First Sale Valuation The Ultimate FAQ Guide

FBA: The Ultimate FAQ Guide

If you’re looking for any information about fulfillment by Amazon (FBA), you will find it right here.

It covers all the critical details about FBA such as what it is, how it works, benefits, products you can sell, etc.

So, keep reading to learn more.

What Is FBA (Fulfilment by Amazon)?

Warehouse

Warehouse

Fulfillment by Amazon (FBA) provides inventory services such as warehousing, packaging, shipping, and customer services.

It helps to facilitate the online selling of products by business owners.

When Did The Fulfilment By Amazon Program Start?

The fulfillment by Amazon program was started back in 2006.

Before its launch, Amazon was facilitating online retail and was a key player on a global scale. It’s when it came to online sales and fulfillment.

One of the major reasons why Amazon founded this program was to fuel the growth of small businesses using Amazon fulfillment capabilities.

The brand not only provides storage and packaging services but also customer service. Which is an added advantage to any business owner selling in Amazon.

That said, the Amazon fulfillment program was geared to have as many third-party sellers as possible. Learn how to increase profits by choosing Amazon.

As current trends pop up, the FBA program ensures that it stays up to date with the current trends. To meet the needs of the evolving online retail environment.

In as much as this enables brands to stay on top of the game, it might as well be challenging to keep up with the constant updates.

How Does Amazon FBA Work?

In simple terms, you send products and Amazon packs and ships to your customers. Below is a detailed explanation of the processes involved;

  • First things first, you need to set up your Amazon selling account, create your product listings and prepare your products.
  • Thereafter, ship your products to Amazon where they shall be provided storage services in the fulfillment centers.
  • Once your products are received by Amazon, you can keep track of them through their tracking system.
  • Interested customer orders your product from Amazon and thereafter Amazon takes care of picking and packaging processes of sold products.
  • After the sold items are packaged, they are shipped to the customer. The shipping method used will depend on the choice of the customer. The customer is also provided tracking information.
  • Additionally, Amazon will provide customer service after the delivery of products. This also entails taking care of any product returns issues.

It’s important to understand that this program not only focuses on orders placed on Amazon but also on other e-commerce platforms.

What Are The Seller Responsibilities On Amazon FBA?

With the several services offered by Amazon FBA, it might be difficult to tell which responsibilities are left to the buyer.

Here are three responsibilities that any seller is in control of when selling through Amazon FBA.

  • Selecting the type of products, you will be selling – This is indeed a key aspect if you are looking to sell on Amazon. It’s vital to choose products that sell fast to avoid slow-moving products and fewer sales.

Research and analyze current trends, this might help you settle on a suitable product that most people are interested in.

  • Ensure that your inventory is well-stocked – Soon after completing the sign-up process, you can begin storing your products in Amazon Fulfilment centers. It is up to you to observe the stock and restock if need be.
  • Marketing your products – It is your responsibility to get your products known to people. You can as well choose to utilize Amazon marketing tools to market your products. Otherwise, FBA doesn’t offer any marketing services. Apart from using Amazon marketing tools, you can decide to use other means to create awareness of your product in the market.

Which Factors Determine Amazon Fulfilment Fees?

The amount of fee charged will depend on three main factors namely;

  • The weight of your products.
  • The sales platform you use to sell your products.
  • The size of your products.
  • Type of FBA services used.

Based on the size and weight, Amazon groups products as either oversized or standard-sized.

Standard-sized products comprise products that weigh 20 pounds after being packed.

Aside from that, their dimensions don’t exceed 18” by 14” by 8”. Products that exceed these dimensions are ruled out as oversized products.

Take into account that you don’t have to be selling on Amazon to benefit from the Amazon fulfillment program.

That said, Amazon fulfillment services are available through a program known as Multi-Channel Fulfillment.

Through this, sellers are allowed to ship their products to their desired Amazon fulfillment centers after which Amazon handles their fulfillment processes.

FBA with MCF fees is higher as compared to when directly selling on Amazon.

What Are The Different Types Of Amazon Fulfilment Fees?

Amazon Fulfilment Fees Table

Amazon Fulfilment Fees Table

There are different types of Fulfillment fees. While some are mandatory for all FBA sellers, others are only applicable under specific circumstances.

