Fulfillment by Amazon: A Guide to Understanding and Using Amazon’s FBA Service
When looking to start an online e-commerce business, most see Amazon as the frontier that must be conquered. This is where pretty much everyone buys their stuff; so in that spirit, wouldn’t it make sense for sellers to offer their products there as well? Getting your products listed on Amazon is the first step, but fulfilling them once a customer places an order is another story entirely. There are two ways to fulfill your products on Amazon.the first is seller complete, which means you are responsible for your own fulfillment.the second is done by amazonwhich means that Amazon will stock your products and deliver them to you, freeing you from holding any inventory and focusing on running your Amazon selling business.
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Leverage Amazon’s Fulfillment Network with FBA
When you choose to fulfill your products through FBA, you can take advantage of the company’s vast fulfillment network. Remember the last time you ordered something from Amazon and it showed up at your door the next day? That is The delivery network you’ll be plugging into… will only get stronger as your company grows.
Much to the chagrin of the Big Three U.S. shipping companies, Amazon is now almost a full-fledged shipping company, with tens of thousands of next-generation delivery trucks, partnerships with regional carriers, and its Prime Airport in Kentucky dedicated to Delivery of products sold on its platform…even drones for same-day delivery.
Most Amazon sellers choose to use FBA to fulfill their products because it allows them to:
- not hold any inventory (Amazon does it for you), and
- Get their products to customers as quickly as possible
How the FBA service works
Here’s how FBA works: Customers order items that you list on Amazon. When they do, it triggers Amazon’s fulfillment network, which queues your item to be shipped from the FBA warehouse.
Perhaps the best part about FBA service is Your item will receive “Prime” shipping on your Amazon listing. This means Amazon will prioritize delivery of your products and your customers will get them super fast…often within a day or two.
Since Amazon keeps your inventory in its own FBA warehouses, you can conduct business from your laptop anywhere in the world! The only thing you need to do then is keep an eye on your Amazon listings, stay abreast of customer service requests, and order new products from your suppliers when your FBA inventory gets low.
How to send my products to FBA warehouse?
After setting up FBA, you can print FBA shipping labels for each product in the Amazon control panel. You only need to enter your supplier’s address, and Amazon will generate a shipping label to the designated FBA warehouse. You will then be able to digitally send these labels to your suppliers. They can print them out, stick them on the box with your product, and you can enter the competition.
You can send FBA labels to almost any supplier, whether they are based in the US or not. In fact, most Amazon sellers source their products from suppliers they find on marketplaces like Alibaba. That being the case, almost every supplier on Alibaba is familiar with the process of sending products to FBA warehouses.
This video provides step-by-step instructions for printing FBA labels.
Which FBA warehouse will my product be in?
There are dozens of FBA warehouses across the country, but unfortunately, you do not have full control over the warehouses where Amazon stores your products. Amazon automatically assigns you an FBA warehouse when you generate an FBA label to send to your supplier. Your warehouse could be in California, or it could be in Tennessee. At the end of the day, it doesn’t really matter. As long as Amazon stocks your products in any of its warehouses, you can rest easy, and no matter where in the US your customers are located, they will still receive Prime shipping.
FBA fees depend on your item size and weight
As with any carrier, the cost of shipping an item depends on the size and weight of the item. The bigger and heavier it is, the more expensive it will be. On the other hand, the smaller and lighter your items are, the less expensive they will be to fulfill. Amazon combines shipping and delivery costs into one fulfillment fee, which is automatically deducted from your products once a customer makes a purchase. It’s all automated!
Also, getting started with FBA isn’t free (although it’s great). As of this writing, Fulfilled by Amazon costs $39.99 per month, plus any additional selling fees.
…what else are the sales charges?
Speaking of additional selling fees: Depending on what you sell, Amazon may charge you other FBA fees in addition to fulfillment and delivery. For example, when selling media such as books, DVDs, music, and other software, Amazon charges you 15% of the list price as part of the total FBA fee per item.
Amazon calls these “category referral fees,” and unfortunately, you can’t avoid them in the first place. You can see all of Amazon’s category referral fees here.
Understanding FBA Inventory Limits
The last thing to know about getting started with FBA is that Amazon will limit your inventory at first. In layman’s terms, you cannot front-load inventory by sending large quantities of products to an FBA warehouse. In fact, as a new FBA seller, Amazon limits you to only 1,000 items in any given listing. This is because Amazon needs to reserve available shelf space in its warehouses for products purchased by customers. If your product does not have a proven track record, Amazon can only specify a minimum shelf space. It makes sense, right?
After you’ve sold a bunch of products and Amazon, the company’s FBA software will start lifting the 1,000-item limit for you.
If you decide you want to move on and are ready to get started, you can sign up for FBA here.
