. The start-up stage is quite challenging for most solo sellers before adjusting to the competitive market. Amazon FBA offers an assuring online trading platform for the sellers. Better strategies in marketing can be achieved by engaging in campaigns offered by Amazon PPC. And a better understanding of the Amazon SEO and the algorithms-provides the seller with a high probability of generating high profit from the sales.
How Amazon FBA works
- Amazon merchants or FBA sellers send their products to the required logistics center i.e., Amazon warehouse. The goods have to be tagged to avoid confusion or misplacement with similar ideals. Note that the transportation carrier is responsible for any damaged product.
- Amazon collects, sorts, and stores the received products. The volume of the products is convenient to determine the charges for storage and fulfillment fees. However, the expenses incurred cover 24/7 Amazon customer care service and the cost of shipping the products to the customer.
- When a customer orders one of your products, Amazon does the courtesy of packing, shipping, and tracking the order until the good is delivered. Therefore, all transactions by Amazon handles all seller transactions and later updated to the FBA sellers’ inventory.
- Finally, Amazon handles the returns and refund policy for the FBA sellers. In two weeks, disbursement of FBA sellers payment is as per their sales and with all seller fees deduction met. The sellers’ profits are deposited directly into their bank accounts.
Besides the following Amazon FBA operations, FBA services offer a Multi-channel fulfillment primacy. Not only does Amazon FBA receive products from their FBA sellers but also from different e-commerce centers.
Amazon FBA fees
Before registering for Amazon FBA, you should ask yourself the fees you are going to incur as a seller by joining the FBA. In this article, I will give you a glimpse of the fees paid in FBA by Amazon sellers. The Amazon FBA fee branches the charges into four different sections:
Fees paid by all Amazon sellers
All Amazon sellers, whether a Fulfilled By Merchant FBM or Fulfilled By Amazon FBA seller, must pay the required fees to sell on Amazon.
Referral fees
The referral fees are a flat percentage that covers every item sold via the Amazon platform. Simply is a commission fee for Amazon, which is around 15% or less. However, the fee cannot be paid upfront. Still, it is deducted directly from the sellers’ Amazon account in every sale made.
Subscription fees or Individual per-item fees.
Amazon has offered two different account platforms for the seller: professional and individual accounts. Regardless of the type of account, sellers have the individual per-item fee charged in each transaction made from the sale. However, FBA sellers can also apply for a subscription fee charged every month.
The Individual seller per-item fee charges sellers $0.99 flat in every sales transaction completed per month. The fees do not require an upfront payment, which is similar to the referral fees, charges are made automatically and subtracted from the sellers’ Amazon account.
While the Professional subscription fees for the seller charges at $39.99 every month. Note that in professional subscription, the charges do not pay as per the sale of the goods. Similarly to other fees charged, it is deducted from the sellers’ balance in his or her Amazon account.
If the seller’s account is in deficit or has no funds in his or her Amazon account, deductions come from the seller’s credit card account.
Refund administration fees.
The refund administration fee is paid when a customer requests a refund from the goods he or she had ordered and paid. Therefore, Amazon takes the obligation of refunding the customer. However, there is a fee charged from the sellers’ Amazon account. Also, if the Amazon seller or merchant has insufficient funds in their Amazon account balance, charges made from their credit card account.
Fees paid by FBA sellers only
Amazon added some fees specifically charged to FBA Sellers in Amazon.
FBA fees
Amazon fulfillment workers help FBA sellers to ship their products to the customers by picking the goods, packing, and sending the product to the required destination. However, this comes under a specific cost-covering those services offered by Amazon. The size and weight of the products determine the cost charges.
Sellers should note that clothing items and products containing lithium batteries have extra charges of $0.40 per unit for clothing and $0.11 per unit for goods with lithium batteries.
FBA storage fee
Since Amazon offers FBA sellers containments for storing their inventories or goods, it does not come free. However, there is a fee charged for the storage facility. Amazon has implemented two forms of FBA storage fee: Long-term and monthly storage fees.
Monthly storage fee
If an FBA seller or merchant has their inventories in the Amazon’s warehouse at the end of the month, Amazon charges a guaranteed monthly storage fee. An automatic deduction of the payment from the sellers’ Amazon account balance. If the seller has no funds in their account, it directly charges from their credit card.
Long-term storage fees
Every month precisely on the 15th date, Amazon performs an inventory clean-up, which includes recording any product that has been in their warehouse or fulfillment centers for more than 180 days. For products stored 180 days or longer charged $6.90 per cubic foot of the storage used. Also, their products stored for more extended periods than 365 days cost $0.15 in every unit.
Like all other fees, long-term storage fees credit on the same date of the month. The charges met from the sellers’ Amazon’s account balance or his or her credit card registered with Amazon.
During demandable seasons, the fees charged may increase to persuade sellers to remove dead stock and create room for more demanded products.
