Our address: LLC, Suite 608, 2125 Central Avenue, Fort Lee, New Jersey, 07024, United States

Amazon FBA Advantages and Disadvantages

FBA (Fulfillment by Amazon) is a program for sellers that provides warehouse space and Amazon services for use. Generally speaking, with the help of FBA, the seller does not care about where to store the goods, how to arrange delivery and service. All these processes are performed by the marketplace itself. This approach allows you to increase turnover and strive to scale your business.

How Fulfillment by Amazon Works in the US Market

The primary task of the seller is to deliver goods from any country to the warehouse of the marketplace. In turn, using internal logistics, Amazon redistributes the received goods to its warehouses. Subsequently, this makes it possible to achieve the optimal delivery speed in terms of time.

Once the goods have been ordered by someone through Amazon, the service processes them, assembles, packages, and delivers to the customer. If a refund is made, Amazon will also take care of this process.

Profits from sales are credited to the seller’s account every 14 days.

How Much Does FBA Cost?

Participation in the program is paid by the seller on several points:

1) monthly – for rent of warehouse space;

2) in the presence of sales – for the processing and delivery of goods, customer service and returns;

3) fines for storage of unsold balances (more than 1 year).

It should be noted that the cost of participation in Fulfillment by Amazon is calculated individually using special calculators and may change upwards every year.

What Are the Benefits of Participating in the FBA?

The first and foremost thing a seller needs to know is that FBA provides excellent customer service. Of course, if working with the marketplace is a hobby with several sales per month, orders can be processed independently. When it comes to growing businesses, the service is a godsend for sellers.

You also need to remember about the multi-million dollar army of Prime category buyers (people who constantly shop on the site). It is with the help of the FBA program that free shipping is provided for them.

The magic “Buy” button among all sellers with similar goods is more likely to bind to the one that uses additional services from the site, for example Fulfillment by Amazon.

The indisputable benefit from using the program can be attributed to significant savings on delivery, customer service, hiring personnel and other necessary costs. All these functions are taken over by the platform, leaving the seller time and effort to solve other problems.

What Are the Disadvantages?

Of course, this great service is not without its flaws. Its most important drawback is the cost of services, which the seller has no ability to influence in any way. Also, he is not insured against tariff increases and fines.

For goods with large dimensions and/or weight, the use of FBA is not very convenient. This also applies to fragile items that can be damaged when moving around warehouses.

Fulfillment by Amazon does not provide an opportunity for sellers to brand their product packaging and include printed advertising materials. All packaging material is marked only with the platform logo and has a rather modest appearance. This approach is justified from the point of view of Amazon’s internal logistics, which allows you to very quickly work with goods in warehouses. Thus, we can conclude that using the FBA service is perfect for starting on the platform, as well as selling oversized and highly demanded goods.