Pros and Cons of Amazon FBA

With technology blooming around us every single day, online shopping has become a thing almost every individual and household indulges in. Being an ecommerce retailer in the current market is both profitable and tricky. The competition is so extreme that you can’t just limit yourself to one medium. Using multichannel listing tools and multichannel listing software is now more a necessity than an option. The elements that eChannelHub offers you, including inventory management tools and order management software and the like help online sellers even more in listing their products across several platforms.

Of the many platforms available, the one that has been around for years and has proven itself to be extremely lucrative for ecommerce retailers is definitely Amazon. Once you start selling on the Amazon marketplace, you might wonder if Amazon’s fulfillment option is right for your business. While it may be the perfect step for your store, it’s best to evaluate the positives and negatives of the Fulfillment by Amazon (FBA) option before deciding on it.

What is Fulfillment by Amazon?

Fulfillment by Amazon (FBA) is a service provided by Amazon that enables the sellers in achieving further flexibility in their selling practices. It’s one of the most efficient and advanced fulfillment networks in the world that allows online businesses to benefit from Amazon’s expertise. A survey once stated that 71% of FBA respondents reported that their unit sales increased on Amazon over 20% ever since they joined the FBA program.

FBA lets the sellers store their products in Amazon’s fulfillment centers, from where they’re picked, packed, and shipped by Amazon. Amazon also provides customer service for these particular products. Basically, it takes care of inventory management, order management, and even shipping on your behalf. All you have to do in return is pay them a small amount, which is much affordable when compared to what you would have to pay in rent, utility, employee management, and supplies costs per month for a decent sized warehouse. The price for storage per month is $0.50 per cubic foot, as stated by Amazon.

Pros and Cons of FBA

Like every other service, FBA, too, has its own pros and cons. Let us take a look at both sides of the coin to gain a clearer perspective.

Pros:

1. When you use Amazon’s FBA service, you will automatically be eligible for Amazon Prime shipping. This entails that all your products will qualify for Prime shipping, and the members of Prime will be able to opt for free two-day shipping for your products. The biggest positive factor behind this is that the buyers will see you as a trusted seller and be assured of the fact that they will receive their orders quicker at no extra cost.
2. Using FBA will increase your chances of winning the Buy Box spot. The Buy Box is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts. Those competing for the coveted space will include customers who are selling the same or similar products. FBA will multiple your chances of winning it over other self-fulfilled sellers, thereby amplifying your reputation by having customers buy from you rather than other sellers. In this market of competition where several other sellers are selling the same product, featuring in the Buy Box becomes a humongous advantage.
3. Managing the fulfillment of orders is an extremely arduous and time-consuming task. Once your sales rate goes up on Amazon, a lot of your time will go in packing and shipping your orders. However, FBA reduces the headache of packing and shipping for you. As you get to outsource your entire fulfillment process, you will be able to devote much more time to the other essential business operations.
4. FBA will let you utilise the multichannel listing tools and multichannel selling software of Amazon’s with its multichannel fulfillment scheme. You won’t be limited to selling on just Amazon. Instead, you will be given the opportunity to sell your products on multiple channels and fulfill multiple orders with FBA.
5. Fulfillment by Amazon is sure to increase your sales, owing to your amplified chances of winning the Buy Box over the non-FBA sellers. Additionally, adding Amazon as one of the platforms across your multichannel selling platforms will eventually bring in new customers, too, due to the global reputation of Amazon.

Cons:

1. Keeping a track of your inventory can get tricky with FBA. Once your product offering is in the hundreds and thousands range, it’s not necessary that your products will sell as quickly as you anticipate. With the products being stored at Amazon’s fulfillment centers, keeping a track of what you have, what you need, and what you should cut back on can get difficult.
2. Your return rate will possibly go up when using FBA. Amazon has an easy return policy that makes the process of returning a purchased product pretty easy. Therefore, your customers will use the liberty of purchasing your products just because they know that they will be able to return it easily.
3. FBA, like all other services, comes at a cost, literally. You need to have a good understanding of your sales volumes to keep just the right amount of inventory needed to maintain a profit. Amazon will charge you based on how much inventory they store for you and how long they have to store it.
4. The process of shipping your product to Amazon can come as a hassle. Getting your products to Amazon’s warehouses is one of the con factors of FBA. This is mainly due to the fact that Amazon has an extremely strict ASIN/UPC system, wherein you have to label each and every one of your products individually and pack them up into multiple shipments before sending them off.

Summing Up

Amazon FBA definitely comes as a great order fulfillment option for many online businesses. While there are certain cons attached to it, but that’s the case with every available service. The good thing is that the pros outweigh the cons any given day, and if you think that it will be the right step forward for your online business, then you should surely go for it.