Amazon FBA: Tips for Getting Started and Optimizing Your Account
by Joanna Lupo
For Amazon merchants and other online retailers wanting to increase sales and expand their business, Fulfillment by Amazon (FBA) looks attractive. FBA leads to better feedback and metrics, less worry over shipments, and smoothly handled returns. It pleases customers with speedy and free Prime shipping and gives your listings better odds for winning the Buy Box, which boosts sales.
But what are the ins and outs of the FBA process? What should you consider when making the decision to switch? How can you get a leg up on other FBA merchants by mastering the unique challenges of FBA?
The FBA Process
Amazon sums up the FBA program in six words: “You sell it, we ship it.” The customer is still buying from you, but the product is shipped out of Amazon’s warehouse; and they manage the customer service. Amazon FBA can be used not only by merchants selling on Amazon, but also by merchants selling on other online platforms, or both. In either case, the process is similar:
- You ship your products into Amazon, using the tools on Seller Central to set up listings and create shipments so the warehouse is notified when it will receive your inventory.
- Amazon receives and scans your inventory at the warehouse so it can be listed for sale.
- Customers order your products; if they order through a non-Amazon channel, you submit the orders to Amazon to fulfil.
- Amazon picks and packs the orders using their efficient warehouse system.
- Finally, Amazon ships the orders and handles customer service and return requests.
With Amazon handling most of the shipping and fulfillment tasks, your biggest task is then shipping the inventory into FBA.
What Experts Recommend When Considering Amazon FBA
Amazon asserts that FBA allows you to spend less time on fulfillment and customer service and more time on growing your business. While this is often true, some merchants prefer to keep control of fulfillment and customer service based on their business model. There are several other things to think about when considering moving to FBA.
FBA often uses a process of commingling inventory. That means that although Amazon keeps track of how much inventory you should have in stock, they do not differentiate your particular units of an item from those of another seller. If another seller ships in defective or lower-quality merchandise for a listing you share, these items could be shipped to your customers, leading to returns or negative feedback. If you are selling mass-produced items that are rarely defective or you are the only FBA seller for your listing, however, this is less likely to be an issue for you.
Long-Term Storage Fees
One of the biggest issues regarding FBA is the question of maintaining good inventory levels and avoiding stale inventory. When inventory shipped into Amazon FBA has been stored for six months, it will begin incurring “long-term storage fees.” These fees can drain revenue from FBA merchants. For this reason, experts often recommend avoiding FBA for items that only sell occasionally.
While overstocking can be a huge issue and lead to increasingly high storage fees, understocking is also a problem for FBA sellers. Running out of inventory means lost sales, and passive inventory management can also mean missing the time when your supplier has inventory available. This could allow your competitors to buy out high-demand items. How can you avoid these pitfalls?
RestockPro: Professional Inventory Management for FBA Sellers
From trying to optimize inventory levels to evaluating the profitability of individual items, FBA inventory management can seem an enormous, complicated, and never-ending task. You want to be in control of your business; you don’t want your business to be in control of you.
This is where RestockPro comes in. RestockPro streamlines the process of shipping inventory into FBA by recommending how much inventory you should restock and allowing you to create and track your purchase orders and shipments. The recommendations are based on your history of past sales and your preferences.
RestockPro imports and calculates metrics on item profitability and other attributes to simplify your inventory management. Best of all, RestockPro is intuitive and easy to use. It is not generic software that can be adjusted to work for FBA; it is designed specifically for FBA merchants by experts on Amazon software. From FBA experts to newbies, RestockPro can streamline and accelerate your business.
Originally published on November 30, 2015, updated June 11, 2019
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.