Let’s have a look at the types of amazon fulfillment fees below;

  • Storage fees – Storage fees are mandatory for all sellers selling on Amazon while using the FBA service. As the name implies, storage fees cover the storage of your products in Amazon fulfillment centers. The number of cubic feet your products take up is used to calculate the storage fees.
  • Referral fees -We can describe referral fees as commissions paid by sellers to Amazon for them to sell on Amazon. This applies every time any sales are made by a seller.
  • Fulfillment fees -As compared to storage fees, fulfillment fees are not mandatory for all FBA sellers. This fee is paid to Amazon FBA to cover the cost of fulfilling your order. Fulfilling your order will entail services such as picking, packing, shipping, and customer care, and after-sale services.
  • Removal order fees – The removal order fee is paid every time a seller decides to remove items from the Amazon fulfillment center. The size and weight of the products being moved will determine the amount of fee to be charged.
  • Selling fees – A selling fee is mandatory if you are looking to sell on Amazon. There are two types of plans you can choose from depending on your budget and preferences. There is an individual plan which costs $1 for every sale made and a professional plan which costs $40 per month on unlimited sales.
  • Return processing fees – As the name suggests, this fee is applied to any products that are returned. The products must be originally sold on Amazon and have to be eligible for free return shipping.
  • Unplanned service fees – Once a seller chooses to sell products in a fulfillment center, they must pack, label, and also barcode their products. Failure to do this will have Amazon take the responsibility and charge a fee. Such fee is what’s termed as unplanned service fees.

How Will Amazon Bill Me For Fulfilment?

Amazon will bill you by deducting the fee from the money credited to your Amazon sales account. The fee will be withheld from the payment of funds to you.

What Are The Categories In Which I Can Use FBA?

Settling on a product to focus on can be quite challenging more so if you’re new to this field. With a wide selection of products to select from, narrowing down your search and finding the best niche is the ultimate goal.

That said, below are some of the categories that you can use FBA;

  • Books
  • Baby products
  • Clothing and accessories
  • Consumer electronics
  • Health and personal care
  • Pet supplies
  • Shoes, handbags, and sunglasses
  • Sports and outdoor items
  • Tools and home improvement products
  • Video games and apps
  • Beauty and personal care
  • Musical instruments
  • Office accessories
  • Luggage and travel items
  • Toys
  • Software
  • Camera and photo products
  • Industrial and scientific (BISS)
  • Garden and outdoor
  • Home and kitchen
  • Arts, crafts, and sewing
  • CDs and Vinyl
  • Automotive parts and accessories

While making your selection, it’s important to consider certain aspects such as the competitiveness of the product and profit margins just to mention a few.

Does FBA Have A Minimum Number Of Items Required?

No

There are no limitations to the number of products you can send to Amazon FBA. You are free to send any number of items from one to 5000.

If you are sending large-sized products, they must not exceed 500.

What Are The Advantages Of FBA?

Fulfillment by Amazon has a lot of benefits to your business which are not limited to;

  • Provision of warehouse services – Storage space is vital for any business that sells products.

In as much as some choose to rent or buy their storage space, it might end up being a costly venture.

Not only will you need to pay for space but also the employees to manage it.

Additionally, determining whether space will be the right size for your goods might be tricky.

Fulfillment by Amazon takes away all these hassles and provides you with enough space for the storage of your products.

The overall cost is inclusive of the inventory fee which is quite affordable.

It’s worth noting that businesses with fast-selling products enjoy unlimited storage space as a reward.

  • Managing your returns – Managing returns from customers can be an overwhelming task.

You have to find the cause of the return as well as decide if it is worth returning the product.

In addition, the costs are incurred by you and if by chance you need assistance you will need to employ staff.

All these are minimized by making use of FBA which ensures every process is handled smoothly as you continue with your routines.

  • Sell products globally – Expanding business to reach the global market will require a huge number of resources which might be unaffordable to some.

Not forgetting the risks associate with such a milestone which might result in an unsuccessful business.

With that in mind, FBA has made it easier for any business owner to reach the global market.

With fewer resources and finances without many risks involved.

