As we all know, Amazon is undoubtedly the most prominent online marketplace globally. It is well-known for its diverse product line. However, Amazon does not sell all of those items. On the platform, third-party merchants also sell their own items. This is in addition to Amazon’s own goods. Since about last year, independent third-party merchants have accounted for around 55 percent of total Amazon’s business.
One of Amazon’s fulfillment choices is FBA. Third-party merchants can store their stock and fulfill orders directly or outsource the task to Amazon via the FBA program. FBA has provided vendors with a slew of advantages and has assisted them in growing their businesses. However, it is not without its expenses and difficulties.
If you’re someone who is thinking of selling on Amazon too, you’re undoubtedly wondering, “Is it going to be worth it in 2022?” Continue reading to learn more.
In today’s post. We will go through all that you need to know about the Amazon FBA program in brief. We’re going brief doesn’t mean we will give you half information. We have curated this post so that it will cover all the essential points that should educate you abundantly without taking much of your time. Let’s dive right into it. Shall We?
Table of Contents
E-commerce is Booming
In 2020, the world battled its most serious epidemic. While businesses all across the world are reshaping their strategy and attempting to recover from the disaster that the Covid-19 virus caused. The e-commerce business witnessed a significant increase in demand during these times.
The Industry jumped from 16 to 19% in the past year alone and became a $26.7 trillion mammoth. As the world enters into the metaverse. Every single thing is going digital. The e-commerce sector is projected to grow even higher in the coming decade. There is no stopping it now.
Amazon Dominates the ecommerce sector.
Amazon started as a small bookseller in the middle of the 1990s. Fast forward to 2022, It now provides practically every product imaginable through its world-famous platform. The brand is loved not only by digitally adept millennials but also by seniors in society.
To put things into perspective, let’s put out the Stats.
- On Prime Day sales Amazon does business of $17 Million on average.
- There were 2 Lakh merchants globally with over $225,000 in sales in the year 2019.
- According to a survey, 90% of buyers will prefer Amazon products to other e-commerces.
- In 2020, Amazon shipped 415 Million packages in the month of July alone. And it’s only growing as we enter 2022.
Now talking about the Third part sellers.
- In 2021, 350,000 new vendors joined Amazon marketplaces worldwide.
- Third-party vendors sold 55% of Amazon’s items as of the Fourth quarter of 2020.
- According to reports of “Business today,” Over 70 thousand exporters joined Amazon Global Selling Platform in India & surpassed total shipments of over $3 billion.
- On Amazon Prime Day 2020, over 4,000 Small Manufacturing Bussiness sold goods worth Rs 10 lakh, and 209 merchants became crorepatis.
The statistics are never-ending. We could go on and on. But as we promised. We’re keeping this brief. So, let’s move to the next important part.
Amazon FBA in a Nutshell
Fulfillment by Amazon (FBA) is a one-stop-shop for selling your items to Amazon consumers. All you have to do when you utilize FBA is ship your items to Amazon Fulfillment Centers. The rest is up to them. Amazon keeps your items in storage, and when a client puts an order, they pack, dispatch, and deliver the product to the customer’s home. Amazon also handles refunds and customer service inquiries.
Amazon FBA Fees
- Inventory Fee (Monthly): Merchants will be charged a monthly fee for storing their items at one of Amazon’s fulfillment centers. The price is determined by the calendar month and merchants’ daily average volume.
- Fulfillment Fee: This is the charge per-unit cost levied to fulfill products purchased from the Amazon store to consumers. The charge is determined by the type, size, and weight of the product.
- Unplanned Service Fee: If you sent Amazon any of your items that weren’t properly wrapped or didn’t have the right labels, you’d be penalized.
- Return and Processing Fee: Amazon handles the returns, but it won’t pay for it. Merchants are responsible to incur the return fees.
- Long Term Storage Fee: If your product stays in Amazon’s inventory for over a year. You will have to pay this fee.
Offers For Merchants: Try FBA For FREE*
FBA for the first three months or the first 100 items is FREE!
This offer includes free shipment, warehousing, and withdrawals at any time. Amazon is also giving a limited-time waiver on inbound charges to Fullfilmnet Centers, Inventory costs, and removal fees.
*(Referral Cost+ Closing Fee + Weight Handling Fee) is a typical Amazon selling fee that is NOT included in the wavered charges.
Pros of Amazon FBA
- Logistics are taken care of by Amazon: If you access Amazon’s FBA program, you would simply have to ship your product to Amazon’s FCs, where they will manage warehousing, batch processing, and even customer care on your behalf.
- Wider customer base: When you list your product on Amazon through FBA, it gets exposure nationwide as almost all age groups of people around the country use amazon. The conversion rate is also high.
- Marketing costs are low: Amazon will handle the marketing on your behalf by channeling shoppers to your product if you understand how to employ the appropriate keywords to be featured in the search results.
- Huge inventory: Amazon has warehouses all across the nation that can store a lot of goods. You effectively have access to infinite storage space, for a certain amount of fee of course.
Cons of Amazon FBA
- High Competition: There is a lot of competition. There are several other merchants offering the same product like yours, then you will have to compete for the Amazon Buy Box spot. It is decided by Amazon’s algorithm and the one who gets it has the most amount of sales. If you want to win. A long-term plan is necessary.
- Fees: Amazon has a lot of fees incurred. Right from inventory costs to return and disposable costs. You will have to make enough sales to make sure your cost incurred is less than the profit you make.
More Amazon Guide:
Final Thoughts: Is It Worth It?
Short Answer: YES.
Why? Amazon is, indeed a highly competitive marketplace but, we think it has significantly more advantages than disadvantages. Although It requires some time and money to get started, and, contrary to common assumption, it is not a set-it-and-forget-it sort of business. But hey, which business doesn’t require all of this right? Managing an Amazon FBA company needs education, persistence, and hard work. Is it, however, worthwhile.
We also believe that focusing on a single source of fulfillment, or even a single platform, is just not enough to compete in 2022. An Amazon FBA idea is a fantastic addition to your seller portfolio, but you shouldn’t limit yourself to just that. You’re losing money if you’re not selling on your own website, social media platforms.
Frequently Asked Question:
Can I start selling on amazon from day 1 after registering?
No, After registering, you need to go through a systematic method which includes Listing the product on Amazon, marking your product under the FBA segment, Figuring out a shipping plan, and finally shipping your product to Amazon’s Fulfillment Centers before starting selling.
When will I get the money I made selling on Amazon?
You are entitled to payment for your sold orders seven days after it is delivered. Amazon assures that money for your sales is safely paid into your bank account, including Cash on Delivery purchases.
What are some of the tools I can use to sell on amazon?
Supplier Database by Jungle Scout, Inventory Management by Helium 10, Feedback Whiz among others are some of the tools you can use to boost your Amazon FBA game.
What documents will i need to list my product?
You can check the step-by-step approach of listing your product on Amazon which includes Paperwork necessary to list your items, Associated fees, and other stuff, based on the category and brand you are selling HERE.
Can I sell outside India through Amazon. in the marketplace?
Amazon. only allows you to sell your products within India. If you wish to sell to the United Kingdoms and the United States, you can do so by accessing the Amazon Global Selling Platform.