Getting Started with Fulfillment by Amazon (FBA)
We've talked about logistics before and how important fulfillment is to the success of your site. Whether you're a new, up-and-coming store or a veteran, order fulfillment is almost always a painstaking process. One that always requires a lot of thought, effort, and tears on your part. But wait. There's a reason that it's only "almost" always a painstaking process and why it isn't just "always" a painstaking process. Fulfillment isn't something that has to be done on your own. You can lean on others for this feat. In this case, you can lean on Amazon Fulfillment.
Before you start believing this to be impossible, I can assure you it isn't. In fact, it will make so much of your job easier for you. When you let Amazon fulfill your orders, they take a good portion of the responsibility onto their shoulders.
What is Fulfillment by Amazon?
Fulfillment by Amazon, or FBA, is a service provided to Amazon sellers in which your products are sent to an Amazon warehouse where they will fulfill your orders using the products provided and their logistics capabilities. For all intents and purposes, think of Amazon as your third party logistics provider, or 3PL. Amazon is well-known for their prowess in shipping products to customers in a timely fashion, so you can only stand to gain from this in the long run.
Should You Use It?
For those of you thinking "this sounds too easy" or "there's a catch", you're not misguided. While using Amazon sounds amazing, it isn't free. This is far from the only thing to consider when you're weighing the scales on using this service, but it could be paramount for some companies. Let's take a look at some of the pros and cons of this service.
Shipping and logistics can be difficult to handle for even the most skilled of us. Amazon makes it look like a cake walk most of the time, so why not let them handle it? It takes a huge weight off of your shoulders in the process, as I've said several times already. Amazon would make logistics one less thing for you to focus on or worry about, and it's a big one to not have to worry about.
2. Consumer Confidence
The moment your products are labeled "Fulfilled by Amazon," you grow ten inches taller in the eyes of the customer. They're more trusting and confident in purchasing from you, whereas if there's no such label affixed to a product, a consumer may very well ignore it. Knowing that their order will be fulfilled by Amazon lets a customer know that their products will get to them in an orderly fashion.
3. Prime Shipping
Having your orders fulfilled by Amazon automatically qualifies them for free prime shipping. As long as your customers are prime members, and so many of them already are, then they will be able to purchase your products with free 2-day shipping at no additional cost to you. One of the biggest reasons for cart abandonment is that customers don't like having to pay for shipping. This eliminates that issue altogether. It is also worth noting that, if a consumer is looking to purchase something on Amazon and they find two of the same product, they will likely go with the product that has the prime shipping. And why wouldn't they? They get it in two days' time and they don't have to pay extra for that. It's a win-win for both of you.
4. Search Result Placement
Another important thing to note is that when you utilize FBA, your products appear higher in the search results due to Amazon's algorithm. Chances are, when people are searching for an item, they generally look at the first few pages. The higher up you are in those results, the more likely it is that a consumer will lay eyes on your product and decide to purchase it.
5. Customer Support
If you're looking for one of many ways to lower customer support costs, then look no further than FBA. Amazon handles customer support 24 hours a day and they take on the hassle of returns. One less thing for you to worry about!
1. High Costs
So, this will likely be the deciding factor in regards to whether or not you will use FBA. As with any 3PL, there are charges associated with the service. For some e-commerce stores, the price is too steep and they decide not to go that route. For others, they bite the bullet. Initial starting costs are always a little high, but over time, many find that it's worth the money.
2. Pooled Inventory
This may be an issue for some e-commerce stores. In an Amazon warehouse, your items may not always be stored in their own container. In fact, if you sell items similar to those of another company, they'll likely be stored together which could lead to your customers getting items that are from a different company. This doesn't sound bad at face value until you consider the possibility that the similar products could be of low-quality or altogether counterfeit. It'll be quite the pain to deal with on the customer service side of it.
3. Shipping Delays
To piggyback off of the above issue, this can result in delays with your customer's orders. If it's during peak season, it could be even more of an issue if your products are sent with the other company's orders and now you don't have enough stock to cover the orders despite having sent more than enough.
Everyone knows what the Amazon shipping boxes look like. It's part of their brand. And when your products are shipped through Amazon, their branding goes along with it. This may not be a big deal to some companies as they may ship their products in standard boxes, but for some companies, it'll be an issue. There's really no way around this one, unfortunately.
5. No Customer Email List
Utilizing FBA eliminates the possibility that you can keep track of recent customers to do some kind of email marketing or drip campaign. Obviously, when you're trying to build your customer base, this is a problem. While one can only hope that the customer will remember your store's name (it happens...there's one store in particular I remember), there's no surefire way to make sure that they will remember you.
So, if you've weighed the pros and cons and decided that you would like to move forward with utilizing FBA, then the setup isn't too hard. The first step is obviously making sure you have an account with them. If you already have a seller's account, then you're already several steps ahead, in fact you can skip the first two steps below. If not, then you'll need to set one up before you can proceed.
You'll need to decide between a professional account or an individual account.
Here are some of those fees I mentioned. You pay more as a professional, but it's worth it if you're selling a lot of product. As an individual you pay less. If you're not selling a large catalog of products, or you're just wanting to test the waters, this is probably the best way to go.
Next, you'll want to update your inventory. Add it using the product's name or the barcode (Amazon uses UPCs only).
After you've added your products, you'll want to select the shipping method. This is where you would be able to select Fulfillment by Amazon. Be sure to select that you wish for Amazon to ship and provide customer service and you'll get transferred to a screen that displays the terms and conditions for FBA.
After this, it's mostly straightforward. You'll have to manage which products you wish to send via FBA, as you can do it for all or some, by selecting "change to fulfilled by Amazon" under the actions tab. Additionally, some of the products may not be able to be fulfilled by Amazon (i.e. if they're too big), so you'd still have to manage sending that yourself. For the products that are to be shipped via Amazon, you'll have to send those to their warehouse. It's a relatively quick setup. but what do you expect from a company who can get most of your items to you in two days?
For some people, the cons may outweigh the pros and vice versa. It will be up to you to make the call to use FBA. As I said, you can always just test the waters and see if it will work for you. That's always a good way to go. Start up can seem a little daunting, but with anything in regards to starting a business, it gets better.