Young Upstarts

All about entrepreneurship, intrapreneurship, ideas, innovation, and small business.

How Amazon FBA Works

More and more people are moving their shopping to online platforms, which is a result of the fast internet connection and the addition of new applications for mobile and web almost every day. Companies also started to invest in online commerce platforms such as Amazon FBA, Shopify and WooCommerce. These platforms help businesses widen their reach as their websites are available worldwide.

What is Amazon FBA.

To start, you might have the question – what is Amazon FBA? It stands for Amazon Fulfillment-by-Amazon, which means when you use their platform, Amazon FBA will do the hard work for you.

Selling on Amazon – The Basics.

What “hard work” does Amazon do exactly? Like most businesses, you will do the researching, planning, and sourcing of your products. Once it’s ready, you will deliver those to the Amazon fulfillment centers. It is basically a huge warehouse where the items to be sold via Amazon FBA are stored, kept safe, and prepared for delivery to the customers.

Your products will now be available on Amazon where their customers can browse items and place an order. Every time a customer places an order for your product, Amazon will do the boxing and shipping for you. They are basically in charge of the transaction and the entire process is automated. They also do after-sales service wherein they check if the customer received the package in good condition and handles disputes on your behalf. That’s the magic of Amazon FBA.

Pros and Cons of Amazon FBA.

Not only do brand new items are allowed to be sold via Amazon FBA, but you can also sell items from your home that you no longer use. And since your products are stored in their warehouse, you might be concerned about its safety. Amazon makes sure that all the products stored in their warehouse are well-taken care of and safe from damage. If in case something unfortunate happens, like a fire or flood, they will reimburse you for your products at its full retail price. If that’s not compelling enough, they make sure to notify you once your stocks are running low. After you delivered your products to the warehouse, you will basically just do the promoting and marketing of your items and Amazon FBA will do the rest.

It may seem like selling via Amazon FBA is the best but there are also cons that you need to consider. Since they are storing your items in their warehouse and taking care of it, you will need to pay for an inventory fee. This fee varies per item. Also, since they’re doing the majority of the work, they will also charge you with 15% for most categories. This fee also varies; for example in books and DVDs, they charge additional flat fees. It’s also best to check their plans depending on the number of sales you have per month. Subscribing to their plans might lessen the fees, but again, this depends on the number of sales per month. 

Conclusion.

Amazon FBA is an amazing feature from Amazon, you will need to consider the fees if you’re planning to start selling on this platform. But other than that, it’s convenient to use.

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Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.

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