With more than two million third party sellers on the Amazon Marketplace worldwide, generating more than half of Amazon’s total sales, there has never been a better time to leverage the wonderful world of possibilities offered by Amazon.
If you are wondering how to sell on Amazon as a third-party seller, the most important decision you will have to make is whether you want to handle your own fulfillment or choose Fulfillment by Amazon for your business.
FBA is a fulfillment choice for sellers that assigns the fulfillment of products to Amazon. In addition to selling its own inventory, Amazon is also responsible for these products from third party sellers on the marketplace. When a product from a merchant is purchased on Amazon, Amazon is responsible for picking, packaging, and shipping that item, in addition to handling returns and customer complaints.
In a nutshell, eCommerce businesses capitalize on Amazon’s storage centers, customer service team, and delivery logistics to mitigate supply chain bottlenecks and increase operational efficiencies.
Regardless of whether you use Fulfillment by Amazon for all orders and sell exclusively on Amazon or sell across multiple platforms in addition to Amazon by combining both MCF and FBA, the process is the same. Your only major fulfillment task is to get your inventory to an Amazon fulfillment center and leave the rest to Amazon. All you have to do now is to Market your brand, keep the shelves stocked, and replenish in time. Here is how Amazon FBA works:
1st step: You Get Your Inventory to Amazon
In the wake of Amazon’s FBA stock prep guidelines, all inventory sent to Amazon FBA has to be properly labeled, prepped, and packed. You begin by setting up a shipping plan in your Seller Central dashboard. Here, you can choose one of Amazon’s Partnered Carriers for inbound stock, since you are hard-pressed to find cheaper prices than what Amazon’s inbound shipping offers.
Step 2: Amazon Stores and Keep Tabs on Inventory in Their Warehouse
Once Amazon receives your inventory, it sorts and stores it in their acres of storage facility. Your stock can be shifted from one warehouse to another if another geographical location sees more demand. For instance, if a major portion of your orders come from the east coast let’s say, wouldn’t it be more economically feasible to shift the bulk of your stock to their eastern warehouses? Not to mention, they can ensure speedy deliveries, less chances of damage to the products, and less disruption. Don’t worry. This process is internal and doesn’t involve you.
Step 3: You can List Products for sale on your website or other Marketplaces other than Amazon as well
Start adding your products to Amazon, your e-commerce website, or other seller marketplaces. Market your brand/products as best as you can via all marketing avenues available to you, such as Amazon PPC ads, social media, email, and wait for it to start raining orders.
Step 4: Customers place orders
As soon as a customer places an order on Amazon, it is directly processed by Amazon and sent for fulfillment. On the other hand, all orders received through other marketplaces or your business website have to routed to Amazon for MCF fulfillment via your connected system. Alternatively, you can create an MCF fulfillment order.
5. Amazon picks Items, packs, and ships orders to customers
All orders are ultimately routed to Amazon’s warehouses for fulfillment. Amazon’s Personnel pick the orders, secure the boxes, print the shipping labels, and transport your orders to buyers. For Amazon orders, buyers also receive an email incorporating tracking information. Not to mention, Amazon also takes care of any shipment-related customer service issues, leaving your hands free. As your busienss grows, you can also leverage third-party Amazon seller tools to help streamline FBA management tasks for you.
How To Sell on Amazon for Beginners?
Are you looking for a detailed answer on how to sell on Amazon FBA? Here is how you can get started!
Create an Amazon Seller Account
The first step is to decide if you want to sign up for an individual account or a professional account. If you have just got your feet wet in your business and are testing the waters with less than 40 products, its more prudent to start with an Individual account. This is because with an individual account, Amazon charges $0.99 per item sold, but a flat $39.99 rate for any number of items sold for a professional account. So, until you have more than 40 items to sell, it is more feasible to go for an individual account. Assuming you don’t, let’s start by registering with an individual account.
You start by logging in with your email address, and provide the information below:
- Billing method
- Mobile number
- Seller Agreement
- Business name and address
- Tax information (only for professional account)
Next up, Amazon requires some personal information on the part of the seller, such as:
- Name and address
- A “Display name”, which is like a username which you want to appear on your Amazon seller account
- Your card and bank information required for deposits
- Last but not the least, verification through text message or call
List Your Inventory on Amazon
The next step is to click on ‘inventory’ > ‘add a product’ and add your first listing as a seller. Now search for your product either by name or barcode, and add all the relevant product information, such as item condition, price, specifications, color, as well as who is responsible for shipping. Here, make sure to select Amazon to handle your shipment and provide customer service for your products.
Once you tick this box, you will be redirected to a screen where you will be presented with all the terms and conditions.
Convert Your Items to Fulfillment by Amazon Items
The next step is to Convert Your Items to Fulfillment by Amazon Items. Now, you must be wondering why Amazon is asking you to convert your items to FBA items if you have already opted in for them to be fulfilled by Amazon in the last step. Know that ticking the box on the shipping method pop-up only means that you have chosen to use Amazon FBA. It nowhere means that you have to use FBA for every item that you sell. You may have some items that can’t be fulfilled by Amazon. Which is why, Amazon requires you to go back to your account and manually select items you want to be fulfilled via FBA.
Scroll up to the “Inventory” tab in your Seller Central homepage and choose “Manage Inventory”. For each item, select the “Actions” dropdown separately and choose “change to Fulfilled by Amazon”.
Keep in mind that once converted, Amazon temporarily removes your listings until your inventory reaches the Amazon’s fulfillment center. So, you have to see the entire process through, to list and sell your items through Amazon FBA.
