Fulfillment by Amazon or FBA can seem like a daunting business venture, especially if you don’t have extensive experience in the world of e-commerce. But fret not for this comprehensive guide on how to start an Amazon FBA business will walk you through the process step by step.
According to Statista, 73% of Amazon sellers in the United States take advantage of FBA. This goes to show how beneficial using this service can be. Let’s check out some of the advantages of using FBA and we’ll have some comparison between the different fulfillment options in Amazon.
Amazon Fulfillment Types
At the moment, there are three types of fulfillment options for Amazon sellers. These are:
- Fulfillment by Amazon – FBA
- Fulfillment by Merchant – FBM
- Seller Fulfilled Prime – SFP
By definition, FBA is a fulfillment service where sellers are allowed to store their products in Amazon’s Fulfillment Centers. Upon sale, Amazon will then pick, pack, ship, and handle customer service on behalf of the seller.
On the other hand, FBM is the opposite. It’s a fulfillment type where merchants opt to handle shipping, packing, and inventory instead of being handled by Amazon.
Finally, SFP is a fulfillment program available to Amazon Prime sellers, which allows them to ship from their own warehouses and control their own fulfillment. By displaying the Prime badge, sellers are committing to fulfill orders with two-day delivery at no additional charge for Prime customers.
For more terms, check out our post on Amazon Acronyms and Abbreviations.
Advantages of Using FBA
Some of the advantages why most Amazon sellers utilize FBA are as follows.
1. Effortless Logistics and Shipping
Handling your own fulfillment can be time-consuming, not to mention the headache associated with it. With FBA, Amazon will take care of logistics and shipping for you, so you can focus on scaling your business.
2. Discounted Shipping Rates
Amazon has tie-ups with the biggest shipping carrier thus allowing them discounts on shipping costs. Some eligible items for orders of $25 and up also come with free shipping via FBA.
3. Returns Management Off Your Bucket
If you think managing fulfillment is a pain, then try handling returns. With FBA, Amazon also manages these merchandise returns.
4. Free Customer Service Management
Amazon has a reputable customer service team providing exemplary support to their customers including FBA seller customers. With Amazon managing your customer service, you can rest assured your customers are in good hands.
5. Potentially Unlimited Storage Space
Finding the right warehouse for selling businesses can be a challenge since you have to consider the warehouse size, the location, the charge, and so on. With FBA, there are no inventory minimums and you can send even just one product. If your products sell quick enough, you also get unlimited storage.
6. Fast Delivery
With hundreds of Amazon fulfillment centers across the globe, customers can get their products delivered fast.
7. Fulfillment of Orders From Other Channels
Via Multi-channel Fulfillment service or MCF, you can sell products on other channels while still getting Amazon to fulfill the orders.
8. More Time to Grow Your Business
With logistics, shipping, returns management, and customer service management off your load, you will have more time to grow your business. You can focus on market research, SEO, product development, advertising campaigns, business partnerships, and so on.
Speaking of advertising, SellerMetrics offers an Amazon advertising software that can also help you grow your business.
9. Gain Customer Trust
Amazon ranked as the second most trusted brand in the United States according to a 2020 inaugural report. When potential buyers see your products being fulfilled by Amazon, you also gain that irrefutable Amazon trust.
Disadvantages of Using FBA
There are no perfect services. No matter how good a service is, there are always some drawbacks. A couple of disadvantages of using FBA are as follows.
1. FBA Fees
Well, it’s not free. Managing logistics and shipping alone on your own can be pricey. This is the part where it’s worth mentioning again that 73% of Amazon sellers are using FBA. This suggests that all the FBA fees can be worth the pay.
For more insights on FBA fees, check out our post on Cost to Sell on Amazon FBA via Private Label.
2. Loss of Control
Handling your fulfillment and shipping to another business entity requires you to fully trust that company to fully control your logistics. You cannot offer an exemption on the shipping fee to a close friend or a relative. Moreover, you also do not get to choose how your products are sorted in the warehouse. You have to fully trust Amazon to do its job for you on the fulfillment side.
How to Start an Amazon FBA Business?
There are 6 main key steps to getting started with Amazon FBA. We’ll discuss them in detail as we go along.
Step 1: Amazon Seller Registration
To register your Selling on Amazon account for FBA, go to www.amazon.com/fba and click on Get started, then select Add FBA to your account. If you do not have a Selling on Amazon account, click on Register for FBA today.
As simple as that, you’re done with step 1.
Step 2: Product Listing Creation
A product listing refers to the product page for the items that you sell on Amazon. This includes the title, the images, product descriptions, and, of course, the price.
There are two main functions an Amazon product listing performs:
- It allows your products to be found in Amazon searches, and
- It gives you the opportunity to convince potential buyers to purchase your products. In other words, to sell your product.
Now you have the product listing, it’s time to have your actual products prepared.
Step 3: Product Preparation
Amazon states that your FBA products need to be “eCommerce ready.” That way, they can be securely transported throughout the fulfillment cycle. Check out the Prep Guidelines below so you can properly prepare your merchandise.
For additional packaging and prep requirements, check out Amazon Seller Central’s post.
This part can be quite tedious as each of your items needs to be prepped and packaged. If you have the budget, you can take advantage of FBA Prep Services. The charge is between $0.50 to $1.10 for standard-size items. For oversized items, the charge is between $1.0 and $2.30.
