Fulfillment by Amazon: Benefits and Disadvantages
Amazon startups usually begin their online selling journey with only a few items to sell in a garage or basement serving as their inventory storage. It’s quite easy to manage your inventory when everything is just within arm’s reach. However, this kind of setup would eventually need to change when your online shopping business starts to grow. Sooner or later, you will have to find a location big enough to accommodate your increasing number of stocks.
After finding the perfect spot to store your items in, you will then have to take care of your warehouse logistics and manage the entire inventory management process. You’ll have to pick, pack, and ship your customers’ orders. Having full-control of all areas in your business is great but as your business grows, it will certainly become time-consuming and tiring.
Good thing Amazon has come up with a solution to make the lives of its sellers much easier through its Fulfillment by Amazon (FBA) service.
What is Fulfillment by Amazon?
According to Amazon, their FBA program works like this:
“You sell it, we ship it. Amazon has one of the most advanced fulfillment networks in the world. With Fulfillment by Amazon (FBA), you store your products in Amazon’s fulfillment centers, and we pick, pack, ship, and provide customer service for these products. FBA can help you scale your business and reach more customers.”
Simply put, Amazon will take care of your orders for you for a relatively small amount. All you need to do is send your items to their warehouse and they will be the one to ship your items to your customers.
What are the Benefits of Fulfillment by Amazon (FBA)?
Hassle-Free Order Processing
Gone are the days when you had to print out packing slips and shipping labels and then stick them to boxes of your neatly-packaged items to ship. With Amazon’s fulfillment program, they will be the one to do these steps for you. This is also true for processing of item returns. Amazon will be the one to communicate with your customers who want to return their purchased products from you. They will also process the returns for you.
For items listed on Amazon, packing and handling costs will make up your total shipping cost. For items posted on other channels but is fulfilled by Amazon, you’ll be looking at the total costs for shipping, packing, and handling. Whatever amount you’ll have to pay for FBA items will always be much cheaper for they’re fulfilled in house.
Amazon Prime Shipping Qualification
When you fulfill through Amazon’s FBA program, all your Prime members can take advantage of the free two-day shipping.
Buy Box Eligibility
Sellers using Amazon’s fulfillment service have higher chances of winning the Buy Box.
What are the Disadvantages of Fulfillment by Amazon (FBA)?
Losing Track of Inventory
As mentioned earlier, it’s much easier to manage your inventory when everything is just inside a room where you could see all of your items. However, with FBA, you’ll find it hard to keep track of everything.
Instead of giving you a separate space to store your items, some of your items get to be pooled with the exact same items but sold by different sellers.
Product Shipping Concerns
Last concern is the difficulty in sending your items to any of the Amazon warehouses. Deciding whether to use fulfilment by Amazon or not is a tough decision to make. Other than considering the pros and cons that comes with it, you also have to look into your needs and budget. At the end, pick a fulfilment method that not only meets your needs and budget but also matches your lifestyle and overall business goals.