Fulfillment by Amazon
Fulfillment by Amazon or FBA is exactly what it sounds like. Amazon manages the shipping and the delivery part on behalf of the sellers and everything involved with it.
FBA has transformed the way merchants sell their products on Amazon without having to worry about the nitty gritty of delivering the product to the customers as Amazon does all the tricky part by picking, packing, managing strict shipping and adhering to timely delivery, processing returns and also managing the customer service aspect.
Speed and time is the key to Amazon’s FBA and it does all of this perfectly smoothly without any intervention from the seller.
Benefits to sellers are quite rewarding as well as they get the Fulfilled by Amazon tag to their product and become exclusively eligible for PRIME Shipping and Super-Saver Shipping; the two accelerated shipping programs from Amazon thereby bringing their product at the forefront. And it ultimately boils down to better rankings in the search results that gives them the much needed instant visibility. Prime badge is known to do better than the ones without.
But with the lure comes some perils. Here are certain crucial points to keep in mind while going for the FBA program.
#1 Co-Mingled SKUs
Sellers can send their products in FBA without having to provide SKU-level stickers on each unit. Such sticker-less inventory has the potential of getting mixed with the inventory of other FBA sellers with the same SKU.
At times during delivery, Amazon pulls the most convenient inventory, thereby someone else’s inventory has a chance of getting shipped in place of your inventory and in case there are complaints about the product not being up to the mark, fake or not in new condition; you can understand who gets pinned with the blame, and a seller account can be suspended for it. Cost of labeling is far less than sending sticker-less inventory for FBA.
#2 Illegible barcode and mislabeling
Such barcode make it difficult to read and workers at the Amazon’s warehouse rely solely on these. Make sure your barcode is clearly visible with no creases and wrinkles. Mislabeling may also result in the product getting rejected.
#3 Not labeling your products correctly
Shipping label should always bear clearly the details like the name and address of the seller, Amazon reference ID, shipment ID, name and SCAC code of the carrier, the shipping reference number.
It is important that you label your products correctly because if you mislabel your products, then there is a very good chance that the listing may get rejected.
#4 Repackage Unsellable Customer Returns
Unless you sell your product in a generic material, always handle repackaging yourself when a product is returned. If you enable the “Repackage Unsellable Customer Returns” it gives the authority to Amazon to repackage the product on your behalf. Often, they would package the product themselves which may make a product look shoddy, counterfeit, most of the times without any logo on it resulting in complaints. Turn off this option to ensure your customers only get the highest quality products with proper packaging.
#5 Understand the vital terms of FBA
FBA fee is often the biggest expense for an FBA seller. Often, the fee can work out to be up to 50% even though the standards are around 30%. Factor in the FBA fee correctly while pricing your product and get more accurate net profit figures by taking this into account.
Look for other financial statements like the cash flow, AR/AP, Income and expense and the balance sheet and most importantly the Amazon dashboard to keep abreast with the right numbers.
# 6 Understand Amazon’s refund and return policy correctly
Amazon’s return and refund policies are highly liberal for buyers. Many a time you may be surprised how liberal they can get with the refund and this gives a leeway to the customers to even engage in blatant frauds. High cost of returns can offset profits made by higher conversions under the FBA program. Therefore it’s mandatory to understand Amazon’s refund policy thoroughly.
#7 Inadequately Accounting For Liabilities
It’s important to understand the nexus tax implications of
Amazon’s seller training program
for FBA. A lot of sellers do not collect the tax or do not remit the sales tax in all states where they have generated a tax nexus. This results in costly returns to be filed in form of back taxes.
Also, it is highly advisable to review the import duties and classify the product properly to file correct returns and avoid fines due to mistakes.
Most successful Amazon FBA businesses outsource Amazon Seller Central Account Setup to specialized
Amazon FBA consulting
firms, who can take on the day-to-day management.
We do research on figuring out the right products to sell and help to source it right as well. We have years of experience in dealing with some of the most credible suppliers, running campaigns, handling shipping and duties. We also undertake full consultancy that starts with product designing, Brand registry, Pricing, wireframing strategies to launch a product, doing product listing and optimization, offering product photography services, deriving responsive stores, augmenting sales, solicit reviews, launch PPC campaigns, manage your sales budget effectively and track the performance of your product.
We assure a double-digit growth in a short span with minimum investment and minimum intervention. Get in touch with us today to learn how you can grow your business on Amazon hassle free.