  • Minimizes cost of shipping – Amazon has partnered with several prime shipping companies to ensure that your goods are delivered as desired at affordable rates.
  • Handles your fulfillment process – The fulfillment process entails all the procedures done to complete a customer’s order. Fulfillment by Amazon handles all these processes for you.

How Do Amazon FBA And FBM Compare?

FBA Vs FBM Chart

FBA Vs FBM Chart

With Amazon FBA, sellers ship their products to Amazon warehouse and have their items delivered to customers by Amazon. On the other hand, FBM gives sellers full responsibility for storage and shipping orders.

Which Is Better Between Amazon FBA Vs Seller-Fulfilled Prime?

Both options have their unique benefits and cons.

Determining which of the two is better will depend on whether you are a smaller merchant or a larger merchant.

For instance, Amazon FBA would be ideal for smaller merchants lacking storage spaces and in need of hands-off fulfillment.

On the other hand, larger merchants owning their warehouses with experience in this field would find it ideal to use seller-fulfilled prime.

That said, it’s important to carefully weigh the two options and settle on what works well for your business.

How Can I Get Started With Amazon FBA?

The first thing you need to do for you to get started is to create an account. Amazon’s website provides all the information you need regarding the sign-up process.

On the Amazon website, you will find important and helpful information explaining services provided and how to go about selling on Amazon.

And that’s not enough, Amazon also provides marketing services and insights which will help you leverage the benefits.

Ensure that you take advantage of all these free tools and services as you get started with Amazon FBA.

Are There Drawbacks To Using FBA Services?

Yes, there are. Just like any other venture expect to experience both sides of the coin.

That said, Let’s have a look at the disadvantages that come with using FBA services.

  • Costly fees – Slow-moving and oversized products can result in piling up of storage fees as well as fulfillment fees. In addition to that, the seller incurs charges on removal fees for damaged. Unsellable or defective items and disposal fees to get rid of unsellable products.
  • Specific product requirements – There are a set of requirements that need to be met by certain products to ensure the safe delivery of the products.
  • Product handling issues by Amazon – Sometimes products get damage during the fulfillment process. If the damages are caused by Amazon, they will repay the loss. Sometimes such faults go unnoticed causing the seller to incur losses.
  • Many returns – Since Amazon takes care of returns with FBA, more customers will be willing to return products upon realizing how easy the process is.
  • Stickerless Commingling – Might result in losses if a low-quality product is mixed with your quality products. The loss will be realized after your account gets suspended or accused of fraud.

Can I Enter A Joint Venture With Amazon FBA?

Yes, you can. Several service providers are opting to enter joint ventures in a bid to maximally utilize the convenience offered by this fulfillment service.

By so doing, third-party retails avoid dealing with the product themselves and have Amazon do all the preparation and delivery procedures.

FBA has continued to grow in popularity since 2004 when Beta was officially launched.

That said, FBA has made most businesses stay competitive and thus it’s a must-have for any business making online sales.

Is Amazon FBA Suitable For All Businesses?

In as much as there are several e-commerce entrepreneurs, Amazon FBA cannot be suitable for all businesses.

You must do thorough research and understand the requirements as well as your customers and target market.

Not forgetting choosing the right products to sell and having solid business objectives.

All these will help you decide on whether Amazon FBA is indeed suitable for your business or not.

How Do I Know If Amazon Fulfilment Is Right For My Business?

To know whether Amazon fulfillment is right for your business, you need to ask yourself the following questions;

Do You Have Adequate Employees?

Seasonal and trending products tend to sell fast during certain seasons.

In times like this, you might need extra employees to get work done efficiently.

Using FBA at such times would be a wise idea.

What Type Of Products Are You Selling?

Using FBA is ideal for small pricy products.

How Many Sales Orders Do You Receive?

If you are still new to the business, it might not be worth using FBA.

The reason being, you still have fewer orders which you can easily handle on your own.

Once your business picks up, it starts gaining popularity and so will the orders increase.

Managing orders on your own will be difficult and thus the need to hire employees will arise.

At this point, it would be ideal for you to start using FBA.

How Do I Upload My Listings On Amazon FBA?

There are three main methods you can use to upload your listing on Amazon FBA namely;

  • Add a product– Once you log into your seller account, you will see the inventory tab. Click on add product.

You can as well add products by clicking “Add products via upload”. If you are dealing with a small number of items, you can one by one.

