Complete guide on Amazon FBA: How does it work?

Fulfillment by Amazon (Amazon FBA) is a logistic program that helps Indian Amazon global sellers or exporters outsource fulfillment processes to Amazon. In this blog, learn how to use FBA to scale your export business.
Amazon FBA
As an exporter, planning logistics and handling delivery in a smooth way becomes important since it directly impacts customer experience with your brand. If you are looking to save time and reduce costs on inventory storage, order management, shipping, customer service, and other steps of e-commerce fulfillment or logistics, Fulfillment by Amazon (Amazon FBA) comes to your rescue.

What is Fulfillment by Amazon or Amazon FBA?

Fulfillment by Amazon is a program that helps Amazon global sellers outsource fulfillment processes to Amazon. You can enroll inventory in FBA to store products in Amazon fulfillment centers. When customers place orders, Amazon can pack, ship, and provide customer service for FBA goods.
· Using FBA for shipment costs 32% less per unit on average compared to alternatives.
· FBA is a flexible program, letting you enroll as many (or as few) products as you’d like — you can even start with just one product.
· Amazon’s customer service team handles inquiries and processes returns.

How does Amazon FBA work?

Seller sends products to Amazon’s fulfillment centers

Sellers send their products to Amazon international fulfillment centers, where they are stored until a customer orders them. To support you with hassle-free logistics, Amazon has also launched SEND, enabling you to ship directly to international fulfillment centers at competitive prices. All you have to do is book, pay and track shipments without any hassles from India to the world.

Customer places an order

A customer browses Amazon’s shopping site and places an order for a product sold by you.

Amazon picks, packs, and ships the product

Amazon’s fulfillment center staff locates the product, picks it from the shelf, packs it, and ships it to the customer.

Amazon handles customer service and returns

If a customer has any questions or concerns about the product, Amazon’s customer service team handles them.

Sellers who use FBA are charged a fee for the service, which includes storage, picking and packing, and shipping fees. Amazon FBA also provides sellers with several tools to help them manage their inventory and sales. For example, sellers can use Amazon’s FBA Revenue Calculator to estimate the potential revenue they can earn from using FBA.
what is FBA

Cost involved with Amazon FBA

When using Amazon FBA, there are three main types of costs that sellers should consider:

Fulfillment fees:

Amazon charges fulfillment fees for picking, packing, and shipping orders, and handling customer service and returns. The fulfillment fees vary depending on the size and weight of the product, as well as the destination of the order.

Storage fees:

Based on product size, volume, average number of daily units stored, dangerous goods status, and the month of the year. Monthly inventory storage fee rates differ between the periods of January-through-September and October-through-December.

Additional fees:

In addition to the fulfillment and storage fees, there are also several additional fees that sellers may incur when using Amazon FBA like removal fees, returns processing fees, FBA export fees.

Amazon FBA vs Seller Fulfilled Prime

With FBA, sellers send their products to Amazon fulfillment centers, and Amazon handles picking, packing, and shipping orders. FBA also handles customer service and returns on behalf of the seller. On the other hand, Seller Fulfilled Prime allows sellers to offer Prime shipping option and deliver directly to customers. By displaying the Prime badge, you are committing to fulfill orders with one- or two-day delivery at no additional charge for Prime customers.

Advantages of Amazon FBA

Here are a few advantages of using Amazon FBA:

Fast and reliable shipping:

One of the most significant advantages of using FBA is that it allows sellers to use Amazon’s reliable shipping capabilities. When a seller uses FBA, their products become eligible for Amazon Prime and other promotions, which can help increase visibility and sales. This can lead to higher customer satisfaction, as customers can expect their orders to arrive quickly and reliably.

Improved customer service:

FBA can also help sellers improve their customer service by allowing Amazon to handle any customer inquiries or returns on their behalf.

Reduced operational complexity:

FBA helps sellers reduce the operational complexity of running an e-commerce export business. By outsourcing fulfillment to Amazon, sellers can focus on other areas of their business, such as product development, marketing, and sales. This can help free up time and resources, allowing sellers to scale their business without having to worry about the logistics of fulfillment and shipping.

Inventory management tools:

FBA offers several tools to help sellers manage their inventory and sales, including FBA Revenue Calculator and FBA Inventory Health Report. These tools can help sellers estimate potential revenue, track inventory levels, and avoid stockouts.

Access to Amazon’s distribution network:

FBA also provides sellers with access to Amazon’s vast distribution network, which can help increase the visibility and reach of their products. Amazon has fulfillment centers all across the world, allowing sellers to reach customers in different regions and countries. This can be particularly beneficial for sellers looking to expand their business globally.

Easy e-commerce exports and logistics with Amazon Global Selling

With increasing adaption to e-commerce exports, Indian exporters have more opportunities to expand their local businesses and take their products from India to the world. Whether you are a multi-city store, local seller, upcoming startup or a seasoned exporter, irrespective of your business size, you can export from India and establish your business on the world map with Amazon Global Selling.

Frequently Asked Questions

How to maximize FBA sales?
One can maximize FBA sales by optimizing listings, pricing, advertising, and inventory management.
Who pays for shipping to FBA?
The seller pays for shipping to FBA fulfillment centers.
What is Amazon FBA return policy?
Amazon handles returns and may reimburse sellers for certain cases.
Published on April 29, 2023.

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