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Expand a Business When You Ship Directly to Amazon FBA

Pramod Bhat
  •  
  •  
October 12, 2020

Can you picture in your mind the Amazon business you want to create? Or if you have already started one, can you see it growing bigger? If thoughts of storage and delivery hinder you from expanding, perhaps you should consider shipping directly to Amazon FBA.

Let’s do a simple visualization exercise: Imagine how you want your business to become. See the products clearly in your mind’s eye. Think of all the orders being placed by customers. Watch yourself preparing stock for shipment.

Keep visualizing. As more orders get placed, you also begin to get more products ready for shipment. Your house gets filled up by boxes and packaging tape. You begin to trip and stumble over product parts and piles of paper. Little things begin to get lost amid the frenzy. You begin to lose track of items and orders. You get bad reviews on Amazon. The business fails.

Let’s change the visualization. This time, imagine your dream business once more. See all the little details. Visualize all the orders coming in.

But the difference now is, you’re working from any place you want. You’re posting product descriptions in Bali. You’re tracking orders through your phone while in Hawaii. You’re reading all the great reviews while sipping beer in your backyard.

Does that seem better? That’s what Amazon FBA can do for you. As your business grows, and as more orders get placed, Amazon then takes care of everything: from storing, to shipping, even up to customer concerns. All you need to do is to take care of the inventory.

What in the world is FBA?

FBA stands for “Fulfillment by Amazon.” It is when sellers make use of Amazon’s warehouses and logistics centers all over the US, in order to store items ready for shipment. More than just an online marketplace, Amazon is a shipping company, which means FBA can also take care of the handling, delivery, and coordination with customers. This becomes extremely crucial for small business owners wanting to expand, or those who are still in the start-up phase. Since Amazon takes care of all the legwork, the primary thing that online sellers must focus on is ensuring that the inventory is always filled so that they never encounter the problem of running out of stock.

Many people try to figure out ways to generate high sales figures without investing large amounts on storage and shipment. FBA takes care of both, and also deals with any further customer concerns such as tracking, returns, and refunds.

Remember the visualization exercise? Suddenly, it’s possible. Whether you plan to run your business at home or on-the-go, you now have a partner that will deal with the more demanding end of online selling. As an entrepreneur, you can now use the extra time and energy to upgrade marketing strategies, as well as come up with ideas regarding new products to sell.

Expanding to all corners of the globe is also possible. Though the warehouses are in America, Fulfillment by Amazon covers international shipping. Amazon US easily ships to Canada and all territories in North America, but can also export to other continents.  There are even ways to avail of FBA’s perks even to those living in Canada. All of a sudden, the business you have in mind has no limits.

There are more perks. Sellers can also take advantage of Amazon Prime through FBA, which means that Prime customers will receive zero Amazon shipping costs. Also, stock coming from another country can be sent directly to Amazon. The bottom line is, sellers don’t have to directly handle the items anymore.

The customers place orders through Amazon, and Amazon delivers.

Delivering Items Yourself vs. Shipping Directly to Amazon FBA

The opposite of the FBA is Fulfillment by Merchant or FBM. This is when sellers store, manually pack, and deliver individual items to the customers.  FBM also gives the seller more freedom when it comes to packaging.  Furthermore, FBA comes with extra fees, so those who do not want to shell out for the additional expenses may opt to store and send items by themselves.

Commingling is also a determining factor for those who choose FBM. Amazon may mix products from third-party merchants, as long as they have the same manufacturer ID. This process makes shipping a lot more efficient, as Amazon can quickly restock and deliver items from the same manufacturer. However, others may see this as too risky, especially when there may be counterfeit products with fake product IDs. The risk is low, but it still exists.

However, if your business is continuing to expand and the turnover rate is increasing, it is recommended to ship directly to Amazon FBA. If you don’t mind commingling, and items are not too bulky, then sit back and let Amazon do the legwork.

Pro tip: Most sellers think that when setting up a seller account on Amazon, they have to choose only one of the two. However, you can register for both FBM and FBA, which will increase modes of shipment, and therefore increase sales opportunities.

What Can You Sell on FBA?

The most common items sold on FBA are those bought in bulk. Wholesale items are usually cheaper. Therefore, it is good to have them shipped directly to FBA and then sold individually at a higher price. You can also find other non-wholesale yet cheap items in retail stores or other online marketplaces, and then market them on Amazon.

