As an online retailer selling on the Amazon marketplace, a key decision you will need to make is whether to use Fulfilment by Amazon, or whether to handle your fulfilment either in house or through an additional service.
But what exactly is Fulfilment by Amazon?
Fulfilment by Amazon, also often referred to as FBA, gives you access to Amazon’s next-day delivery options and trusted customer service. In other words, FBA is a service available to all of Amazon’s third-party sellers, where you can hand over fulfilment – packaging, sorting and shipping – of any listing to Amazon. Basically, you sell it, Amazon ships it.
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Why should I use Amazon FBA?
There are huge benefits to any seller using FBA, the biggest arguably being increased sales, which can ultimately maximise business growth. In fact, a 2014 survey showed that 71% of FBA respondents reported a 20% increase in unit sales since joining FBA. Several reasons Amazon can maximise your company’s growth include;
- Fewer Business Operations
FBA eliminates any fulfilment shipping efforts for sellers, by handing over warehouse management and packaging to Amazon, not to mention the associated fees.
- Increased Customer Satisfaction
With FBA, you’ll have access to Amazon’s acclaimed customer service, and you can rest easy knowing that they’re providing your customers with the best service possible. The best part is that while this is happening, you can invest your time elsewhere, and you don’t require the need for customer service specialists.
- Quicker Shipping Rates
In addition to 24/7 customer service, FBA enables quicker shipping rates, and is eligible for Amazon Prime shipping and delivery tracking. As FBA inventory is shipped by Amazon, they can be processed and shipped faster than products sent directly from the retailer.
- Buy Box Share
FBA is a great way to boost your chances of achieving buy box placement (the box on a product detail page where customers can begin adding items to their shopping cart). There are several factors that influence this, such as shipping, seller rating, price, and of course fulfilment status.
- Amazon Branding
Aside from all of the benefits already listed, FBA goes way beyond being solely a fulfilment solution, and is being leveraged worldwide as a marketing tool. At the most basic level, by using FBA you have instant access to Amazon Prime customers, who are among some of the e-commerce giant’s most loyal and active customers. Your listings are also more competitive, and you will have access to international marketplaces.
So how does FBA work?
FBA is simply integrated with your selling account, offering a flexible, pay-per-use model without minimum inventory requirements, making it easier to sell in the EU depending on your comfort levels. Start by determining which type of FBA programme is right for your company;
- FBA Export
FBA Export is a programme available through FBA which enables you to extend your offers to customers in up to 26 European countries, at the simple click of a button. This approach is ideal for all FBA sellers, and is at no extra charge or risk to you as the seller. It’s important to be aware, however, that FBA Export doesn’t list your products on other Amazon marketplaces, instead it enables your products to be shipped directly to international customers who are shopping on your home Amazon marketplace.
- European Fulfilment Network (EFN)
By using European Fulfilment Network, you can sell on all of Amazon’s EU marketplaces from UK inventory, and benefit from them dealing with the customer service and returns handling in the customers local language. This is a great programme to leverage in order to test which products will perform will across the EU, however there will be a single ‘EFN fees’ structure across Europe.
- Multi-Country Inventory (MCI)
When using Multi-Country Inventory, you are able to send your most popular inventory directly to Amazon Fulfilment Centres in each of the countries your products are listed, and they will be stored close to local customers. This programme helps improve your company’s sales conversion by getting your international orders to customers faster, and at a reduced cost, which is ideal for sellers who have a clear growth plan for the EU.
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Remember, FBA goes beyond Amazon
It may come as a surprise, but FBA can fulfil other orders, not just those associated with Amazon. The reason being that Amazon’s FBA programme has multi-channel fulfilment, meaning you can list and sell your FBA inventory on other channels such as eBay and your own website, and fulfil those orders through FBA.
There are several steps we would recommend you take to prepare for any programme; firstly, get your bestselling products into FBA, secondly book your shipments into the Amazon Fulfilment Centre in good time, and finally, estimate the required stock levels. Do remember, however, that FBA won’t be appropriate for every company, and it’s important that you determine your budget, margin and profitability for using Amazon as a whole, as well as for specific products.