Amazon FBA meaning
Amazon FBA is a Facility which is given by Amazon to its sellers, in this program a seller has to pass his headache of packaging, storage shipping and delivering of the products he sells, to the Amazon. Customer care is also handled by the Amazon in behalf of the Seller.
If the customer decides to return the products then Amazon will take care of this as well.
This program is availed by almost 75 per cent of the sellers associated to the Amazon. And it seems to be very beneficial to them. Now sellers do not have to worry about most of the selling procedures involves.
What is MFN
MFN refers to the Merchant Fulfilling Network, this is not any sort of program by amazon but if seller has not subscribed for the FBA then every aspect of the selling including packaging, storage, shipping and delivery has to be taken care by seller which is called by Amazon MFN. Seller has to incur every cost related to fulfilling in MFN.
How does FBA Works
As we have discussed above that FBA is a facility to the sellers with Amazon so that they can concentrate on selling of the product not on the fulfilling procedure. FBA works by taking care of packaging, shipping, warehousing of the product from the seller. Simply the seller has to send his product to the Amazon, then Amazon send that product to the warehouse owned by it. When customer places the order then Amazon dispatches the product from its warehouse to the customer.
Cost of Amazon FBA
The cost of Amazon FBA is depending on some factors or as per the services given under FBA program:
Types of Goods: There are two types of goods, dangerous goods and non-dangerous goods. Those goods which consists chemicals or gun powder or anything that could harm others or have effects on other goods are considered dangerous goods. Dangerous goods have more cost than normal goods.
Size of the goods: If the size of the good is more than the general size than it will cost the seller more. For example: Television.
Fulfilling fees: There is a fulfilling fee on every product that comes under FBA program. This fee is applied on the picking, storage packaging and delivery of the product. Fulfilling fees is determined on some other factors and those are: apparel and non-apparel, however the pricing is sort of similar for both.
Inventory occupied: Amazon charges monthly fee from the FBA seller for the use of inventory or warehouse facility of the Amazon. This fee is charged on monthly basis.
Extra inventory charges: If the products in the inventory are not sold in the time frame of one year then FBA seller has to incur extra on inventory.
Advantages of Amazon FBA
Lower responsibility: With Amazon FBA facility the seller does not have to worry about the fulfillment procedure of the products he sells.
Saves time: Amazon FBA saves lot of time of the seller and allowed them to focus on other things like marketing.
Inventory support: That seller who could not have inventory facility of his own, has benefited a lot from this program.
Amazon prime: The FBA seller gets the Amazon prime membership and avail the prime shipping facility to the customer.
Customer support: If you are a FBA seller then you will get customer support for 24/7.
Storage facility: Amazon has larger warehouse across the world, a small seller gets the chance to access that entire place.
Disadvantages of Amazon FBA
Less products: If the seller is small and do not have much products to sell then Amazon FBA is not for him.
Less branding: If you have bought anything from the Amazon then you must have noticed the Amazon logo on the packaging, this is branding, which FBA seller could not get to do because the product was with the Amazon the whole time.
Costly: That seller who is new to selling business or has very small business, for him Amazon FBA might be very costly.
Well we have discussed mainly about the FBA, let’s discussed about some Advantages of MFN as it would be very beneficial for new sellers:
Control: If you are looking to have more control over your business then you should avail MFN.
Dimension of the product: Amazon charges more on the products which are oversized or very heavy. This cost might not be there if MFN is availed.
3PL: 3PL refers to third party logistics some of which charges relatively lower than Amazon sometimes so a seller can take their services instead.
Conclusion
In this article we had A deep discussion about the Amazon FBA service a seller can be very benefited availing this service most of time but a person should do a thorough study of the advantages and disadvantages of FBA and the cost associated with it before going for anything. However, if you are interested in learning about “How to start E-commerce business” then you must click here.