Fulfilment By Amazon (FBA) has transformed thousands of online businesses, helping them to save time, drive more sales and test new international markets with minimal risk. But how exactly does it work? What is Fulfilment By Amazon? How much does it cost? There are so many questions when it comes to FBA, but don't worry, here you can find the answers.
What is a fulfilment service?
A fulfilment service is a third-party service that prepares and ships orders for you, it's a great alternative to you doing the heavy work by yourself, and avoid bad experiences for your customers.
Why would I choose a fulfilment service?
Using a fulfilment service is a smart move for your business if you can't seem to keep up with orders by yourself. Amazon - as you know - is a forever expanding marketplace who on average ship 1.6 million packages a day globally. For a small business, it can be tough to stand out, but using a fulfilment service means that you can almost guarantee good customer service. It'll impact your business by driving more sales and traffic to your site, meaning business growth.
What is FBA?
Fulfilment By Amazon (FBA) is a group of fulfilment solutions offered to your business by Amazon, so you can trade and fulfil orders fast and easily. It is Amazon's version of a fulfilment service, and aims to help sellers grow their online business at home and internationally by giving them access to Amazon’s world-class fulfilment services. It is a channel that is separate from your Amazon seller account - it needs incorporating into your account manually - so this is not compulsory.
How does FBA work?
The basic understanding of FBA is that you sell your products, but Amazon does the picking, packing and shipping. You're basically paying Amazon to process entire orders for you.
See other services Amazon FBA offer, comapred with eBay GSP here.
How do I sign up?
If you are a new customer, you can sign up for FBA using the link here. If you are already selling on Amazon, you can add Fulfilment By Amazon to your account here by accepting the User Agreement for FBA. Then simply follow the instructions online to complete the simple enrolment process.
How much does FBA cost?
Amazon charges you for what you sell using Amazon FBA, the standard charges you will receive are calculated by your storge fees plus your fulfilment fee. This is the amount Amazon will charge you each month per unit.
Be aware that there are variable fees and fixed fees when it comes to payments, depending on:
- The size of your stock fulfilment rate
- How much you sell
- The weight of your products
You can also calculate your estimated products, by using the revenue calculator:
Simply type in the product (using the description or ASIN code)
Then select your product:
Then type in the neccessary details provided, then Amazon will calculate the net profitability of that specific product.
This is a great action to take when deciding which products will be best to process through FBA, although it can be time-consuming.
The table below shows the costs of standard packaging in Fulfilment By Amazon Europe. The cost of each package depends on its size and weight.
This table shows the pricing for oversized packages.
Monthly storage costs are determined by measuring the cubic foot of the storage unit. The monthly inventory storage fee for items stored in United Kingdom fulfilment centres is £0.48 per cubic foot during the months of January through September and £0.68 per cubic foot during the months of October through December.
The monthly inventory storage fee for items stored in Germany, France, Italy, and Spain, Poland and Czech Republic fulfilment centres is €20 per cubic meter during the months of January through September and €28 per cubic meter during the months of October through December.
See if the benefits of Amazon FBA outweigh the fees and see detailed explanations of the fees that Amazon FBA have.
Finally, here are the size guidelines for packages by Amazon FBA:
To view a full list of Amazon FBA's size guidelines and fees - plus the full updates for 2017 - click here.
1) The Amazon Prime qualification
Amazon Prime by Amazon was first introduced in 2005, since then it has become a global success. Offering Prime service to your buyers will give an indication that you are a reliable seller who will give guaranteed delivery dates and first class service. The service costs £79 per year for UK customers and $99 for US customers. It offers buyers a range of benefits including:
- FREE One day delivery
- Guaranteed delivery dates and times
- Unlimited same-day delivery (evening)
Amazon Prime has not quite kicked off in the UK as much as it has in the US, but almost half of all purchases made in the UK last year were on Prime accounts, so it's certainly getting there. So, offering your buyers Prime services will further spark a positive reputation for your business.
More buyers around the globe are signing up to Amazon Prime, in the UK alone Prime memberships have risen by 35% and just under half of Amazon account owners in America own an Amazon Prime account. This is important for Amazon FBA users, as the option to offer Prime services qualifies with the FBA fees. Offering buyers Prime service reassures them you are a reliable seller, and customers feel they are getting their money's worth because if your business does not offer Amazon Prime products, Prime customers will not shop at your store. It also means that the more products that are available with Amazon Prime, the more customers will sign up for the added service. This adds to the huge benefits of this service is the almost guaranteed positive customer service this provides to your buyers. Both Amazon and your customers get the service, and you didn't lift a finger.