A lot of sellers also make money from private labeling. Private labeling is when a seller buys a non-branded product from a third-party manufacturer and sells it under a new brand. For example, you can get a Chinese manufacturer to create unbranded soap, have them shipped to what is called a “prep and shipper” for inspection and branding, and then send the items to FBA for storage. You then create a listing on the Amazon marketplace and wait for orders, and FBA will do the rest.

A Step-by-step guide to FBA

The first thing to do is to set up your Amazon account. Once you have registered as an FBA seller, you can then begin thinking of what products you'd want to sell. The next step would be to find the right supplier; this may mean finding a store that sells wholesale goods, or an online supplier overseas. Before placing a bulk order, it's a good idea to first buy just one piece. Check the quality in order to make sure that you won't get any customer complaints.

Once the item passes your quality check, you can now order in bulk. You send your products directly to FBA, where they’ll store them in one of their many warehouses. In there, your products will be inventoried and sorted. No need to worry about damaged items, as not only will Amazon ensure that they’re taken care of, but they also offer full reimbursement for any product damaged in their storage areas.

Now you can focus instead on optimizing your product listing and handling processing orders, as the next steps are already automated under Amazon. This means that when a customer places an order, Amazon will take care of the transaction, even up to packaging and shipping. They also will follow up to make sure that the customer has received the product. If there are complaints, or the customer demands a refund, Amazon will handle all that as well.

A word of advice: make sure that you always have stock in your inventory, and continue on advertising. Though FBA will take care of the legwork, it’s up to you to attract and keep the customers.

Benefits vs. Drawbacks

Of course, having Amazon's resources and manpower is the biggest benefit of signing up for FBA. However, it's also good to note that shipping items this way will have Amazon's brand more easily associated with the product, which can lead to more patronage. Delivery will also be fast, and Prime customers will have an extra advantage because they can avail of the free shipping.

Sellers under the FBA program will also gain a better ranking on the Amazon search algorithm. To add to this, the chances of securing the Buy Box will also increase.

Not all sellers are aware of the Buy Box, and what having this entails. The Buy Box is the "Add to cart" or "Buy now" button right beside the product details, which of course, leads to more sales as people can then instantly buy the item in that listing. If there’s no Buy Box, then Amazon will redirect the buyer by showing a “See all buying options” button instead.

New sellers, products with low sales, and items that Amazon thinks are priced too high often do not get a Buy Box. The site seeks to lessen customer complaints by redirecting them to all options available, and customers can then choose which sellers or items they think they trust. You'll easily surmount this with a Buy Box, and chances of securing one becomes higher if you sell through FBA.

However, there are some disadvantages that should be looked into before registering with Fulfillment by Amazon. The first one would be the cost, as Amazon charges both storage and fulfillment fees. Therefore, these should be taken into account before setting the item prices. You may also opt to get advice from an Amazon Shipping Company so that you have more options.

As much as you can utilize the Amazon brand through FBA, that also means that it’s not possible to repackage the products in any other way. In short, to the customer’s eyes, all these products will come packaged as just from Amazon.

Lastly, there may also be an increase in returns. Since Amazon will handle all customer concerns, this also makes it easier for customers to return products.

All in all, the benefits seem to outweigh all the disadvantages, especially since having access to both the Amazon brand and its resources is already a huge thing.

Fulfill Your Dreams

Visualize your business reaching its maximum potential. How many orders are being made each day? See the items, neatly lined up, being shipped in the fastest ways possible. See yourself relaxed, looking at the numbers pile up from the comfort of your home or favorite vacation spot. This is possible. Fulfill your dreams with Fulfillment by Amazon. Sit back, and let them do the legwork. 

If the cost is what’s keeping you from making this vision come true, or you’re from Canada and want to avail of FBA’s services in the US, then check out how these options can help you.

This isn’t just a visualization exercise anymore. Your dream business can now become a reality.

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Pramod Bhat
Written by Pramod Bhat

Pramod is the CEO of Stallion Express - the leading eCommerce shipping provider in Canada. His vision, leadership, and innovative strategies have catapulted Stallion into one of the industry's most trusted brands. He is on a mission to help online sellers in Canada scale and succeed. He is also the reigning office ping pong champion.

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