Fees paid by Fulfilled By Merchant- FBM sellers
FBM sellers incur a high cost compared to FBA sellers since they store, pick, pack, deliver their goods, and handle the customer care service on their own. However, FBM sellers do not have a separate fee compared to the FBA.
Therefore, when an FBM seller wants to sell a particular product, he or she has to factor out the cost of packaging, shipping the product, and tracking the product. Thus, it prevents from being hijacked.
Even though an FBA seller has to pay additional funds for services offered by Amazon, FBM sellers incur a lot of costs. Since they tend on their services from packaging to delivery. If you wish to compare prices between FBA and FBM, Amazon has offered a free FBA Revenue calculator platform.
As a seller in Amazon, whether an FBA or FBM seller, you have to focus on the opportunity cost and compare the graph between values used for labour and the profits. In FBA, labor cost factored and deducted from the additional FBA fees charged. On the other hand, FBM sellers have to estimate their opportunity costs from the damage incurred in labour. Remember, time is money. Therefore, you can evaluate your opportunity cost-calculate your pay on an hourly basis and multiply by the amount of time required to complete the activity.
Miscellaneous Service fee
This fee paid by several sellers’ including FBA and FBM sellers’.
Closing fee
Similar to the referral fee, this type of payment charges media products such as Blu-Ray, CDs, books, and DVDs. The media product charges with a fee of $1.80 in every sale they make. The tax deducted from the sale proceeds; therefore, there is no need to pay the costs upfront.
High-volume listing fee
Sellers with a high number of ASINs, required to pay a monthly fee of $0.005 flat per the eligible ASIN. Unless a seller has listed more than 100,000 products, he or she needs not to worry about the high-volume listing fee. The fees deducted from sellers’ account balance or directly from their credit card registered with Amazon.
Rental book service fees
Sellers pay a service fee of $5.00 for each rental textbook sold on Amazon. The fee subtracts from the seller’s Amazon account balance. Therefore sellers need not pay the fee in advance.
Responsibility of sellers/merchants using Amazon FBA
1. Sellers’ have to choose the kind of products they are going to sell by limiting your products with customers’ demands to avoid storage fees.
2. Sellers’ should always check the level of their inventories to maintain their stocks.
3. Besides a seller is eligible for the Amazon FBA, they have to boost demand for their products. Hence, they gain tremendous profits. Marketing and advertising of the products to familiarise them with the customers.
Benefits to sellers using Fulfillment by Amazon (FBA)
1. FBA services save time for the FBA sellers or merchants, thus gives them a window to focus on their business.
2. Amazon offers steeply discounted rates in shipping costs of inventories from sellers to the Amazon fulfillment center.
3. Amazon has a number of fulfillment centers around the world. Therefore, sellers’ products delivered quickly to the customer.
4. FBA sellers’ products applied for Amazon Prime i.e., and the FBA products can be freely delivered. The premium advantage boosts the customers’ experience. At the same time, shopping and, in return, increases the customers’ trust in the company, loyalty, and demand for more products.
5. FBA services have a flexible structure for the fees rates, where there are no additional fees paid during subscription, zero start-up fees, and no fewer units. Besides the following standards, FBA sellers can pay for these services as they continue with their business without requiring upfront payments.
6. Amazon offers their services for fulfillment orders received from other e-commerce channels such as BigCommerce store. Therefore, they deliver, track the goods, and update the data for the customers from the e-commerce centers.
7. It helps build trust between customers and the sellers’ product received via Amazon. Since Amazon offers premium services when it comes to packing and shipping of the goods to the customer, hence, they offer quality customer services and returns.
8. With the increase of sales, FBA sellers need not pressure themselves for extra human resources, since Amazon provides the required workforce to manage in packaging and delivering of orders made. Besides that, Amazon also offers adequate inventory space in case of high demands and supply.
9. Amazon FBA services support customer services and returns for goods delivered through Amazon.in. Amazon provides the FBA sellers with free delivery for their products. Also, FBA sellers offered transportation services for their products, picked from their doorstep to the Amazon fulfillment centers.
10. Cash on Delivery the primary form of payment mostly used in India. Therefore, FBA offers a platform in Pay on Delivery for ordered products, and the payments deposited directly into sellers’ bank account.
FAQ’s
1. How does the process of vetting products work?
Certification varies on the product sold.
2. Is the FBA fee discounted if you have multiple units per order?
No.
3. When selling a product on Amazon FBA, should I pay all the FBA fees before I start trading?
The only fee paid upfront is the Amazon subscription fee if you are a professional seller. Otherwise, the charges deducted from every sale.
4. Where can I purchase my UPC?
Sellers’ can purchase their UPCs from GS1.
5. Are there taxes or other additional costs in selling books?
VAT considered in most of countries. Typically, you have to be vigilant with the VAT; otherwise, you can contact the seller support.