Before we go to the next step, we have to discuss product labeling, which is an important part of product preparation.
Amazon requires products being sold to have product labels as their receiving systems and catalogs are barcode-driven. Product labels will associate the product with the seller account and these labels can be printed from Seller Central. To learn more about Amazon barcodes, check this post on Explanation of Different Amazon FBA Barcodes.
Printing your labels is something you don’t want to cost-cut since you would really want quality labels. Here’s a checklist when it comes to printing quality labels:
- Use a thermal transfer or laser printer (inkjet printers are more susceptible to smearing and fading).
- Make sure you’re printing with a resolution of 300 DPI or greater.
- Use proper label paper. Litho, semi-gloss, and high gloss paper are recommended.
- Test for scannability.
Amazon also offers to label your products via FBA Label Service for $0.30 per item.
Step 4: Assigning Inventory to FBA
After the product prep, you can now assign your inventory to FBA.
- Log in to your Seller Central account. Then go to Inventory > Manage Inventory.
- On the Manage Inventory page, select the products you are adding as FBA listing by checking the tick box next to them on the left side. Then click on the Actions menu and select Change to Fulfilled by Amazon.
- On the next page, either click on the Convert & Send Inventory button or the Convert button. Use the latter if you’re not quite ready yet for your shipment.
To start your shipment if you selected Convert, you can select Send/Replenish Inventory from the Actions menu on the Manage Inventory page.
After the steps above, you will be prompted to the shipment creation workflow to create a shipping plan.
Step 5: Shipping Products to Amazon
The shipping plan via the shipment creation workflow specifies the products you want to send to Amazon, the quantity of each product, the preferred shipping method and carrier details, and whether you want to prep and label your inventory yourself or if you want Amazon to do it for you.
How to Create a Shipping Plan
- From the Send/Replenish Inventory page, click on Create a new shipping plan. To add products to an open shipping plan, you can instead click on Add to an existing shipping plan.
- Confirm your ship-from address. This is the location where your shipment will be picked up which can be your home address, business address, or your supplier’s warehouse address. To change the ship-from address, click Ship from another address.
- Confirm the packing type of the products you are shipping to Amazon, whether they are Individual products or Case-packed products. The latter are multiples of the same products with each case containing the same quantity in the same condition. Note that an ASIN (Amazon Standard Information Number) with multiple parts must be shipped in a single package.
- Select Continue to shipping plan.
- The Set quantity page consists of three tabs:
All Products – This shows all the products you have included in your shipping plan.
Information required – This shows the products in your shipping plan which requires additional information.
Removal required – This shows products that are not allowed to be sent to Amazon fulfillment centers due to certain FBA restrictions.
To set the quantity, go to the All Products tab, then type the number of each item under Units.
For products not on the list that you want to be included in your shipment, click Add products on the top right section, put in the product name, ASIN, or MSKU, then click Search my inventory. Click on Add Product for each item you wanted to be added. Note that only previously converted products are searchable.
To remove the products, simply click X in the Remove column.
Step 6: Tracking Your Shipment
Tracking your shipment can be done on the Shipping Queue page, which provides details on all the shipments you are working on and those you have sent to Amazon.
The Shipment Summary page, on the other hand, shows details of a specific shipment sent to Amazon.
To open the Shipping Queue page, click on the Inventory drop-down menu in Seller Central, then select Manage FBA Shipments. There are two tabs on this page:
Shipments tab – Shows the status of all the shipments you have created and are creating to send to Amazon fulfillment centers.
Shipping plans tab – Shows all the shipping plans, the plan IDs, and the status of each shipping plan.
The Shipment Summary page can have up to six tabs, which are:
- Shipment events tab – This lets you track your shipments from creation to completion. You can see the sequence of the shipment’s statuses, along with information about the shipment’s location.
- Tracking shipments tab – Here you can enter your carrier’s tracking information to check the tracking details for small-parcel shipments. For Less than Truckload (LTL) or Full Truckload (FTL), you need to contact your carrier.
- Shipment contents tab – Shows the number of units for which Amazon has confirmed receipt.
- Problems tab – This tab shows up if there are any problems with your shipment. It will tell you of the actions that you need to perform to fix the problems.
- Reconcile tab – Shows information on how to reconcile units in your shipment if there are any discrepancies between what you have sent and what is received, usually with the unit count.
- Pallets tab – Shows information about the pallets you have sent to Amazon fulfillment centers.
Once your carrier has picked up your shipment, or if you’ve dropped it off at your preferred shipping center, mark your shipment as Shipped on the Shipping Summary page.
For shipments with a Delivered status, allow 24 hours before contacting your carrier to confirm the delivery location and the receipt of signature.
A Checked-in status means that the shipment has arrived at the fulfillment center. The status will be updated to Receiving once the fulfillment center starts scanning the barcodes and receiving the inventory.
It normally takes 3-6 days from when your shipment is delivered to be received at the fulfillment center.
Understanding the steps on starting your Amazon FBA business is vital for the success of your shipping plan and of your business as a whole. We hope this guide has given you a much clearer picture of how to confidently start your Amazon FBA business.
If you have questions or insights to share, please feel free to post them via the comments section. Please also consider joining our Facebook Group where we discuss any questions you may have about running an Amazon business.
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