March212012

Is FBA Right For You?

One of the many services offered to Amazon sellers is Fulfillment by Amazon. Primarily, FBA exists so that high volume, high inventory sellers can more easily manage their listings while Amazon handles the sales, shipping and customer support. This saves the seller a huge amount of time since really; all you have to do is ship your inventory to Amazon and let them worry about the rest. Amazon assumes this headache for a modest storage fee, but like any service, FBA has both pros and cons that any business should consider before they decide whether or not FBA is right for them 

On the Pro side are items like being eligible for Free Super Saver and Prime Shipping. These options increase the chance of an FBA listing being chosen over a similar listing that can’t offer the same level of service. This also means that you can increase an item price exclusive of shipping and still have the lowest total price. Also, since Amazon assumes responsibility for customer services, buyers are given access to twenty four seven customer service, which is a feature that can make the difference in capturing a sale. This will also lead to an increase in Buy Boxes captured since with Amazon working to keep a high level of customer satisfaction you are likely to receive higher overall feedback scores. These scores play an important role in determining who gets the Buy Boxes. In addition if you are using a repricer, that gives you an even greater edge in capturing the Buy Box. Lastly, in the Pro column is the fact that FBA can save you an immense amount of time. Without having to pack, print and ship your items you can focus completely on managing your listings and working on the aspects of your business that impact your sales. 

As for Cons, remember that increased item price we talked about before? Since Amazon charges a storage fee if the price is only lowered by a few dollars, then regardless of whether or not you have increased your sale price your margins may remain the same. Also, because of the storage fee items that have very low sales prices, like used books or DVD’s, are not going to make much money. Other issues with FBA is that while it is a great system to use once it gets going you have to take the time to learn it before it really works for the sellers benefit. There are regulations about items and how they are added to the FBA system that can be maddening to learn at first and so like any good tool, time needs to be invested in order for it to pay off. 

Even though using FBA seems daunting at first once you get the hang of it, it becomes a very useful service that helps alleviate the stress that is often associated with online sales. Without the stress you can take the time to build your business and increase your overall profits without having to make yourself crazy with all the details. 

(Source: appeagle.com)

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