What Is Amazon FBA & How Does It Work In 2023?

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Scratching your head and still figuring, What is Amazon FBA?

Well, your quest ends here. As in this post, we have featured the definite guide to Amazon FBA. Reading this post, you will learn β€” what Amazon FBA is, how it works, the cost of FBA, the benefits and drawbacks of FBA, and so on. 

What’s more, I have also featured a step-by-step guide to help you get started with β€” Amazon FBA.

With all that being said, let’s get started with What Is Amazon FBA & How Does It Work In 2023.

What Is Amazon FBA?

FBA stands for β€” Fulfillment by Amazon. FBA is a service provided by Amazon that helps Amazon sellers store products in Amazon’s warehouse, and Amazon automates and manages the order fulfilment and shipping services. 

The working of Amazon FBA is straightforward, yet it’s powerful, and it can help you manage your online Amazon FBA business without even hassling about order fulfilment and shipping. 

What Is Amazon

Now you might be thinking about how it will be helpful for you.

If you enroll in Amazon FBA, Amazon will handle all the fulfilment and shipping, including returns and refunds. What’s more, Amazon will also handle the product warehousing facility, like picking, packing, and shipping. 

As a seller, you just need to send your product to your nearest Amazon warehouse. Once your product reaches the warehouse, Amazon will process all the orders as they come in. 

Again, you might be wondering β€” is there any fee associated with Amazon FBA?

Yes, Amazon does charge fees for handling and automating the fulfilment and shipping process. 

The question is, if you pay the money, what will you get in return? 

  • 24/7 Responsive Amazon Customer Service
  • All costs will be included (fulfilment and shipping β€” pick, pack and ship).
  • Provides access to the world’s most dynamic and large fulfilment networks.

So this is all about β€” What is FBA? Let’s understand other essential aspects of it. 

How Does Amazon FBA Works?: What Is Amazon FBA

Note: If you want to learn more about Amazon FBA, then check our list of best Amazon FBA courses and choose the best one from the list.

In this section, I’ll explain β€” how Amazon FBA works. Also, I’ll be explaining in detail β€” what Amazon will handle and what you need to handle β€” when you get started with Amazon FBA. What’s more, I’ll be adding a step-by-step guide to help you get started with Amazon FBA.

Amazon FBA Infographics
Amazon FBA Infographics: FBA Daddy.

Working of Amazon FBA is simple; I have listed it in simple steps below:

#1: Send your products to the Amazon warehouse.

#2: Amazon Warehouse stores your products.

#3: When customers purchase products, Amazon FBA work starts. 

#4: Amazon picks products from the warehouse and packs and ships products. 

The best part, Amazon FBA also manages returns and refunds.

Now let me explain the exact steps you need to follow to get started with Amazon FBA right away. 

What Does Amazon FBA Do For YOU?

Let me explain what aspects Amazon FBA will handle. 

  • You need to send your products to one of your nearest Amazon warehouses. Don’t worry; you can find your nearest Amazon warehouse here.Β 
  • Amazon facility will store your products β€” safely in the warehouse.Β 
  • Once customers purchase products β€” Amazon will deal with the whole transaction to update your inventory.Β 
  • Amazon will then pack and ship your product.Β 
  • After the products are delivered, Amazon will handle most customer services, like dealing with returns and refunds.Β 
  • Every two weeks, Amazon will deposit your sales profit directly to your bank account.Β 
  • AMAZON FBA it’s kind of like having your one warehouse, where it manages every aspect without any hassle.Β 

Getting Started With Amazon FBA (Step by Step)What Is Amazon FBA

YES, fulfilment by Amazon can help you eliminate your fulfilment headaches. And it can help you scale your business. In this section, I’ll share the exact steps you need to get started with Amazon FBA. 

Step #1: Setup up FBA Account

 To get started, you must create your Amazon seller account, log in to seller central, and navigate setting up FBA. 

How to Start Selling On Amazon

Step #2: Create Your Products Listing

Once you set up your FBA account, add the product listing to the Amazon catalog and specify the FBA inventory.

Add Your Product - What Is Amazon FBA

Step #3: Prepare your Products

Now it’s time to prepare your products for secure and safe transportation to your nearest Amazon fulfillment center. You need to follow the Amazon packing guidelines along with shipping and routing requirements. 

Prepare Your Product - What Is Amazon FBA

Step #4: Shipping Your Products to Amazon Warehouse

Create your shipping plan, print the Amazon shipment ID labels, and then send your shipment to Amazon fulfillment centers. You can learn more about sending inventory to Amazon. 

BRAVO, your work is done! Once Amazon receives your products at the fulfillment center, then your customer can start placing the orders. You can learn more about managing your FBA order here. 

What’s The Cost of FBA?: What Is Amazon FBA

The thing is, Amazon charges various kinds of Fess to FBA Members. In this section, I’ll explain the charges of FBA in detail. 

  • Fulfilment Fees: The fulfillment fees are per unit, and it varies depending on the size of the products. The price is decided to depend on whether the product is of standard size or oversized. What’s more, the product should also include important information such as β€” picking, packing, shipping, handling, customer service, and product returns.Β 
  • Standard Seller Fees: Amazon takes approximately 15-18% of the product’s price as sellers’ fess when an item is being sold. The exact fees on any product depend on the product itself. Amazon mainly says they charge 15%. However, there are some hidden costs associated with it. These hidden costs are associated with refunds, returns, etc.Β 
  • Inventory Storage Fees: Based on the calendar month and the daily average volume β€” sellers are being charged a monthly storage fee per cubic foot of inventory. What’s more, these fees also vary by the product’s size tier. Such as long-term storage fees apple to the units that have been stored in an Amazon fulfillment center for more than 365 days (and in addition to any monthly storage fees).
  • International Shipping: The best part, Amazon now offers Global Export which allows Amazon sellers to send their inventory worldwide.