As soon as all your products have been listed, you can convert them to fulfill by Amazon.

  • API interrogation -Amazon inventory catalog provides a platform where you can integrate your website or inventory management software. This is most ideal when dealing with a large number of products.
  • Flat file feeds – Flat file feeds are applicable when listing several products. Upload a flight file and directly list your products for fulfillment by Amazon.

What Product And Order Information Do I Need To Provide When Uploading Listings To Amazon?

Amazon will require you to provide information regarding your products including the fulfillment of your items. You should follow the order of information upon request.

Some of the product information that you will be required to provide is not limited to the following;

Your product categorization and sub-categorizations

  • The weight of your products
  • Barcode data of your products
  • Packaging dimensions
  • Condition of your products

Can I Ship Directly From A Manufacturer In China To Amazon FBA?

Yes, you can directly ship from a manufacturer in China to Amazon FBA.

You need to trust your manufacturer to meet the required Amazon packaging requirements and quality standards.

You can either choose to directly ship to Amazon FBA or work with a freight forwarder.

However, it’s important to note that using a freight forwarder is suitable when shipping to multiple FBA centers since it’s cheaper.

In addition to that, it’s recommended that you use a freight forwarder when working with a new manufacturer.

What Is Stickerless Comingling Vs. FNSKU For Amazon Fulfilment?

Stickerless Comingling Vs FNSKU by Fulfilment by Amazon

Stickerless Comingling Vs FNSKU by  Fulfilment  by Amazon

For your products to be scanned as they pass through the Amazon system, you will be required to sticker them.

You are allowed to either use stickerless comingling or FNSKU on your items.

With stickerless comingling, you are free to use ASIN, EAN, or UPC among others.

Not only is it the cheapest but also the most efficient method you can use to sell on Amazon FBA.

Ensure that you carefully inspect your products to make sure they have stickers as listed. Failure to do this might result in being fined.

FNSKU (stickered) tends to be more expensive than stickerless since you will have to individually label your items.

Nevertheless, FNSKU separates your products from other sellers’ products which helps in quality control.

This is quite beneficial especially when your products have higher quality than other sellers.

What Are The minimum Packaging And Labeling Requirements For Amazon FBA Shipments?

The rules surrounding packaging are not that strict as long as the product is well covered and protected.

You can use items such as cardboard boxes, bags, plastic sleeves, and cardboard sleeves when packaging your products.

Nevertheless, the product should have a clear label to facilitate tracking.

That said, ensure that your packaging is secured without any markings to prevent any confusion.

If you are shipping using cartons, they must not exceed 50lbs and 500 products in the carton.

Products shipped in poly bags need to be sealed in transparent, clear, and durable bags which should be 1.5ml or larger.

The bags should also display barcodes and labels. Through the plastic as well as show a suffocation warning for bags that have a 5” or wider opening.

Keep in mind that any explicit products should not be packaged in a transparent bag but in opaque packaging.

Also, the expiration date of the product must follow the DD-MM-YYY format.

Another way you will have to display a sticker with the appropriate format covering the original date.

Last but not least, loose products should be well secured by tape.

How Do I Calculate How Many Products To Send To Amazon FBA?

Knowing the number of products to send to Amazon FBA is essential in avoiding any unnecessary payments.

Such payments can range from storage payments and restocking fees plus losing money on stock-outs.

To calculate the economic order quantity, you will need to have existing data of your business.

  1. Identify the turns – Analyze how fast your product sells as this will help you calculate the cost of storage.
  2. Identify the demand for sales velocity – Get to know how many products are sold per turn.
  3. Calculate the ordering cost -The ordering cost is the fee that covers the process of ordering a product and shipping it to FBA. You will incur this cost upon creating a new shipment for FBA.
  4. Calculate carrying costs products – Analyze the total cost of storage as well as management costs.
  5. Calculate the Economic Order Quantity (EOQ) – This will help you know the right number of products to send to Amazon FBA to balance the ordering and total storage cost.

You should send more products to Amazon if the ordering cost gets higher. A decrease in demand will mean that you have to send fewer products owing to the payment of long-term storage.

Will My Products Be Safe In Amazon Fulfilment Center?

