7 Facts You Need to Know About Amazon FBA Services

The e-commerce industry quickly picked up the pace during the global pandemic, boosting its global market worth to $4.9 trillion in 2021. By 2025, it's expected to reach a whopping $7.4 trillion!

 

 

 

The e-commerce industry is very vast with a wide variety of solutions for all sectors, whether it's commercial goods or automobile spare parts—and since the industry is growing so quickly, some e-commerce giants, such as Amazon, are playing their role in making this industry more efficient by offering Fulfillment by Amazon.

 

If you don't know what this is, it's a service offered by Amazon that helps third-party sellers automate their fulfillment and shipping operations. Still not clear? Basically, you sell (the seller), and Amazon takes care of the shipping process. From quick logistic solutions to warehousing, they offer a wide range of services to make online selling easy for sellers.

 

However, before you dig deeper into the FBA services and analyze how you can benefit from them, here are some things you should know about them.  

 

FBA Can Become Expensive

If you're approaching someone to use their services to make your life easy, obviously you have to pay for it too. Amazon charges its FBA sellers for order fulfillment and storage based on which of these (or both) they use.

 

The storage cost is calculated based on how much space your inventory occupies in their centers. However, you don't pay for the shipping costs since that's a part of their FBA fees. So, the only time you benefit from the FBA services is if you're making quick sales and not utilizing too much of their storage space for a long time.

 

 

No Sales Quota

Unlike similar services, Amazon has kept no minimum sales quota for their FBA program. That's because they understand that every product is different, which means its demand and sales will be different too. So, if you sell products that don't move quickly, you can still enjoy FBA services without any hassle.

 

An average FBA seller makes around one to twenty-five thousand dollars based on what they're selling and how often. 

Sellers Must Pay for Shipping to Their Fulfillment Centers

While you don't have to worry about the shipping fees for your products, you have to pay the shipping cost to bring your products to Amazon's fulfillment centers.

 

To help keep the costs low, Amazon does partner with some carrier options that offer a much-discounted price compared to the open market rates—and if you choose someone from their carrier options, the shipping cost is added to your monthly FBA account bill. 

 

Amazon Uses FIFO Method for Storage Fees

FIFO is one of the most used inventory management methods that stands for "first-in, first-out." This means the first batch of products that arrive at their warehouse will be the first to be sold too. Once it's gone, sellers don't have to pay the storage fee.

 

However, the new items that replace the old ones will be charged a storage fee until they're sold.

Amazon Offers Long-term Storage Fees

If you sell slow-moving products that take time, you will probably have to deal with excessive long-term storage fees and many other FBA fulfillment charges. If you want to get an idea, here's a quick, long-term storage fee chart from Amazon to help you understand.

 

 

All the items that remain in their storage for six months or more qualify for long-term storage fees. Therefore, if your product moves substantially slowly, you might want a quick cost-benefit analysis to see what's best for your e-commerce business.

"Pick and Pack" Fee is Unavoidable

While you'll be saving lots of time by using FBA services for order picking and packing and making customers happy, unfortunately, you do have to pay a fee for this service, which can't be avoided. So, the question is whether the amount you're paying to save some time from picking and packing is worth it or not. 

 

 

Start Slow

You have to face many challenges as an e-commerce business, especially to help run your business. There are many things you have yet to learn, which you will, but at its own time. That's why we'd recommend you start slow.

 

Give Amazon a limited number of products through their FBA services, preferably those that sell fast. Notice how you do for a few months before adding some more products to the list.

Confused About Amazon's FBA Services? Let E-Commerce Express Help You

Amazon FBA services are covered under multiple clauses that can be difficult to understand all at once. If you're overwhelmed with this massive flow of information, don't worry because E-Commerce Express has your back.

 

They are an all-in-one order fulfillment company that offers a wide range of services, from branded & custom packing to custom product sourcing services from China. They also offer Amazon FBA prep service and fulfillment to help those who feel lost on their own.

 

Visit their website now to learn more about them.