How to Use Amazon FBA to Maximize Sales Fulfillment by Amazon (FBA) can help you get the most out of your business.
By Leyes Edited by Amanda Breen
Opinions expressed by Entrepreneur contributors are their own.
With the rise in popularity of the video-sharing app TikTok in 2020, it seems like everyone is talking about Amazon FBA. FBA, or Fulfillment by Amazon, is an incredibly powerful and unique tool. If you have a product to sell, Amazon will store, pick, pack and ship it for you. There are Amazon FBA fees and fine print to consider, but you'll find that the benefits of Amazon FBA far outweigh the negatives.
Done-for-you customer service
Perhaps one of the most time-consuming aspects of running a business is assisting with customer issues. Amazon FBA takes this off of your plate. With Amazon's customer-service support, people shopping with you can call or email customer service 24/7. Most importantly, Amazon handles returns for you. Although Amazon's lofty return policy can sometimes result in higher return rates, the lack of stress is well worth it. It means no more coordinating return shipments or haggling with unhappy customers. Instead, you can spend time building your empire.
Avoid shipping headaches
Once you've shipped your product to Amazon, you no longer worry about the physical product. You're left to focus on what matters — high quality, SEO-packed listings and keeping Amazon stocked with your product. Since Amazon picks, packages and ships the product, you don't have to worry about packaging any orders or calculating shipping fees. Amazon is a giant in the shipping world, so you also get to take advantage of the better shipping rates that only it has access to.
Become an omnichannel seller
You should never put all your eggs in one basket — and Amazon FBA helps you avoid that! Your products might take off on Amazon alone, but they also provide you with multi-channel fulfillment (MCF) options. Amazon's MCF service gives you access to sell your products across other channels and platforms, like eBay and BigCommerce — all with the same white-glove service you get through Amazon FBA.
Endless inventory storage
For small-business owners, like many of those selling on Amazon, your home is your office, studio and storage space. For the average person, this can really limit the amount of stock on hand at any given time. Since Amazon stores your product with their FBA program, you can have as much stock as you need — plus you can reclaim your home space. This can be a bit of a double-edged sword, as Amazon will charge you a long-term storage fee if you don't consistently sell through your product. Amazon does not like to sit on product, and neither should you.
Gain the trust of customers
There's a noticeable difference in the shopping experience for customers browsing Amazon FBA products and seller-fulfilled Prime products. Many Amazon shoppers selectively shop Amazon-backed products, especially those that offer free shipping. Your products will showcase the "Fulfilled by Amazon Prime" symbol, which customers have grown to know and trust over the years. Customers will know what to expect, which puts them more at ease when buying your products.
Related: Top 5 Marketing Tools to Grow Your Business
Do Amazon FBA fees ruin the program?
For most people, the biggest issue with Amazon FBA is the fees. Selling through Amazon, you face three different fees with each transaction: fulfillment fees, storage costs and Amazon-seller fees. Since fulfillment fees are subject to change within Amazon FBA fees, the actual amount can sometimes be unpredictable. However, if you do enough research on the products you sell, you'll likely sell enough that the fees no longer matter.
This is a hard lesson learned for some entrepreneurs. With unforeseen circumstances and fluctuating prices — ones that often rely on what other sellers are doing — there's always the chance of losing money on a sale. But you can mitigate that risk by thoroughly researching products before you sell them, taking out some of the guesswork and setting yourself up for success.
Related: How to Start a Private-Labeling eCommerce Side Hustle Business on Amazon FBA
There will always be risks in business — especially when you're investing money to buy capital. With Amazon FBA, you've got the power of a mega-successful company on your side. If you can get over the fees, you'll find many valuable tools at your disposal.