Yes, they will be safe. Amazon safely stores your products until the time of shipping. However, in some cases, your products might be damaged through the fulfillment process. The better side of it is that Amazon is always willing to reimburse you for any damages caused on their side.

Does Amazon Take Liability For Damaged Or Lost Products In FBA Warehouses?

Quite simply, yes! In case your products are damaged or lost in the FBA warehouse. Amazon might either replace the product with a new one or reimburse you for it.

Take into account that this doesn’t apply to returned products.

What Are Amazon Requirements For Product Shelf-life?

The expiration date of products is one of the most sensitive factors you should pay attention to whenever you are shipping to Amazon FBA. A slight mistake or violation in this might have your products confiscated or being fined.

Let me walk you through some more Amazon requirements that you should know about before engaging in this business.

  • The format used to print the expiration date must be in MM-DD-YYYY format.
  • Only one expiration date is allowed per carton.
  • FNSKU must be used on any product that has expiration dates.
  • You are only allowed to send products to Amazon FBA if the shelf life exceeds 105 days after being delivered to Amazon.
  • The expiration dates must be highlighted preferably in 36-point font or larger. Each of the printing must be on every individual unit.
  • If your products happen to expire within 50 days, they shall be confiscated by Amazon.

To avoid such situations, it’s important to know the right number of products send to avoid sending excess or less. Ensure that you send products that will sell before the 50th day of the expiration date.

How Do I Ship Products To Amazon FBA?

Shipping Procedure

Shipping Procedure

You can ship products to Amazon FBA using the following eleven steps;

  1. Sign in to your seller account and proceed to manage inventory.
  2. Choose products that you want to ship from your inventory.
  3. Select “Action on Selected” and next choose “Send/Replenish Inventory”.
  4. Choose your shipping plan.
  5. Enter your shipping address.
  6. Confirm the type of packaging. Either individual products or case packed.
  7. Click “continue to shipping plan”.
  8. Choose the product preparation method then prepare and label your products.
  9. If you are using labels, set the quantity and print labels.
  10. Preview and prepare the shipment.
  11. Select the type of shipment. Either small parcel delivery or less than a truckload.

Can I Use FBA Services With Third-Party Stores?

Yes, you can use FBA services with third-party stores. Buyers who purchase from third-party stores such as Shopify, and Etsy can receive products via Amazon.

The shipped products will be packaged in an Amazon-branded box regardless of the site bought from.

Why Does Amazon Label Some Products As ‘Add-on Item’?

To start with, add-on items refer to small products that might have a higher shipping price as compared to their actual price.

That line of reasoning, items can only be purchased if they are sold with other complementary products adding up to $25.

Upon realizing this, Amazon introduced the add-on item program and it’s easy to understand why.

If a customer runs out of a pen, they will purchase more products to have their totals stand at $25.

The weight and price of a product play a major role in determining whether a product should be added to the list.

How Do You Determine Break-even Point For Amazon FBA?

Just like any other business, selling on Amazon is a risk and most people are afraid to fail. This is due to the high costs and therefore every business owner strives to balance the costs with the sales. By so doing they can make profits.

Break-even Point in Units = Fixed Cost Over Sales Price per unit Minus Variable Cost.

Additional, calculate the total business costs of the following;

  • Fixed Cost – Such costs include salaries, property tax, warehousing, Amazon fees, software, and lease. Let’s take for example $80,000 per year.
  • Price per unit -This is the cost of a single product. We can use $20.00 for our example.
  • Variable cost – Variable costs are dependent on the volume of sales. They include Amazon fee, Manufacturing, Amazon percentage, and shipping. We can set this at $13.00

Break-Even Point = $80,000 Over $20.00 Minus $13.00 = $3987

Ensure that you calculate the total costs to avoid losing money.

What Are The Tips And Tricks For Maximizing Amazon FBA Sales?

Some of the tips and tricks for maximizing Amazon FBA sales are not limited to;

  • Optimizing your product page with SEO makes it easier for buyers to find your product. Use the right keywords in your product title to boost your SEO.
  • Make use of influencer marketing strategies.
  • Select products that go wide with keywords
  • Create an email list or use social media to sell your existing audience.
  • Register your brand to avoid issues with someone selling counterfeit products under your brand name.
  • Have outstanding product images.
  • Stand out from the competition. Seek to find out a gap that most sellers haven’t exploited and take maximum advantage of the opportunity.
  • Strive to get customer reviews and feedback. Studies show that most customers check the product reviews before deciding on whether to make a purchase.

