A Starters Guide to Amazon FBA

Oct 21, 2020 Lilia Khovrak Lilia Khovrak

Fulfilment by Amazon (FBA) is a logistical service provided by Amazon where you can store your products in one of Amazon’s fulfilment centres until they are sold. When an order is placed for the product, the Amazon staff pack, prepare, and ship the items directly to the customer.

After registering for the Amazon FBA programme, your products will need to be shipped to one of Amazon’s fulfilment centres; this is where SeaRates.com can help. As a leading marketplace for freight quotes, SeaRates.com can offer a cost-effective way to ship your cargo to Amazon. We offer different services for shipping, such as Full Container Load (FCL), Less Container Load, and bulk for multi-modal solutions across Sea, Air, and Land. You can also contact our customer support regarding any clarifications for your shipping needs.

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How does FBA work?

Working with FBA is a straightforward experience. These five steps cover the essentials.

1. Ship products to Amazon: The company has over 175 fulfilment centres worldwide and more than 150 million sq ft of space. Amazon will let you know where to ship your products.

2. Product storage: Once Amazon receives the products, it gets added to their inventory and stored in one of their warehouses.

3. Product order: After an order is placed by a customer, Amazon will prepare, pack and ship your product directly to the customer. They handle the payments and update your product inventory accordingly.

4. Customer Service: Amazon will deal with customer orders directly and handle the customer service, including the return or refund process.

5. Payment: You will receive the profits from your sales from Amazon every two weeks.

Shipping to Amazon:

There are a few things to consider before shipping your products to Amazon’s fulfilment centres. Make sure everything is in order or you may incur penalties and extra fees in shipping.

Here are some things to keep in mind for Amazon FBA shipping:

1. Shipping Plan: A shipping plan lists your products being sent to Amazon, including quantities, the mode of shipping, and the carrier.

2. Label your products: All products sent to Amazon FBA must be properly labelled in accordance with Amazon’s barcode system. Each label must either have a Universal Product Code (UPC) or the specific FBA label which is called Fulfilment Network Stock Keeping Unit (FNSKU). The FNSKU label is unique to each seller, making it easier for products to be identified.

3. Select your freight forwarder: The right freight forwarder can help you connect with the most effective shipping carriers, track the cargo, and provide assistance with documents. Check out SeaRates’ Online Freight Marketplace to get instant freight quotes from forwarders all over the world.

4. Packaging requirements for shipments: It is important to ensure that the packaging dimensions align with the measurements listed on Amazon. You can use our Load Calculator to optimise container space for your products. This will help avoid any additional fees for shipping and storage.

Advantages of using Amazon FBA:

1. Access to Amazon Prime customers: There are over 150 million Amazon Prime members on a global scale. You can make your products available exclusively to Prime members, who tend to spend more on Amazon. Your products would also qualify for unlimited free one-day and two-day delivery, boosting customer demand.

2. Reduced overhead charges: Storing products at one of the Amazon warehouses means not having to worry about the costs of packing or shipping directly to customers. Outsourcing in this way allows you to focus solely on growing your business.

3. Pay as you go: You don’t have to pay any subscription or start-up fees. You only pay for the services you use at any given time.

4. Product visibility: Amazon is a trusted marketplace that people all over the world use to purchase products. Businesses that use FBA Amazon can instantly improve their product visibility and build customer loyalty.

5. Global Selling: With the help of Amazon Global Selling, you can list and sell your products on any of Amazon’s websites worldwide, including the UK, Canada, China and more. You can then ship your products to one of Amazon’s fulfilment centres in any of those countries.

Disadvantages of using Amazon FBA:

1. High costs: FBA Amazon might not be cost-effective for your business if the products aren’t being sold fast enough. That’s because Amazon charges fees for both storage and fulfilment, which can be costly if inventory turnover is slower than expected.

2. Product prep and packaging: Amazon has strict guidelines when it comes to packaging and labeling products. It is a tedious task and you would have to invest a lot of time to make sure everything is in order.

3. Lack of branding: Selling products on Amazon is highly competitive with little to no branding or marketing options. In addition, the product packaging will include Amazon’s logo, which would make it difficult for you to raise brand awareness.

4. Taxes: When it comes to selling in the US, Amazon has warehouses in different states and each state has its own rule about storage and sales tax. Seeing as Amazon sometimes shifts inventory across its warehouses, it can be difficult to keep track of tax regulations to find out what you owe and when.

Is Amazon FBA a viable solution for you?

Almost 3 million sellers use Amazon’s FBA platform to sell their products. And that number has kept rising since the beginning of the global pandemic. Third-party sellers presently account for about 58% of the company’s total sales. Amazon Prime Day also offers a huge boost in sales for FBA sellers. This year, for example, SMEs earned more than $3.5 billion through the platform.

It is undoubtedly a great solution if you are looking to scale your business and don’t want to be burdened by storage, customer management and other fulfilment tasks. That being said, it is important to conduct research into the service, associated costs, and guidelines before signing up.

Lilia Khovrak is a professional content manager from Odessa, Ukraine. Loves life by the sea. Dreams to see Paris and eat a croissant on the thresholds of Notre Dame de Paris. Hates to read meaningless articles.