Dear ChannelAdvisor: Should I Be Using Fulfillment by Amazon (FBA)?

July 14, 2015

Marketplaces John Bryan By John Bryan

dear channeladvisor

As we host webinars, post blogs and interact on social media, we frequently receive questions from online retailers about how to best sell on Amazon. Some questions are specific and technical. Some are broad and strategy-based. Over the next few months (or longer — it depends on how many questions we get!), we’ll be answering your Amazon questions each week right here on our blog.

Have an Amazon question you need answered by one of our marketplaces experts? Just email marketing@channeladvisor.com and check back each week to see if your question was chosen.

We currently fulfill our company’s Amazon orders ourselves, but are considering outsourcing that responsibility to Amazon. Can you explain how Fulfillment by Amazon (FBA) works?

Sincerely,

FBA-or-Nay

 

Hi FBA-or-Nay,

Fulfillment by Amazon (FBA) has proven to be a popular and profitable option for retailers — especially for small and mid-size retailers who want to scale sales but are unsure whether they can handle the cost of a heavy operational lift.

And the structure is simple. Retailers opt into the FBA program and store products in Amazon’s network of fulfillment centers. When a customer orders a product, Amazon picks, packages and ships the item to its final destination. Amazon will then send you the customer order information once the order has shipped, so you’re not losing any valuable customer data. The program will also handle customer service on your behalf. There’s no contract, no minimum quantity and no minimum SKU count. You can also recall your inventory as needed (after paying a small fee, of course).

Though participating in FBA makes your products eligible for Prime status (which includes the popular free, two-day shipping option!), the status isn’t required. You’ll still be able to control your own pricing and shipping models.

Two additional variations of FBA are available for retailers looking to broaden their reach:

  1. Multi-Channel Fulfillment works the same way as FBA, only you can advertise your products on multiple channels (in addition to Amazon) and still fulfill orders through Amazon’s fulfillment centers. With this option, you’re no longer locked in to just selling your FBA quantity on Amazon.
  2. FBA Export is a program that takes FBA international. Amazon identifies which of your products are eligible for purchase by international buyers, fulfills your orders and handles the entire export process — including value-added tax (VAT) or any additional fees.

We can’t make the call for you, but if fulfillment and customer service have become difficult to manage, you may want to consider letting Amazon handle theses details so you can focus on other aspects of your business. If you’re interested in learning more, this FBA deep dive goes into great detail on the fulfillment network.

 

Sincerely,

John Bryan

ChannelAdvisor Team Lead

Marketplace Services