Of course, if you do not wish for Amazon to process your orders, but want to offer your customers Prime products and service, there's always the option to sign up to Amazon's Seller Fulfilled Prime. This offers you Prime privileges, but your business manages everything from your own warehouse(s). To find out more about Seller Fulfilment Prime, take a look at the video below.2) The buy box
By using FBA will get an increased chance to secure the buy box, which allows a customer to add products to their basket from the side-bar of their page. See example below:
This box usually appears at the side of products when a customer is viewing it. Other sellers will the appear underneath the add to basket area, increasing their chances of a sale. It's important to appear on a buy box, as sellers are more likely to purchase from one. Increasing your buyer box percentage means you are more likely to appear in other sellers products. 82% of purchases happen through a buy box - like Prime - it's a good idea to give buyers that opportunity to see your products and prove you're a reliable seller with the FBA benefits to seal the deal.
However, it is not guaranteed that you will get the buy box, your business needs to perform high to prove to Amazon you are a reliable seller.
Joshua Price is an online marketplace expert, he says the buy box is very beneficial for sellers to try and keep their reputation high so that they appear on the buy box:
"If your reputation is low, you could lose the buy box, and it's because your reputation is low it damages the algorithm that Amazon uses to decide on who gets the buy box. So, you’re not going to get anywhere near as many sales as you would with a buy box, also if you’re selling your own labelled products, you’d also drop in the search ranking, so it can be very damaging to your business”.
3) Multi-channel services
FBA also provides a multi-channel fulfilment service, meaning your business can use FBA to serve customers across different selling channels, such as eBay, Flubit, your own personal site etc.
4) Trusted customer service
Amazon's main initiative is to make sure their customers get the best service, so by running your business with Amazon FBA, you'll be getting the fast and efficient customer service that Amazon promises each and every one of their customers.
5) Fast growth of your business
This service gives your business the chance to progress and grow, if you provide good service your customers are happy. So they are more likely to return to your online store and make more purchases in the future.
See how else Amazon FBA can help you grow your eCommerce business.
- 83% of FBA users - who joined primarily to gain access to Prime customers - said that they were able to do this purely by joining FBA, and it allowed them to achieve this goal.
- 79% of Amazon FBA users said that their business was able to expand.
- 78% of FBA users said that after joining the service, their business saw a significant increase in sales.
Of course, where there are loads of advantages to the fulfilment service, there will be a few disadvantages, after all, nothing's perfect:
- Fixed fees
One possible issue is no matter how well your business is doing, Amazon FBA will charge you the exact same fees. This may be difficult to keep up with if your business does badly one month.
With FBA - or any third party service - you're essentially putting your business effectively in the hands of another, therefore if any mistakes are made in the fulfilment process, your customers will hold you responsible.
By using FBA, you're going to send your products to Amazon, meaning you will be shipping the way Amazon wants you too. This means you won't be able to cut corners with cheaper packaging. Amazon do this so you don't risk falling behind their high expectations of sellers using FBA.
The cost of the service itself may not be the best for your business, own branded products, for example, may cost more to sell than their worth. You may not sell enough to meet the prices of FBA. The fees that Amazon charges are completely unavoidable, so it's a large commitment.
The main fees for FBA are:
- Monthly storage
- Weight handling
- Picking and packaging
- Order fulfilment
These fees can be tricky to calculate, so make sure that your business stays on top of these calculations, although as a business owner this can be time-consuming (as I mentioned in the example earlier). More importantly, you need to make sure these fees are affordable, or you may lose out on profits.
- No free trial
Unfortunately, there is no free trial with Amazon FBA which can be a disadvantage if you cannot afford to pay for a trial service. If you then find that FBA is not the right fit for your business, it may mean you have wasted money, which is not ideal for a business getting off the ground.
Here's a list of all the countries Amazon FBA, and take a look to see which services operate in different countries:
|ISO Country Code||Country Name||Standard Shipping||Express Shipping||Priority Shipping|
|KR||Korea, Republic of||Yes||Yes||Yes|
|TW||Taiwan, Province of China||Yes||Yes||Yes|
|TT||Trinidad and Tobago||Yes||Yes|
|AE||United Arab Emirates||Yes||Yes|
|US||United States of America|
|VE||Venezuela, Bolivarian Republic of||Yes||Yes|
|BA||Bosnia and Herzegovina||2016|
|TZ||Tanzania, United Republic of||2016|
Shipping to other countries comes with some challenges, such as item conditions, return fees and mostly item restrictions. There are items that FBA will not accept including:
- Any product that cannot be lawfully sold and distributed.
- Alcoholic beverages (including non-alcoholic beer).
- Sky lanterns or floating lanterns.
- Vehicle tyres.
- Gift cards, gift certificates and other stored-value instruments.
