Supply chain management, Amazon

Amazon FBA - Will it work for my business?

BY TradeGecko 19 Sep, "17

If you’re wondering whether Amazon FBA will work for your business and what are the best products to sell on Amazon FBA, you’re come to the right place. In this article, we highlight the key things to consider if you’re thinking of using Amazon FBA as a means of fulfilment, and tell you all you need to know about delivering different products using Amazon FBA.

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Amazon FBA is a fulfillment service provided by Amazon. Merchants who use Amazon FBA have their products stored in Amazon's fulfillment centers, and every time a purchase goes through, Amazon will pick, pack, ship, and even provide customer service for the order. Other alternatives to Amazon FBA include Merchant Fulfilled Network (MFN), as well as other third-party providers.

Read on to find out the factors you should be taking into consideration when deciding whether to use Amazon FBA, as well as what are the best products to sell on Amazon FBA!

1. Sales volume


If you’ve just started with your Amazon store, and orders are trickling in at a lower volume, it can make more sense to fulfil them by yourself. However, once you hit approximately 40 orders per month, you may start finding it difficult to fulfil all of these orders by yourself – and this means it could be time to outsource your fulfilment.

Why use Amazon FBA as opposed to other fulfilment services, you ask?

There are several reasons.

Firstly, Amazon FBA is cost-effective. It’s a lot more affordable for you to have your Amazon orders fulfilled by Amazon, as compared to a competing fulfillment service. But don’t take our word for it – use this FBA calculator to check how much you could save by switching to Amazon FBA.

Secondly, by using Amazon FBA, your products will be eligible for free shipping (provided that your customer meets the minimum order requirements). Your products will also be eligible for free 2-day shipping for Amazon Prime customers; bearing in mind that 61% of shoppers say that they are “somewhat likely” to cancel their entire purchase if free shipping isn’t involved, this will definitely have a significant (and positive!) impact on your sales.

Last but not least, having your ordered fulfilled by Amazon FBA provides a certain legitimacy to your Amazon store (especially if your store is relatively new, and you don’t have many product reviews). Because Amazon’s brand is so reputable, having your orders fulfilled by them will inspire greater confidence in your customers.

2. Amount of manpower you have

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If you’re selling a “trending” product which is high in demand, you may find your sales going through the roof unexpectedly. In such a scenario, you may not have the manpower to cope with the explosion of additional orders, and it’ll be much easier to manage and fulfil orders if you simply outsource this to Amazon FBA. (Also, fast-moving items won’t rack up storage fees from Amazon, so this works out well on both ends!)

Running in the same vein, if you’re selling seasonal or cyclical products, Amazon FBA is likely to be a good fit for you as well. It might be too time consuming and costly to hire extra staff to help out during peak periods when your existing team can’t support the higher volume – why not pass on all fulfilment duties to Amazon instead?

3. Type of products that you sell

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The best products to sell on Amazon FBA are items which are small, light, and higher priced.

These items won’t incur exorbitant FBA fees; the fees are also likely to take up a smaller proportion of your profit margin.

On the other side of the spectrum, if you’re selling items which are large, heavy, and lower in value, using Amazon FBA might eat into your profits too much. Don’t worry, there are plenty of other fulfillment services that you can consider – some of these even specialize in shipping heavy and oversized items at a discounted rate, so evaluate them and decide which is the best option for you.

In a nutshell,Amazon FBA is a great fulfilment service, however, it’s not a one size fits all solution. Be sure to consider your sales volume, your resources and manpower at hand, and the type of products you sell before making a decision as to whether you want to get onboard Amazon FBA. Amazon FBA can also be integrated with inventory management software TradeGecko , which allows you to sync your inventory, sales channels, accounting and shipping data with zero hassle. Sign up for a free TradeGecko trial today!

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See also;
4 benefits of using Fulfillment by Amazon

Amazon Prime Now enters the eCommerce race in Singapore

Amazon Web Services - The Disruptive Technology of Platform Innovation in 2017

 

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