Fulfilment by Amazon (FBA) Definition + How does it work?

Fulfillment by Amazon (FBA) enables salespeople to focus on all the other aspects of their business while Amazon handles everything related to packing, and shipping/delivery of the order. FBA is a popular business model, with 91 percent of third-party sellers using it.

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Fulfilment by Amazon, or FBA, is an Amazon service that handles inventory storage, order fulfilment, returns, and even customer support for sellers on Amazon.  

Fulfilment by Amazon (FBA) enables salespeople to focus on all the other aspects of their business while Amazon handles everything related to packing, and shipping/delivery of the order. FBA is a popular business model, with 91 per cent of third-party sellers using it.

To determine if Fulfillment by Amazon is a nice choice for you, think about the number of sales orders you receive, the number of workers you have, and the variety of goods you sell.

How to Make Use of Fulfillment by Amazon

Once you’ve established your Seller account, using Fulfillment by Amazon is as easy as shipping your products to an FBA storage facility. Once Amazon acquires your inventory, it will instantaneously list your items for sale and make them Prime shipping eligible.

  • In Amazon Seller Central, create a shipping strategy.
  • Create a heavily discounted shipping label using Amazon’s partnered shipping carrier (done in Seller Central)
  • Pack your products following your shipping strategy and Amazon’s packaging and preparation prerequisites.
  • Drop your package(s) off at a UPS location or arrange for a pickup.
  • Allow enough time for Amazon to collect and process your inventory cargo.

Also Read: Advantages & Disadvantages of drop-shipping

Advantages of Using Fulfillment by Amazon:

Fulfilling all of your orders: A manual packaging and shipping orders daily is a time-consuming and labour-intensive process. Utilizing Fulfillment by amazon is similar to having one’s warehouse workers who manage everything instead of you.

  • Handling Customer Service: 

Amazon will resolve any service issues related to orders packaged and shipped via FBA. 

  • Handling returns: 

By using Fulfillment by Amazon, Amazon will pack and ship your orders. Above all, deal with the returns. In case, if the item is returned and is in mint condition, then it will be added to your inventory by the company.

  • Multi-channel fulfilment

Did you realize that Amazon FBA can be used to fulfil orders for other markets or e-commerce platforms? Sellers can place a fulfilment order and ship a product to a customer who doesn’t have Amazon. 

Disadvantages of Using Fulfillment by Amazon:

  • Amazon FBA Fee Payment: 

You can’t put off what you owe Amazon. This means you can’t use the proceeds from the next sale to cover the costs of the previous one. That is to say, as per Amazon’s policy, the company will deduct fees you owe to them before making any payment to you. For instance, what if you do not have the money in your account to cover the fees? Well, to pay the remaining amount, you must provide a credit card.

  • Product Preparation Requirements: 

Amazon does have its own set of criteria for products arriving at the storage facility to be satisfied through FBA. It would be best to make sure that your products have been prepared according to the FBA inventory warehousing guidelines before giving them to Amazon, including how they are packaged, labelled, and shipped. Several of the specifics can be a bit challenging.

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