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If you’re weighing up selling on Amazon, you could be on to a winner. 76% of Amazon sellers are profitable as of 2022, and 69% of brands are pure-play Amazon businesses. One of the secret ingredients to many brands’ success on Amazon is Fulfillment By Amazon, also known as FBA.
Each year the FBA service improves, and Amazon’s customer base grows, making FBA a top contender in the fulfillment industry. There are many benefits to using FBA for your eCommerce business. We’ll delve into Amazon FBA’s makeup and why it remains the top international fulfillment provider for eCommerce businesses of all sizes.
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Amazon FBA (FBA for short) is a fulfillment service operated by Amazon for eCommerce orders. FBA works a lot like a 3PL. Once sellers send their goods to Amazon’s warehouses and Amazon unpacks and sorts them for easy picking, packing, and shipping. They also handle reverse logistics and customer service and offer value-added services.
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Whether you want to explore Amazon FBA as a multichannel selling option or want to build an Amazon-only brand, you’re on the right track. FBA has gained worldwide acclaim for its service from sellers, customers, and even its competitors. But what makes FBA so unique? Let’s find out.
If one characteristic sets FBA apart from the rest, it’s the global reach of its operations. Amazon has over 175 fulfillment centers worldwide, spanning over 150 million square feet. Most of them are in North America and Europe. Alongside its delivery fleet, Amazon also partners with quality shipping carriers globally to expand its shipping capabilities. These traits offer perks like a 2-day delivery window to Prime members. For example, Amazon has:
Amazon is also serious about its technology stack. They’ve already invested €400 million in robotics in the last three years. The aim is to upgrade efficiency rates in fulfillment services like sorting and packing by supporting their staff with automation. Amazon can fulfill orders quickly, no matter their size or composition, because of its strategic sortation center location strategy. Amazon distributes packages to sortation centers according to location, required delivery speed, product type, and items requiring special attention, e.g. hazardous material.
As we mentioned earlier, once your goods are in Amazon’s warehouse, Amazon takes over the entire fulfillment from sorting to shipping, customer service, and returns. Thanks to these qualities, the Amazon FBA system is as close to “set and forget” as eCommerce can get, giving sellers more time to scale their brands. eCommerce businesses also get more sales once they switch to FBA. For example, Amazon reported a 35% increase in sales for FBA sellers. Amazon also comes with a 200 million-strong Prime membership community which acts as a conversion-boosting strategy since the Prime badge signifies fast shipping and encourages more sales. Another characteristic of FBA is its alternative, Fulfilled By Merchant (FBM), which allows sellers to fulfill orders themselves and can be used in tandem with FBA.
Rising shipping costs are a huge concern for eCommerce brands. From sky-high sea shipping rates to global supply chain disruptions, there are a lot of hurdles to overcome to maintain healthy margins. Amazon is one of the retailers taking charge of their driving down costs by controlling more of their supply chains, and FBA sellers are one of the main beneficiaries. For example, Amazon hires cargo to drive down fulfillment times and control where its goods go.
Amazon’s huge order volumes, optimized supply chain, and partnerships with various shipping carriers mean FBA brands can access better shipping rates. You can pass this saving on to your customers.
Amazon’s customers aren’t the only ones that benefit from world-class customer service; FBA sellers do too. Sellers can piggyback off the seamless customer experience to build brand loyalty and drives more sales without the work. According to Amazon, sellers saw a 35% boost in sales when they shifted their goods to FBA in the UK, thanks to the fast delivery that customers love.
When you first start selling on Amazon, the marketplace provides solutions, services, and resources to improve your odds of success. You’ll also get perks from selling under the new seller incentives solution, like a 5% bonus from your branded sales, up to £40,000, and learning resources at Amazon University.
Don’t sell on Amazon? No problem! FBA isn’t limited to Amazon selling. Amazon has a service called Multi-Channel Fulfillment (MCF). With the MCF, you can fulfill orders on other channels using your Amazon-based stock and the FBA fulfillment network. What makes this service even more appealing is that you can automate and control the entire process. For example, using solutions like Multiorders, Skubana, and Sellercloud, you can integrate all your sales channels and fulfillment options.
Without the funds to set up your own warehouses and fulfillment centers or enlist 3PLs abroad, it can be challenging to offer cost-effective and quick shipping. FBA allows you to circumvent this issue through its Global Selling program.
This service grants FBA sellers access to Amazon’s top-grade international logistics capabilities and shipping costs to expand operations without breaking the bank. The Global Selling Program spans 28 countries in Europe, the United States, Australia, India, and Japan. Amazon is also working on expanding the program to emerging markets such as the Middle East, Singapore, Turkey, and Brazil.
Amazon‘s long track record of selling online has helped it pinpoint the different needs, struggles, and competitive advantages its sellers have. Over time Amazon has developed a suite of programs to help sellers succeed, and as an FBA seller, you’re the first in line to secure a spot. Some of the most notable are:
Brand-registered Amazon sellers also gain access to Amazon’s growing brand protection measures. Some of the initiatives and resources to help sellers stay safe while trading on Amazon include:
Accessing accurate data on your Amazon business’ health is crucial to make the right strategic moves to scale. As an FBA seller, you can tap into the analytics, and data Amazon provides on your business to adjust and improve your results.
Top tip: for best results, combine the insights Amazon provides with information from solutions like Helium 10 and Jungle Scout for a more well-rounded view.
Using FBA as part of your eCommerce fulfillment is an excellent way to lower operating costs, drive customer satisfaction, and maintain competitiveness. But the service isn’t perfect. To ensure your business is profitable, keep informed on Amazon’s charges and examine the FBA fees for your products to decide which items are suitable. Finally, reinforce your FBA efforts with FBM via a reliable 3PL, so you stay in stock and selling no matter what. Tweak your approach based on the results you’ll be on your way to building an Amazon selling machine.
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