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What is Amazon FBA?

If you’re brand new to the world of selling on Amazon FBA, then this page is for you!  It contains the info you need to get up to speed quickly and start your own FBA business confidently.

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First, imagine a business where you don’t have to interact with customers or ship products to them yourself, and never have deal with product returns or complaints directly.  In fact, you even have the option to outsource your shipments so you’ll never need to touch boxes or packaging tape again!

Perhaps you already run a small business and realize the importance of freeing up your time to work on the business, instead of in the business?  How many small business owners, (especially eBay sellers) aren’t able to relax on vacation because they need to be available for their customers to answer calls, ship packages or deal with returns/complaints?  How would your life change for the better if you didn’t have to do business this way any longer?

Welcome to Amazon FBA (Fulfilment By Amazon)

Amazon has created one of the most advanced fulfilment networks in the world, and you can benefit from their expertise. With Fulfilment by Amazon (FBA) you store your products in Amazon’s fulfilment centres, and they pick, pack, ship, and provide customer service for these products.  Best of all, FBA can help you scale your business and reach more customers.

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So there’s a caveat, as with anything in business.  While this service is available for a reasonable cost, it’s still a cost you need to factor into your business model.  A very general rule of thumb, is that in order to be comfortably profitable, you should be able to sell a product for about 3 times what it cost you and focus on products that sell for at least $10-$15ea.  Amazon on average, takes approximately 30% of the selling price in fees to cover their services.  While that may sound high, consider that you don’t pay anything extra to have them ship your products to your customers (often with delivery in 2 days or less).  And consider what your own time is worth and how much you could grow your business with that new free time.

How it Works

Step 1: You send your products to Amazon.

You send your new or used products to Amazon’s fulfilment centers.

  • Log in to your seller account and add your listings into Amazon’s system.  You can choose as many or as few products as you like.
  • Select the quantity, and method you’d like to use to ship your parcels to Amazon
  • Print out the PDF product labels and pre-paid shipment/FBA Barcode labels provided by Amazon (if you use Amazon’s discounted shipping).  Or select your own carrier, and print out postage labels there.
  • Label the products as required, pack them nicely in a box, seal and stick the shipment and FBA labels on your box(s)
  • Sit back and wait for the courier company to pick up your parcel(s), or drop them off at the post office yourself

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Step 2: Amazon Receives and stores your products

Amazon receives your parcel(s), catalogs and stores your products in their ready-to-ship inventory.

  • Amazon receives and scans your inventory.
  • Amazon record item dimensions for storage.
  • You monitor your inventory using their integrated online tracking system
  • Products will show up in your seller central as “fulfillable” once in their system

Step 3: Customers order your products

Customers search for and purchase your products on Amazon and pay with their credit card.

  • Your listings on Amazon are eligible for Amazon Prime and Free shipping on orders over $35($25 in Canada) and rank by price plus shipping
  • Typically, customers pay a higher price for FBA (Prime) merchants because they trust Amazon and like to receive their products quickly

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Step 4: Amazon picks/packs and ships your products

Fulfillment by Amazon picks your product(s) from inventory, packages & ships to the customer.

  • Amazon locates your products using their advanced web-to-warehouse, high-speed picking and sorting system.
  • Amazon manage your order volume – whether you get a few orders a day or a thousand.
  • Customers can combine your orders with other products fulfilled by Amazon.
  • Products are shipped to the customer

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Step 5: Amazon pays you upon shipment

Amazon add the amount of the sale, less their fees into your seller account balance.  You can withdraw this money or have it auto deposited at regular intervals into your bank account.

 

 

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You can find out more about the Amazon FBA program here:

What is Amazon FBA?

 

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