Next up, you have to make choices pertaining to Sticker-less, commingled inventory and FBA label service. When you choose the sticker less, commingled option, it basically means that Amazon might not ship the order item from the inventory that you submitted but ship an exact copy fulfillment center closer to the customer. However, this option comes with its own set of risks, since the unit Amazon randomly sends to your buyer may be a counterfeit from some shady seller, which might ruin your image.
The other option is to choose the FBA label service, which means that Amazon will place product labels on your items for just 20 cents/ item. This option is best if you want Amazon to send products strictly from your inventory to your buyers.
Create a FBA shipping Plan
The next step is to choose from between Convert only and Convert and send Inventory. The former category is best if you will keep adding products to the list, while the latter is for when you only have one item to send.
This is where your item will now appear on the in ‘Amazon-Fulfilled Inventory’, which can be assessed by clicking on Inventory > Manage FBA Inventory.
Upon clicking ‘Convert and Send Inventory’, the next step is to create a shipping plan, for which you need to add a “package type, and a “ship from address”. Also, choose between “Case packed Products”, and “individual Products”. The former option is when you want to send a box of identical items, such 20 water guns. While the latter is when you want to send a single, unique items.
Select all relevant items on the list:
Ship Your Inventory to Amazon Fulfillment Center
The last step is shipping your item to Amazon. For this, click on Inventory > Manage FBA shipments > continue with shipping plan. This is where you enter the quantity of units of each product you are sending, choose who will box and prep the items, choose if you want to print your own labels or have Amazon do it, weight your items, and purchase shipping from Amazons. If you have printed labels, stick them on to your items and drop off your inventory at any shipping service such as FedEx or UPS.
Fees associated with Fulfillment By Amazon
Instead of second guessing the economic viability of selling a product via Amazon FBA, its better to make your calculations, keeping mind all the fees associated with Amazon FBA.
Fulfillment By Amazon fees are divided into two main categories:
First comes the Fulfillment Fees: For each individual unit, this fee includes the cost of packing, handling, shipping, product returns, and customer service. This fee also varies based on the size of your product, with further categories in each size range:
- Small (1 lb. or less) – $2.41
- Large (1 lb. or less) – $3.19
- Large (1 to 2 lb.) – $4.71
- Large (over 2 lb.) – $4.71, add $0.38 for every pound above 2 lb.
- Small oversized (1 lb. or less) – $8.13$137.32, add $0.38 for every pound above 2 lb.
- Medium oversized (1 lb. or less) – $9.44$137.32, add $0.38 for every pound above 2 lb.
- Large oversized (1 to 2 lb.) – $73.18$137.32, add $0.79 for every pound above 90 lb.
- Special oversized (over 2 lb.) – $137.32, add $0.91 for every pound above 90 lb.
The second is the Monthly inventory storage fees. It is charged per cubic foot for all units of your products stored at any of Amazon fulfillment centers. This fee varies depending on the volume of your product moving through the facility and the time of year for which it is stored for. The breakdown of this fee is:
- January – September – $ 0.64 per cubic foot
- October – December – $2.35 per cubic foot
- January – September – $ 0.43 per cubic foot
- October – December – $1.15 per cubic foot
Many people find it pretty daunting to figure out the FBA fee, which is why it is better to use the Amazon FBA calculator in order to determine your profit margins and make sure that you are making the right choice for your business with Amazon FBA. With
How Can Fulfillment By Amazon Benefit Your Business?
If you are looking for ways to cut down on budget allotted to fulfillment, reduce delivery times, and shrug off the hassles of fulfillment, this option is great for your business. Other benefits that FBA affords you, include:
- Fewer Business Operations: FBA takes all the hassles of fulfillment off your hands, such as picking up orders, handling shipping, packaging, warehouse management, and the numerous costs associated with it. Simply pass off those redundant tasks to Amazon and free your hands.
- Amazon Prime: Get access to Amazon Prime customers, since they are more prone to buying than traditional Amazon shoppers. Since FBA products appear for prime filtered searches and feature Prime shipping, this method increases your product discoverability. The best part is that prime users keep increasing seasonally, especially around the holiday season. Last holiday season saw more than 1 million new Amazon Prime buyers in one week. Conversions are more likely on detail pages that are prime eligible, which can increase sales for products you sell using FBA.
- Customer Service and returns: With all FBA orders, customer service and product returns are handled by Amazon itself. So, if you don’t have customer service specialists, this can be a huge perk for your business.
- Shipping Speed: FBA translates into delivery tracking through Amazon, stellar, round-the-clock customer service, Amazon prime eligible shipping, quicker delivery, and reasonable shipping rates. As compared to products that are sent directly by the retailer, FBA products are processed and shipped faster. Amazon’s impeccable customer service means that shoppers can rely on helpful assistance.
- Amazon Branding: Why do people love and trust Amazon all over the world? Perhaps the greatest reason is the ease of online shopping it affords them, as well as a stellar customer service. When your brand aligns with the “Amazon Brand”, people automatically associate it with Amazon’s reputation. “Fulfilled by Amazon,” is a badge of trust for Amazon shoppers familiar with Amazon’s stellar delivery reputation.
- More sales: FBA increased sales by more than 20% for 73% of Amazon sellers who have registered with Amazon FBA.
- Amazon offers free shipping on orders over $25 to all buyers. But the catch is that this offer is only valid for FBA items. The same applies to buyer events like Prime Day and Cyber days and Amazon coupon deals; FBA products generally qualify for these offers too.