What Is Amazon Algorithm And How Does It work?

Amazon algorithm refers to the criteria used to rank products on Amazon to help consumers with their product search.

The algorithm ensures that the customer is provided relevant results by ranking sellers and their products on the site.

The reason why this is a prime key to any business. It determines whether or not your product will be visible to customers on the product page.

This goes a long way in determining how fast your products move as well as the overall profits and success of the business.

Interestingly, Amazon algorithms keep on changing and this might be challenging to keep up with.

Let’s take for instance Amazon A9 algorithm.

This algorithm ranked items based on profits. With the introduction of the A10 algorithm, the main factor is displaying to customers the most accurate results without considering profits.

Paying closer attention to the updates is quite important if you want to be at the top of the game.

What Is Amazon IPI And Why Is It Important

Inventory Planning Index by Amazon

Inventory Planning Index  by  Amazon

Amazon Inventory Performance index is used to show your inventory performance. It assesses how well sellers manage their inventory including the number of units. Too many units will result in extra storage costs and excess holding while fewer units will result in out-of-stock items.

These are just some of the factors considered when doing the assessment. The inventory performance index has numbers ranging from 0-1000.

Amazon IPI is important in that the seller can minimize the lost sales as well as holding costs.

What Are The Factors Influencing The Amazon IPI?

Three main factors influence the Amazon IPI namely;

  • In-stock inventory – To prevent running out of stock as well as preventing lost sales.
  • Excess inventory -To minimize the carrying and storage costs of inventory.
  • Stranded inventory– To ensure that your inventory can be readily purchased and delivered.

Is Amazon FBA Worth It?

It is worth it in boosting your business to the next level. Not only does it outsource storage but also handles shipping, packaging, returns, and customer services for your business.

Amazon has witnessed impressive growth over the years.

In 2013, the total net revenue stood at $74.46 million. Six years later in 2019, the amount tripled to $280.52.

This is more than three times the actual amount and ever since the growth has been massive.

This is where the problem lies. With the massive growth comes stiff competition and so some sellers might be skeptical on whether Amazon FBA is still worth it.

Luckily, there are some great tools you can utilize to compete in the market.

Apart from Helium 10, Amazon also offers a range of tools to help you get started with your business.

In addition to that, ensure that you have proper negotiation skills when sourcing your products.

If you do it the right way, you will land at an ideal manufacturer for your items and you’ll be set to make good profits.

Can I Lose My Amazon FBA Account?

The simple answer is Yes.

Amazon has a set of rules and guidelines that need to be followed by every seller. Failure to adhere to the rules will result in the loss of your FBA account.

The reasons why some accounts get suspended are due to the following factors;

  • Selling counterfeit items – If there’re are numerous claims regarding the quality of your product, you might lose your account.
  • Listing products without adhering to Amazon Condition Guidelines.
  • Having more than one seller account – You need to seek permission from Amazon before signing up for a second account.
  • Violating intellectual property laws – Copyright issues can have your account suspended.
  • Displaying false or manipulated reviews – Never think of purchasing reviews as Amazon will find you and suspend your account.
  • Selling prohibited products – Ensure that you go through the guidelines regarding prohibited items before indulging in your business.
  • Ignoring your performance metrics – This can range from not replying to emails, canceling several orders to confirming the shipment of an order without sending it out.

In addition to that, compensating your customers in exchange for positive feedback can result in your account being suspended.

Ensure that you keep tabs with your metrics at all times as all of these might result in negative feedback. Negative feedback will increase your ODR and result in account suspension.

  • Listing products that have healing effects might land you in problems. If the product is not classified as an over-the-counter drug in the country you’re selling, avoid selling it. Additionally, don’t deal with products that claim to cure incurable diseases.
  • Failure to follow Amazon Condition guidelines when listing your products. A product should be sold in its original form.

At BanSar, we will help you in all shipping from China to Amazon FBA.

We are also your trusted Amazon freight forwarder in China.

For any questions about FBA, contact us now.

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