- Products with unauthorised marketing materials (e.g. pamphlets, price-tags, or other non-Amazon stickers) Amazon will not accept pre-priced labels or products.
- Products that are larger than 144 inches by 96 inches by 96 inches or weigh more than 150 pounds.
- Any Products that require prep that have not been prepped according to FBA Packaging and Prep Requirements.
- Loose-packaged batteries.
- Damaged or defective units: used condition products may have damage as long as the product is labelled with the appropriate condition.
- Products with labels that were not properly registered with Amazon before shipment or that do not match the product that was registered.
- Products that have been illegally replicated, reproduced, or manufactured
- Products that Amazon otherwise determines are unsuitable.
These restrictions are specifically to guide online sellers and if any seller is caught trying to send a restricted products, your Amazon account will be terminated.
Find out how else you can avoid account suspension on Amazon with this complete guide.
Amazon FBA may have become one of the industry’s most successful fulfilment services, but for those of you with items listed under £7, I’m sure you’re already well aware that it isn’t a viable or cost-effective option for these goods.
However, what you may not realise is that Amazon does, in fact, operate an alternative fulfilment service, designed specifically for lower-value, fast-moving, small and light products. Whether you’re already familiar with FBA Small and Light or not, below we have outlined pretty much everything you need to know.
So, what exactly is FBA Small and Light?
Amazon’s newest fulfilment service, FBA Small and Light, is a fulfilment solution for fast-moving products that meet specific size, weight and price requirements. It allows you to list items that qualify for this and because your items qualify, Amazon will charge you less in fulfilment costs. You will still be eligible for Prime members with free 1-3 days shipping and standard 3-5 days shipping for non-Prime customers, and free delivery on orders over £20.
FBA Small and Light UK
While FBA Small and Light has been popular in the US since 2015 it was only launched in the UK (and Europe) in 2016. It proves to be successful among small to medium-sized businesses and grows every day.
What products are eligible?
These are the conditions of eligibility for Small and Light:
- Products must weigh less than 250 g (including packaging weight)
- Products must have dimensions less than 30 x 22.4 x 2.4 cm
- Products must be priced under £9
To really master the ways around Small and Light here are a few steps you could take:
- Set competitive pricing: by passing along fulfilment savings to your customers.
- Use sponsored products
- Gain exposure and increase sales by creating promotions at no cost on Amazon’s Today’s Deals page.
What are the fees?
Fulfilment package type
Outbound shipping weight
Fulfilment fee – Small and Light
Fulfilment fee – regular FBA
23 x 15 x 0.4 cm
0 – 100g
30 x 22.4 x 2.4 cm
0 – 250g
Your outbound shipping weight is your products weight and your package weight combined. As you can see, it's certainly beneficial to sign up, as you will save £0.49 on smaller products and £0.54 on larger products.
How do I ship my products to Amazon FBA?
To ship your products over to Amazon FBA, the first step is to create a shipping plan. To do this you need to create a list of products that you wish to send over to Amazon FBA.
For a full tutorial on how to create a shipping plan, and submit to Amazon FBA, click here.
For online sellers looking to expand their business across Europe, it may benefit looking into Pan-European FBA. It's the easier way of processing orders to the four Amazon European marketplaces:
- Germany (Amazon.de)
- Italy (Amazon.it)
- France (Amazon.fr)
- Spain (Amazon.es)
How does it work?
Simply send your products to the fulfilment centre in the country you choose, then pay the small costs, Amazon will then pick, fulfil and handle delivery for you.
Why should I use Pan-European FBA?
At no extra cost, you get access to four fulfilment centres in the four marketplaces. With this in mind, customers will receive your items quickly, at lower costs:
As shown above, this table compares the payments you would make through EFN (European Fulfilment Network) to the Pan-European FBA Fee. As you can see, you only pay the local fulfilment fee of the marketplace where the order is placed. Meaning you can efficiently grow and expand your business, by reaching millions of visitors to these marketplaces. Do enquire about VAT though, as a tax charge may be required.
How do I get started?
To get started on Pan-European FBA, simply have an Amazon account set up, and view the sign-up page here to get you going. Just note, your product must be available to all five of the Amazon EU marketplaces. Amazon will then automatically trans-ship your products to the countries where there will be expected demand.
Click here to learn more about how you can expand your business to Europe with Amazon.
Fulfiment By Amazon can offer tremendous value to your business, by providing your buyers with world-class customer service, and ultimately allowing you to grow your business across Amazon's international marketplaces. On the other hand there are, of course, disadvantages such as unavoidable costs and lack of individual brand recognition, so it's so important you make the best desicion for your business.
Have you used Amazon FBA before? Share your experience by leaving a comment below.