Amazon is one of the biggest and most recognised international online marketplaces for both online sellers and retailers. It is estimated that Amazon has around 300 million active users and over 9.6 million sellers.
According to The Guardian, in 2020 Amazon UK sales rose by 51% due to the coronavirus pandemic, which left consumers to make their purchases online as a result of lockdown restrictions. Since the pandemic, with Amazon continuing to take the lead, the eCommerce industry has seen exponential growth.
Now, you may be considering Amazon fulfilment, but you aren’t sure how it works or if it will really benefit you. Let us talk you through things with the help of our Amazon fulfilment guide.
How does fulfilment by Amazon work? (FBA)
Anyone can sell on Amazon, and what’s even better is you can do it from the comfort of your own home. If you’re on the smaller side of things, you can easily pick, pack and ship orders from your own home.
If you’re a bigger business, or just don’t want to fulfil your own orders, you can use Amazon’s FBA service. You simply ship your products to an Amazon fulfilment centre, and they will store, pick, pack, and ship your orders for you.
You do the easy part and let them take care of the rest. Not only this, but they will even handle customer service for you- another responsibility taken off your (probably overflowing) plate. Free up space, free up time, free up money. Using FBA can also help you scale your business and reach new customers due to the size of Amazon and due to the high volume of users they have.
Doesn’t that sound like the right service for you? FBM might be the better solution for you.
How does fulfilment by merchant work? (FBM)
FBM follows the same process as the one outlined above- instead of Amazon storing, picking, packing, and shipping your orders, you do it. You are just using the platform as a means for sales without any of the extra benefits or services besides the ability to reach millions of new customers.
Weighing out the pros and cons of FBA and FBM
In order to make sure you make the best decision for you and your business needs, we’ve compiled a list of the biggest pros and cons for both FBA and FBM services, lets’s dive in.
Pros of FBA
- Products are automatically eligible for Amazon Prime, and Prime customers will be able to find your products more easily due to Amazon’s ‘filter’ system.
- You don’t need to worry about packaging and shipping your orders because Amazon handles this all for you. This gives you more time to focus on selling, growing and scaling.
- FBA can reduce the time and HR spent on your Amazon business since you don’t need to worry about paperwork and transaction management.
Cons oF FBA
- Lack of control over your inventory- once Amazon receives your shipment, they take charge. This may be difficult if you make frequent changes to your inventory.
- As well as FBA shipping fees, you also have to pay long-term storage fees which may be a problem if you end up struggling to sell certain products.
Opt for FBA if;
- You have a product with all-year demand
- Your products fit within the limits and requirements set by Amazon
- You can sell a high volume of products and have a large margin
- You want someone else to handle shipping, packaging, tracking, delivery, and customer service
- You’re looking to free up time so you can focus on other things/other aspects of your business
Opt for FBM if;
- You still want to have control over your inventory
- You sell products with a low margin, and their weight doesn’t fall in line with Amazon’s restrictions and requirements
- You wish to sign up for seller fulfilled prime (to be discussed after this)
- You have some products with all year demand but predominately sell products with a seasonal demand
- You don’t want to pay fulfilment or long-term shipping fees to Amazon
What is SFP?
Seller Fulfilled Prime (SFP) is Amazon’s Prime program that allows you to deliver directly to domestic Prime customers straight from your own warehouse.
In order to display the Prime badge, you must commit to following Amazon’s shipping requirements and failure to do so can result in you losing your badge.
The Process:
- Qualify for SFP and complete the trial period
- Store inventory in your own warehouse
- Process your orders and buy labels from Amazon-approved carriers
- Pick, pack and ship your orders on the same day
- SFP carrier collects and delivers orders directly to customers
- Work 6-day weeks.
The requirements for SFP
- Have an Amazon Professional seller account
- Have a domestic warehouse you can fulfil orders from
- Ship over 99% of orders on time
- Have an order cancellation rate of less than 0.5%
- Deliver your orders with Amazon Prime-approved carriers
- You agree to Amazon’s return policy
- Allow for all customer service inquiries to be dealt with at Amazon
Now comes the hard part- picking which one is best for you. Feel like you would benefit from both FBA and FBM? Well, you’ll be pleased to know that you can use both services if you wish as long as you’re selling multiple products.
TSP can help
At TSP, we understand that running an online store can be challenging. Our goal is to simplify the process for merchants to fulfil orders through our quick, smooth and cost-effective Amazon fulfilment service.
Using Amazon-approved couriers, we are specialists in delivering fulfilment services, and our fulfilment centre for Amazon is the envy of our competitors. Customer satisfaction is our highest priority, and we promise to deliver the best service for you and your business.
We understand the complexity of choosing which Amazon service is right for your business, which is why it’s important to have the flexibility to choose. Additionally, you have the ability to change with the times as Amazon’s terms and pricing change. Contact us today and find out we can help you.
