Updated: Aug 19, 2021
Who says earning income cannot be just a click away? With Fulfillment by Amazon, most often referred to as FBA, possibilities abound, especially for the uninitiated who have never sold a retail product before, and it all lies within just one click.
The massive changes that have been produced in the market, especially over the past few years, and the warming attitude of the general public to online transactions have certainly fueled the growth of the Amazon platform at a huge rate globally. Accordingly, selling on Amazon has never been more profitable as it is now.
How Did We Get Here?
The pandemic has brought with it unexpected changes in online selling platforms. It cannot be denied that these changes have made, and continue to make it possible for thousands more to join the Amazon marketplace.
Besides more sellers and entrepreneurs showing interest in joining the e-commerce trend, more consumers are now open to buying products online. Opening the doors to more opportunities, Amazon dramatically grew its market reach around 40% after just a few months into the pandemic. Supported by the protocols that dictated staying at home, we understand that while some were forced to put their trust in online stores, they also experienced a new sense of convenience that they may have considered before COVID.
Digital commerce has paved the way for a new form of economy around the globe that keeps the cash flowing in the market, even in the midst of sudden stagnant conditions experienced by other industries or sectors. Beyond the social impact of COVID, the economic impact is clear: more online retailers open shop and more consumers will choose to buy products via the internet, bypassing physical stores altogether.
It is only expected to expand further in the future. The name of the game is convenience. And when it comes to an Amazon FBA business, doing business online is certainly a convenient choice for those who are interested in joining this trend.
How Does FBA Work?
As the name implies, “fulfillment by Amazon” means products are fulfilled by Amazon once they make it from your supplier to an Amazon fulfilment center, from managing the allotted amount of inventory in a center to tracking the products, filling orders, and delivering them right to the doorstep of your shopper.
In short, FBA is an Amazon business system for sellers that streamlines logistics and provides a network of processes between the seller, Amazon logistics, and the buyers.
Simply put, Amazon is the primary factor that bridges the connection between the seller and buyer, which is often a preferable option for new, inexperienced sellers who don’t want to deal with the hassle of arranging and coordinating inventory tracking and shipping to the customer.
Besides the convenience of managing inventory and efficiently responding to orders up until the point of delivery, there is something more to Amazon FBA business system, especially when it comes to giving sellers the chance to engage with all of Amazon’s users and beat the competition, not only within the Amazon platform, but also to empower the way they sell their products through their own websites and as a brand.
Let’s take a look at each factor that goes into FBA operations within the system:
FBA Inventory Management
The management of inventory is often one of the most tedious parts of online selling. Individuals who opt to handle all aspects of selling, logistics, and shipping all on their own often find themselves in the dilemma of finding a proper place to keep their inventory before sending it off to customers, all without breaking the bank.
In FBA, Amazon fulfillment centers receive products from suppliers and provide an allotted amount of space or set number of units (all depending on the Amazon policy of the moment). At the time of publication, Amazon currently limits FBA sellers by volume, measured in cubic feet.
As an FBA seller, after you coordinate your products’ arrival from supplier or manufacturer to an Amazon fulfilment center, then Amazon takes responsibility for the inventory and updates it in their system. You can then access inventory data via Amazon Seller Central, which is the secure platform FBA sellers are given access to in order to manage their Amazon business wherever they are.
FBA Order Management
After an order is placed by a customer, the seller really doesn’t need to do much but tally up another sale. Inventory should already be in stock at a fulfilment center, meaning that Amazon workers are responsible for locating the correct item, packaging and labelling it for delivery, loading it on the appropriate truck, and getting it physically to the customer.
Managers and supervisors in the fulfilment center will check through the inventory and prepare the items according to protocol.
FBA Order Delivery Logistics
Once the item goes out for delivery, the seller can keep updated on the shipment’s status, as can the buyer. As you know if you’ve ever ordered anything from Amazon, they don’t stick to a strict 9 to 5 schedule, and you may even see a Prime van driving around on a Sunday.
Amazon logistics management has been tested through time and is considered to be one of the most efficient systems around, especially when you take into account Prime Now, which guarantees delivery of groceries and daily essentials in under two hours. Given the experience that they have in serving millions of sellers and buyers over many years, Amazon delivery logistics is both trustworthy and efficient and ensures that orders are protected during the shipment process, whether it be local or international deliveries.
Greater Investment Means Greater Rewards
FBA businesses demand higher fees than FBA (fulfillment by merchant), as they provide more comprehensive services using reliable channels and tried and true processes.
Nonetheless, accounting for the convenience that this system offers and the ease of business management it presents, FBA is a sought after choice that sellers often prefer, simply because it takes the guesswork out of the logistics side of running a business, and sellers find they can manage everything with much less stress and more ease.
With the help of Amazon Seller Central, doing business with Amazon and connecting with buyers is a relatively simple process. The initial investment of running an FBA business may be more costly than going out on your own, but it opens more doors for sellers, allowing greater possibilities for profit and brand growth.
Still Have Questions About FBA?
What is Seller Central?
Seller Central is the web interface that Amazon sellers are given access to, for a price, through which brands manage, market, and sell their products to Amazon customers. This helps Amazon sellers to control their business easily and all in one place, while monitoring the progress of their operations and managing their inventory efficiently.
Amazon seller central offers every seller the opportunity to improve the way they market their products and reach out directly to the buyers through different forms of messaging, which includes the automation of email marketing, as well as offering various options for advertising. Seller Central also includes a forum where users can connect and find answers to questions along with help from other sellers.
FBA Selling Vs. Other Selling Models On Amazon
The fact that FBA logistics operations are guided and controlled by Amazon management, the seller has the assurance that Amazon is responsible for everything to be done properly, with standards set in place and followed accordingly. Your business as an FBA Amazon seller is protected up to a certain extent.
Of course, Amazon FBA logistics can’t handle everything for you, meaning you still have to put in the work to grow your business and focus on a strategic pattern for your business. You still have to spend the time to properly promote your products and make sure you reach your target audience. Another important factor that will play into a company’s success on Amazon and lies in the hands of the seller is determining the best products to sell on Amazon FBA. This requires proper research beforehand and time spent so that before you do become an Amazon seller, you start with a strong foundation.
Are There Any Disadvantages to FBA?
Like any business, there may be a few negative aspects that counter some of the positives. With FBA, one of the cons of this operation as a seller in Amazon is high competition, making the chance to set a distinct brand apart from the other competitors sometimes an uphill battle.
Nonetheless, FBA allows for automatic built-in processes that can help you launch your business without figuring out every detail on your own.
If you are considering selling online, then there’s no doubt that Amazon is one of the most viable options available, and operating as an FBA business offers two specific advantages: convenience and ease of management.
Aided with the right attitude, the right strategies, and the right mindset, selling via FBA is a solid starting point, especially for those less familiar with online retail sales, and will provide proper footing to launch your business and succeed in the venture through Amazon FBA’s established processes and logistics operations.
Whether you need a better way to manage inventory or want to improve the way you meet customer demands, being an FBA seller can be an excellent way to dip your toes into selling on Amazon. If you’ve already experimented with FBA and you’re now exploring how to sell your Amazon business, UmbrellaFund can help.