Note: If you want to calculate the actual Amazon cost, you can calculate the exact fees here

Benefits & Drawbacks of Amazon FBA

Yes, Amazon FBA has its advantages and disadvantages associated with it. Let’s have a look at them here.

Benefits of Amazon FBA: What Is Amazon FBA?

As an Amazon seller, you can take advantage of all the resources and benefits associated with Amazon FBA once you get started.

  • Amazons’ Nametag With Your Products: Well, you don’t need to build a brand presence to sell your products. Amazon guarantees the quality of your products, and buyers will appreciate the Amazon brand tag. All the products will have the Amazon name associated with them, this will help sellers gain consumers’ trust β€” rapid delivery and excellent customer support.Β 
  • Amazon Customer Service Management: Yes, Amazon FBA also comes with reliable customer service management. The 24/7 available Amazon Customer Service management handles all the inquiries, returns, and refunds on behalf of the FBA sellers. The best part, the service is free, except for the return processing fees on the selected product categories.Β 
  • Discounted Shipping Fees: Yes, Amazon has a relationship with all major shipping companies. As a seller, you will pay less shipping compared to shipping from an individual’s account. What’s more, as a seller, you have the option to offer free shipping for a certain amount. Since the products are being sold through FBA and also they are eligible for FREE Super Saver Shipping.Β 
  • Omnichannel Amazon Fulfillment Center: Yes, as an Amazon FBA seller, you can easily store your inventory at Amazon’s fulfilment centers. Products can be shipped quickly while handling the inventory sold on multiple channels β€” not just on Amazon’s marketplace.Β 
  • Multi-Channel Fulfillment: Amazon can quickly ship and handle the inventory that is being sold on multiple channels. Amazon FBA can easily manage multi-channel fulfillment, not just the Amazon marketplace.Β 
  • Prime Audience Access: If your listing is a qualified FBA listing, it will be eligible and displayed with the Prime logo. This will enable the seller to reach a new audience who are seeking express PRIME delivery. The PRIME audience can help you boost your sales.
  • Return & Refunds Management: Amazon FBA also manages and handles returns management in addition to managing your sales and inventory. Yes, returns and refunds are considered part of fulfillment.Β 
  • Shipping Standardization & Priority: All FBA orders are processed in the same way Amazon handles its products and merchandise. That means if someone purchases any products, Amazon will pick up the item from the inventory, pack it, and then ships it to the buyer. What’s more, as a seller, you can also list these items on your websites, and the Amazon FBA service will manage the other aspects.Β 

Drawbacks of Amazon FBA: What Is Amazon FBA?

As explained earlier, there are pros and cons associated with Amazon FBA. Let me share the drawbacks of FBA. 

  • Costly fees: The Amazon fulfillment and storage fees for long-term products can hike quickly β€” especially with oversized and selling products. Moreover, sellers are also charged removal fees for defective, damaged, and unsellable items. Yes, there are disposable fees for the unsellable inventory.
  • Sales Tax: All the sales taxes are managed at the state level. Somehow if your business is being operated in one state and the warehouse is in a different state β€” you will not be sure of which tax to use. There are tools available that help you automate various tax situations and rules.Β 
  • Product Handling Issues: In some cases, inventory can be damaged or get lost during the fulfillment process. The error is mostly on Amazon’s end and not at the end seller. For such instances, Amazon will reimburse the seller. Often, other cases go unnoticed where the inventory is damaged, and all the sellers’ money is lost.Β 
  • Pinpoint & Precise Product Guidelines: Yes, Amazon FBA has specific requirements for certain products and categories. For this, you must ensure the product is appropriately packed with all the precise guidelines. What’s more, as a seller, you have the option to opt β€” Amazon prep for a pre-time fee.Β 
  • More Returns: Due to Amazon’s open return policy, you might see an increase in the number of returns and their frequency as a seller. This is because of Amazon’s open return policy. If the item is being returned, Amazon will forward that item to your facility, for which you have to manage the transportation.Β 

Well, now you have got the benefits and drawbacks of Amazon FBA. 

Is Amazon FBA worth a Shot in 2023?: What Is Amazon FBA

The answer is YES! 

As per the reports, millions of sellers opt for Amazon FBA to run a profitable business. Opting for Amazon FBA is beneficial. However, it’s not for everyone. 

Amazon FBA is best suited if you’re primarily an Amazon seller; FBA is a great solution to grow and expand your selling on Amazon business. You can literally grow and expand your products to a well-known brand. 

The best part is that you can focus on another important task instead of time-consuming fulfillment tasks like packing, shipping, returns/refunds, etc. 

It’s proven using Amazon FBA; you can easily create a lucrative venture. However, before getting started, you should know all Amazons’ FBA requirements and policies. And the most crucial part is β€” to understand your customer, and market and then decide whether Amazon FBA is right for your business or not. 

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Summary: What Is Amazon FBA (2023)

It is evident from various case studies that Amazon FBA helps you eliminate your fulfillment headaches and helps you scale your business. 

I hope with this information shared in this article, you have a better understanding of Amazon FBA. After going through the article, you might be able to decide the correct way to start selling on Amazon. 

If you have a query, feel free to share your thoughts in the comments section below.

Anyways, if this post helped you β€” feel free to share it!  

Brian Williams

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