Should I use FBA on Amazon?
Delivery costs are one of the factors that give cross-border sellers the opportunity to come to the fore on online marketplaces. Fulfillment by Amazon (FBA) can be a way to stay competitive when selling on Amazon. Will it work for every seller, though?
What is it about?
If you don’t want to do the packaging and dispatching of your goods yourself, this is what FBA is about. You move part of your stock to a Fulfilment Centre and Amazon not only fulfills your orders for you but also provides a return address in the delivery country, pays for returns and provides customer service in the buyer’s native language.
Who is it for?
FBA can be beneficial for various types of sellers :
- Sellers having limited fulfilment/shipping capabilities
- Sellers looking for a solution to increase sales and conversion rate on Amazon
- Sellers willing to sell internationally to various European countries
You don’t have to move all of your items to FBA: you can select top-selling products. This service can be very beneficial, however not in each and every case, for example, not if you don’t have any clear best-sellers in your portfolio.
The service can also be used to dispatch items on other channels than Amazon (orders from other marketplaces, your own website) but the rates will be on general less advantageous than on Amazon.
What are the advantages?
Generally, FBA is cost-effective, simple and allows you to delegate a lot. As a result, you have more time to focus on the expansion of your business. You don’t have to worry about the costs of foreign returns and about managing complaints from foreign buyers
Additionally, FBA allows you to offer one-day delivery to Amazon Prime customers. Also, your ratings on Amazon can improve – any negative feedback related to deliveries within FBA will be removed. Finally, sellers using FBA are more likely to get into the BuyBox even if they are not offering the best price for a given item. This means better visibility and promotion of your product as well as higher sales – more than 80% of Amazon sellers using FBA report that it has increased their sales volume.
What are the disadvantages?
FBA will be less advantageous for you if it’s not clear which of your items are the best-selling ones.
Moreover, if a product doesn’t sell well and you decide to stop the service and have Amazon ship your goods back to you, you will have to pay £0.60 per unit (there is an active promotion which allows you to have your goods back for free if there is no increase of your sales with FBA within the two first months.)
Finally, you must be aware that when your product is delivered, the packaging will have the Amazon brand name on it instead of your own. As a result, your item is likely to be associated more with Amazon than with your brand.
What are the costs?
It’s a fact that you can capitalise on the FBA programme and stay well ahead of your competitors. However, you need to take various factors into consideration when deciding whether FBA will work for your business.
Want to read more about Cross Border Trade? Check 7 factors that can make or break your international sales deal.