Is Selling on Amazon FBA Worth It? Beginners Guide

Over 2 million sellers are currently leveraging Amazon’s FBA program, without this program we’d have struggled to get our business off the ground. To help you decide whether FBA is right for you, I will be answering this question; Is selling on Amazon FBA worth it?

Enrolling in the FBA program means you get to take advantage of Amazon’s shipping and fulfillment services. FBA sellers also benefit from the Amazon Prime shipping program.

Amazon FBA – The Basics

FBA, or Fulfilment from Amazon, entails sending your merchandise to Amazon for distribution and storage. It is easy; a client places an order, Amazon picks, packs and ships the purchase for you. Among the big plus points is they'll also deal with your refunds and returns -- that alone leaves the charges worth it. Amazon FBA requires out the hassle of fulfilling orders and making sure your goods reach clients securely and in time.

Amazon sellers usually refer to reselling as either online arbitrage, retail arbitrage or wholesaling. These three models are slightly different, but the objective is the same, buy low, sell high. As a private label seller, you’re entirely in charge of your products and your brand, which means your profit margins are usually higher too.

Amazon pays sellers onto a bi-weekly cycle. Amazon calculates your earnings, deducts the mandatory fees, and deposits the money into your bank account.Amazon will book a part of your balance to make sure there aren't any purchase issues.Amazon has multiple satisfaction centers all around the world; this implies clients receive their orders fast, and you've got the chance to scale your company worldwide.Amazon does the heavy lifting whilst you are able to work on developing your organization.

The Cost of Amazon FBA

With Amazon FBA, there are two primary fees to factor into your product pricing; storage, and fulfillment fees.

Amazon Storage Fees:To keep your merchandise, Amazon charges a monthly fee -- that fee applies no matter whether you create sales or not. The storage fees are contingent on how many cubic feet of storage space your goods need. Fees also vary based on product-size grade in addition to the period of this year. Oversized products are a lot easier to shop. Smaller things, on the other hand, require particular kinds of drawers and shelving, which makes storage more meticulous.

From January to September, standard-size products cost $0.75 per cubic foot, and from October to December, the cost is $2.40 per cubic foot.For oversized products, the cost is $0.48 per cubic foot from January to September and $1.20 per cubic foot from October to December

If you want to sell goods that Amazon class as dangerous, expect to pay anything from $0.78 to $3.63 per cubic foot.Products that are stored by Amazon for more than 365 days attract long-term storage fees. Amazon does this to keep operations as efficient as possible – it encourages sellers to move products faster.

Amazon Fulfillment Fees:Each time Amazon should select, pack, and send one of your merchandise, they charge a commission based on weight and dimensions.Standard-size non-apparel things have satisfaction fees which range from $2.50 to $5.42. Standard-size apparel items vary from $2.92 to $5.95.Oversized product satisfaction fees vary from $8.26 to $137.32, also for those selling hazardous goods, satisfaction prices vary from $3.85 to $157.12.

These costs do tend to fluctuate, so it helps to keep track of changes. This way, you can adjust your prices and still make a profit.

Is Selling on Amazon FBA Worth It?

If you don’t want to manage your fulfillment and distribution network, Amazon FBA is the right program to consider.

Let’s look at some of the plus points of becoming an FBA seller.

1. Turn Free Shipping Into a USP

Customers that store on Amazon have come to expect superior deals and extras like free delivery. As an FBA vendor, you can use Amazon's low shipping charges to your benefit.The packaging and shipping prices for goods sold through Amazon are a great deal lower than if you'd like to do it all your self, that makes it a lot simpler to supply free delivery on orders and improve your bottom line.

2. Selling Online Becomes Easier Than Ever

Amazon really simplifies the eCommerce procedure. Rather than having to pack goods, fill out address labels, and manage deliveries, Amazon FBA does it all for you. All you have to do is determine what to market, maintain your inventory in stock, and deal with the advertising side of things.Together with Amazon FBA, you have to Concentrate on running and growing your Internet Business Rather than worrying about the daily logistics

3. Returns & Refunds Are Taken Care Of

Ok, not having to spend time managing refunds and returns frees up your time for a company proprietor. If a client contacts Amazon, they could organise to go back the merchandise and get a complete refund, without you having to do anything. Having someone to help you with this element of customer support is a lifesaver, especially when you are only getting started. Remember the Amazon's free-returns policy is only pertinent to the client -- you still should pay an returns processing fee.

It’s worth mentioning that you will still have the responsibility of responding the customer messages. If a customer messages you on Amazon, you have 24 hours to respond. When we started, we’d handle this ourselves, but we now have a team of customer service agents ready to assist our customers.

What metrics you should optimize to win the best seller badge

Amazon’s A9 algorithm determines the search ranking of a product. The #1 Amazon best seller badge is awarded to the product that has the highest number of sales in a specific category. Besides, Amazon’s A9 algorithm updates the best sellers rank (BSR) every hour.

Although Amazon failed to define the specific metrics affecting the very best seller position, it's apparent that earnings velocity and earnings history play a powerful role in deciding the BSR of an item. Thus, total earnings background is taken into account when standing products within a category or subcategory. Categories like Clothing,'''Electronics,'' and toys and games' are exceptionally aggressive. It's very difficult for vendors to receive the best sellers badge at such classes.

1.Create an optimized product listing2.Target the right category3.Maintain competitive pricing4.Concrete advertising strategy

Is Fulfillment by Amazon Right for You?

FBA is one of the best ways to try your hand at online entrepreneurship, but it isn’t for everyone.

For FBA to work, you need to have confidence in the products you sell. In my opinion, Amazon FBA is the perfect place to grow and nurture your very own private label brand.Amazon should be used as a platform to grow your business, but long term, you shouldn’t rely on it entirely. Use Amazon to build a snowball of product sales; you can then use that profit to build your brand away from the Amazon platform.

Amazon is a fantastic platform, but don’t put all of your eggs in one basket. In our training, we talk about the power of growing a brand on and off the Amazon platform. We've leveraged Amazon in this way, and it’s a decision we have not regretted

Mathew Johnson A Digital Marketeer Keep Learning.