What is FBA?

Seller Plans

Having your orders fulfilled by Amazon will cost as much as hiring an individual to fulfill orders in your warehouse. The benefit is that you can pay as you go and avoid employee issues. You have two choices of how to set up your Amazon Seller account: Individual Seller or Professional Seller.

Individual Sellers can avoid a standard monthly fee but will pay more for individually fulfilled orders. They also cannot advertise on the platform or see certain metrics. Pro Seller accounts are charged a monthly fee but can advertise on the platform, get customized reports, and pay less per fulfilled order.

Convenience of FBA

E-commerce professionals across the planet use FBA services to pick, pack, and ship their items daily. FBA fulfillment centers handle all inventory management details and order fulfillment, saving time and money. FBA has specialized services to help businesses grow without investing in infrastructure or staffing.

Some FBA services include:

• FBA Small and Light: Low-cost, small, and lightweight FBA inventory reduces the cost of fulfilling orders.
• FBA Subscribe & Save: Offer discounts on eligible FBA products for repeat customers.
• FBA Pan-EU: Offer fast delivery in Prime-eligible European countries.
• FBA Export: At no extra charge, expand your FBA business to more than 100 countries—minus the complexities of international selling.
• Multi-Channel Fulfillment: Sell from your own or third-party e-commerce sites, with Amazon picking, packing, and shipping to your customers.
• Amazon FBA’s Pay-As-You-Go: Ensure that you only pay for storage space and the orders that FBA fulfills. The cost of shipping is included in your fees, with no extra charge for Prime FREE Two-Day Shipping and free shipping on eligible orders. Fees for Selling on Amazon and optional services may apply. Using FBA to fulfill your orders has the benefit of Amazon’s 24/7 customer service team.

Disadvantages of Using FBA

While FBA can be pretty convenient for business owners and retailers, it does have a few downsides. These problems boil down to inventory issues and fees you must pay while using the service.

Inventory Issues

Amazon has established multiple warehouses and fulfillment centers in prime locations over the last few years, including pop-up locations. With all the space they’ve acquired, you would think there would be plenty of space for inventory.

However, reports from sellers indicate that Amazon tends to mishandle inventory when it arrives at its warehouses. Items have gotten lost in the warehouse or on the receiving dock while waiting for a storage space to open up. While Amazon has a fulfillment warehouse system designed to keep track of all inventory, they have had to keep track of all of it since a massive volume of commodities passes through daily.

Even if a business’s inventory management skills are perfect, there is a chance for items to be out of stock thanks to mishandling. This could result in a loss of profits and canceled orders; something businesses absolutely do not want.

Fees

Fulfillment fees arise according to the shipment’s packaging and handling needs. Fees will also vary depending on size and weight. Storage fees are similar, taking into account the shipment’s volume and size. The shorter the stay, the lower the fee. The longer the stay, the higher the fee. Other standard seller fees will include the customary 15%-18% of the product price that Amazon absorbs for providing its services.

Having your orders fulfilled by Amazon also comes with various other fees. In addition to the fulfillment costs, there are possible storage and disposal fees.

Here are the most common FBA fees:

• Inventory storage fees: Charged for all items stored in an Amazon fulfillment center and based on your daily average volume of inventory measured in cubic feet. See how to determine the product size tier for your items.
• Long-term storage fees: Assessed monthly for all items stored in a fulfillment center for more than 365 days. Maintaining sound inventory health can help you avoid long-term storage fees.
• Fulfillment fees: Charged per unit for picking and packing your orders, shipping and handling, customer service, and product returns. Use the FBA revenue calculator to estimate fees and see how to preview your fees.
• Unplanned services fees: Charged when inventory arrives at a fulfillment center without proper preparation or labeling, making unplanned services required.
• Removal order fees: Amazon can return or dispose of your inventory in a fulfillment center for a per-item fee.
• Returns processing fees: Charged on orders when Amazon provides customers with free return shipping.

Customer Service

There will always be glitches in a system, including order fulfillment, so good customer service is imperative for any fulfillment service. Amazon’s customer service is usually hit or miss, depending on who you’re asking. If you’re a customer, you usually will get a satisfying experience with a team dedicated to resolving issues as quickly as possible. This includes customers who have ordered from a FBA-enrolled business, as part of their services include outsourced customer service.

However, the same can’t be said for those enrolled in the FBA services. Sellers reported having frustrating experiences with their customer service team. This includes waiting a long time to hear from a representative, having to communicate over multiple emails, and difficulties resolving issues promptly. A business could handle customer service independently, but dealing with angry customers is not pleasant, which is why it’s easier to have a third party handle customer service, which makes FBA’s slow and irritating customer service more egregious.