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10Apr, 2015

Advantages of Fulfillment by Amazon (FBA)

Author Matt Category

There has been quite some buzz in the e-commerce industry regarding FBA. Although relatively new, Fulfillment by Amazon (FBA) has played a major role in shaping the market in the last few years. More and more retailers and sellers are considering FBA to be a viable option to run their e-commerce business.

If you are a seller looking to move your inventory, the top question that you would be asking is “how?” There are many conventional methods of moving your inventory; however, we suggest that you learn what FBA is. We are sure you would want to switch to this model once you know everything about it. Here are a few reasons why FBA is worth knowing and investing in:

What is Fulfillment by Amazon?

A simple understanding would be: you sell it, Amazon ships it. Yes, it is that simple. Here is a more detailed understanding of how this works:

  1. Amazon has fulfillment centers; you send your items there.
  2. Amazon receives the inventory. Simultaneously, you monitor it through a tracking system.
  3. Your clients can place their orders through Amazon or any other e-commerce platform.
  4. Once the order is placed, Amazon delivers the item to the designated address.
  5. The cherry on top is, Amazon, by itself provides customer service.

FBA is not limited to items stored and listed on the Amazon fulfillment centers and e-store. You can have your products listed on your individual website and use FBA to fulfill your orders. Obviously, Amazon charges for this service. After all, they too have to make a living! So, is FBA worth it?

Customer Service:

Amazon offers customer service to all its FBA respondents. Instead of talking to you, your customers will talk to an Amazon customer service representative. This can prove essential because of two reasons, one you can now focus on your business rather than giving customer service and two, Amazon is known for its superior customer service and you can now offer the same to your customers without investing a lot of time and money. In case, your customer is not satisfied with the product, he can return it and Amazon provides the logistics for it. However, you would be charged for this service.

Discounted Shipping Rates:

Two of the most crucial aspects of the e-commerce industry are the shipping time and shipping price. Amazon with its volumes will be able to negotiate much better rates with the delivery companies and extend that benefit to you and your customers. Moreover with FBA all your items/products that are priced over $35 would be eligible for free shipping, which is a norm in Amazon. Prime members can avail the Amazon Prime free Two-Day shipping on all your items.

Multi-Channel Fulfillment:

Just because you are using a service from amazon does not mean that it is the only place from where you can sell. FBA offers multi-channel fulfillment. You can have your own e-commerce site and still use FBA.

Customer Experience:

As you are a seller putting your inventory on Amazon, they will look after the customer service for you. Another way of representing it would be: whatever is sold from the Amazon website can be termed as “their sale.” You would not have to worry about the post-sale shipping and customer service.

Scale Your Business:

The FBA is a great way to scale your business. It allows you to scale your operations without additional capital. You can now leverage FBA and the customer base of Amazon to reach a much wider and global audience without worrying about the logistics. In addition, Amazon easily handles large volumes, which in turn would help you in expanding your business. Moreover with FBA’s flexible rate structure your working capital requirements are lower because you only pay for the service you use; which you can then invest into your business helping you scale faster.

Focus:

With your logistics taken care off, you can devote more time to focus on your core business.

Protection from damages:

Amazon is one of the most trusted e-commerce organizations there is. This trust definitely helps you in your business. You would be credited with the service and the trust associated with Amazon. In addition, you would certainly not have to burden yourself with lost or missing merchandise again.

Efficient Returns Management:

Returns is one of the most complicated aspects of the business and managing it effectively can mean a lot for businesses. With FBA your returns are very well taken care of; they not only take care of refunds but also the logistics for the returns.

Get Noticed on Amazon:

With a number of sellers selling products similar to yours FBA can make or break a deal for you. FBA may help you compete for the Buy Button which appears with the Add to Cart option when customers click on a product they wish to buy. In a survey by Amazon in 2014 among FBA Sellers, 86% reported a sales increase after they started using FBA.

Others:

Along with the above-mentioned advantages, there are many other rewards that can prove to be beneficial. You can take advantages of the analytics, pricing optimization and recommendation that are handed to you by Amazon. Also with Amazon’s powerful recommendation engine Amazon will even promote your product to customers who have visited Amazon to buy a product that you don’t even sell.

This has been a comprehensive report on the advantages of Fulfillment By Amazon. In the next blog, we wish to cover the disadvantages that are associated with FBA.

What are your thoughts about FBA? Have suggestions or feedback; feel free to comment below or drop us an email at info@i95dev.com to know more.

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Advantages of Fulfillment by Amazon (FBA)