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Amazon Consulting Services Amazon FBA Fulfilled By Amazon

Fulfilled by Amazon: What is it and why should your business capitalize on it?

Optimizon

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December 20, 2021 | 8 min read

Ask any online shopper to name their top site, and there’s a good chance that Amazon will be up there in the lead

Even if they don’t admit it, the numbers don’t lie. Amazon is the biggest online market place in the UK with the average number of visits (coming from both mobile and desktop) standing at around 485 million per month. That’s a lot of shoppers.

If you’re already selling business-to-consumer on the platform, you may know that 86% of people in the UK shop at Amazon. Therefore, creating a strong brand and presence on the platform is a must for any savvy seller.

If you already sell on Amazon, you will definitely know that it’s a competitive market where pricing isn’t the only way to the edge out the competition. With about 15 million British shoppers signed up to Amazon Prime, it’s clear that delivery speed is one of the main considerations for buyers choosing a particular product.

What is Amazon FBA?

As an e-business, it’s not difficult to capitalize on Amazon’s speedy delivery service and first-class logistics. Just sign up for Fulfilment by Amazon (FBA). You sell online, Amazon packs and ships for you. They’ll even pack and deliver non-Amazon sales, meaning some businesses have done away with packing and shipping operations of their own.

All you need to do is send your products in bulk to Amazon. In fact, you can have your supplier send the bulk delivery direct to the Amazon Warehouses, so you don’t need to ever handle the items.

If you’re still unsure if this is the right move for you, Nicola Graves, operations manager at Optimizon Amazon Agency, sets out 10 reasons why your business should capitalize on Amazon FBA.

1.) Fast delivery

FBA will deliver your products to your customers faster than you can deliver them yourself, especially if you opt for the Amazon Prime sales service. Amazon FBA will pick, pack and ship your products from one of Amazon’s warehouses, leaving you more time to focus on growing your business on the Amazon Marketplace.

As we know, shipping speed is a major purchase decision driver. So don’t get left in the dark ages. Give your customers what they have come to expect. Rapid delivery times.

2.) Lower shipping rates

As a global fulfillment giant, with competitive rates, Amazon can probably offer your business lower shipping costs through the FBA platform – helping to boost your return on investment (ROI).

3.) Lower business costs

It’s easy to look at FBA picking, packing and delivery costs and consider them to be just a painful expense. However, our client studies have found that Amazon can deliver these services at a lower cost than almost any other business.

Most businesses do not truly capture the real costs of picking, packing and delivering items themselves. In every case we’ve looked into, once these costs are truly calculated, Amazon turns out to be cheaper. Add the additional benefits of speed, and it’s a no brainer.

4.) Convenience

FBA is an automated service, meaning all of your orders are processed and fulfilled by Amazon in their warehouses - with shipping costs included. You don’t need to store your products, ever. Amazon will also make sure your goods are properly packed with Amazon Prep Service.

There is certainly something to be said for outsourcing these activities. It could save you money, and it will certainly save you a lot of work.

5.) Brand options

Do you have a bespoke approach to your branded packaging? If that’s the case, FBA has a flexible approach with an options for you to package items yourself or pick just the packing options you need.

6.) Direct shipping

You can arrange for your supplier to send products directly to Amazon warehouse meaning you don’t ever have to handle the goods yourself. Cutting out this middle-tier of your logistical chain will, again, save you time and expense.

Suppliers from around the world are becoming increasingly familiar with how to send wholesale goods directly to Amazon warehouses. Some huge retail business now run from surprisingly small premises since then never need to handle goods whatsoever. Food for thought.

7.) Multi-platform sales

FBA allows you to sell across different platforms as the service can even process orders from multiple sellers, such as BigCommerce and eBay. This means you can leverage the benefits of Amazon’s superior logistics.

Amazon can even fulfil sales from your own online store. Find out more about Amazon Multi-Channel Fulfilment solutions (MCF).

8.) Transparent fees

Amazon deducts any fees owed to you before making any payments – so there is no confusion about your sales income.

Sound painful, but at least you have accurate knowledge of exactly what these processes are costing you - unlike when you deliver them yourself, when staff costs, premises, and other overheads are difficult to accurately attribute to specific sales.

9.) 24/7 customer service

Amazon customer service is always open for your customers via one portal. Let Amazon handle any queries about delivery, plus process all of your refunds and returns. That’s another thing you don’t need to worry about, so you can get on with making other parts of your business top-notch.

10.) Free to join FBA

It’s free to start using FBA, and it’s open to all new and existing Amazon sellers, but fees do apply. You can use this handy Amazon FBA calculator to help see if it’s a profitable move for your online business.

The downsides of Amazon FBA

It’s clear that Amazon FBA is an incredible service that any company can benefit from. Amazon’s largely automated warehouses and cutting-edge logistics make their operations second to none. However, there are some potential downsides to consider before taking the plunge. For the sake of balance, let’s look at these here:

1.) Large items

If you are selling large bulky items, like furniture, then FBA may not be the best choice for you due to the costs Amazon charges to store and deliver those items.

2.) Low value items

FBA on lower-priced items may eat into your ROI, depending on how they need to be packaged and posted. This is because the cost to ship may be higher than your profit per unit. Make sure you are confident about your margins and overheads - then you’ll be able to make an informed assessment.

3.) Overall costs

It’s true, Amazon FBA can eat into your profits. But that is because it is a genuine overhead. It’s important you understand the true cost of delivering these services yourself, so you can accurately compare which is better value for your business.

We haven’t found many businesses that can match Amazon FBA when all overheads are considered, but that doesn’t mean that you can’t.

4.) Reliance on Amazon

If you put all of your packaging and delivery fulfillment operations into the hands of Amazon, you may be understandably nervous about an over-reliance on outsourcing.

What if Amazon suddenly increase prices or the quality of the service falls). It could be a big undertaking to bring fulfilment back in-house.

However, the overall benefits may still be worth the risk. It’s a business decision you need to make. Ultimately if may not just come down to whether you can deliver the services at a lower cost than Amazon can – and at the same speed. Instead, the decision may be driven by what is best for your customer.

Amazon packaging requirements for FBA

Whilst Amazon rules on packaging and labels are fairly straightforward, you must follow the FBA guidelines to the letter. You can find out more in our article ‘Making Sense of Amazon Packaging Requirements for FBA’.

Set up FBA for your business

If you want to let Amazon take the time and stress out of packaging and delivering your online sales, leaving you to focus on other areas of your business, then get in touch to find out more. As always, our team of experts is here to help. We can advise you how to set up FBA for your business.

Amazon Consulting Services Amazon FBA Fulfilled By Amazon

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