What Is FBA And How Does It Work In 2021?

WHAT IS FBA?

Fulfillment By Amazon services, better known as FBA services are when it comes to eCommerce. Here’s what it’s all about and how it works in 2021.

Fulfillment By Amazon – What is it?

Fulfillment By Amazon or FBA is a storage and shipping service provided by Amazon to help businesses sell products. Product manufacturers can ship their commodities to one of Amazon’s fulfillment centers, and Amazon will receive, pick, and pack the products. The fulfillment centers also take care of returns, refunds, and customer service.

Do other warehouses also offer FBA services?

Yes, other 3PL fulfillment centers also offer FBA services, adhering to the guidelines set by Amazon. Other 3PL providers like Fulfillment Hub USA also offer FBA services and take care of receiving, picking, packing, returns, refunds, and more, similar to Amazon.

Advantages of FBA

Opting for Fulfillment Services By Amazon comes with a host of advantages to grow a business. Here are some pointers as to why a business should choose FBA.

1. Sell worldwide
If a business is looking at scaling up and venturing into the global market, it often costs a lot to set up a business. Instead, if you opt for FBA services, you have all the processes sorted, and you can sell from one location with fewer financial risks while saving big.

2. Warehouses at your service
Every business needs space to store goods. Depending on the volume a company sells, you may need a warehouse to store goods — an added expense. However, when you choose FBA services, you save money, as Amazon has warehouses set up across the globe, and you only pay for the small space you use.

3. Save on shipping costs.
When a business is targeting global customers, shipping expense is a concern — you cannot charge your customers for it, nor can you pay the costs involved. Instead, opting for FBA services gives businesses access to leading shipping companies at discounted rates. This way, everyone saves costs.

4. Manage returns easily
Part of being in the eCommerce business is handling returns. A business needs to understand why an item was returned, who returned it, how to refund the customer, and if the refund was genuine — a tedious task. With FBA services, Amazon deals with this entirely with a dedicated team of support engineers.

Disadvantages of FBA

While the fulfillment services by Amazon seem to do everything, there are a few disadvantages too. Here are some of the cons of using FBA services.

1. Additional costs
FBA services cost you, although it is much cheaper than owning a warehouse and setting up an overseas station. Apart from Amazon, other 3PL service providers also offer FBA services, and most cost around the same. So when opting for such services, look out for the pricing upfront, only to ensure there are no hidden charges.

2. Can you handle the volume?
Often, small businesses or those selling in small quantities can manage stock from their homes or offices. It does not make sense to opt for FBA services if you do not handle large volumes, as you end up shelling out extra money for no reason. So think of the number of orders you ship.

3. Not right for all businesses
There is no ‘one size fits all’ when it comes to fulfillment. FBA services might look like it offers all, but take a minute to see if it offers all for your business. You might be selling large, inexpensive products, and in such cases, FBA services might not be the ideal choice as the pricing may not be justifiable.

In short, this is how FBA works

Step 1: Set up an Amazon selling account. If you already have it, choose Fulfillment By Amazon services.
Step 2: Add your products to Amazon’s catalog. This can be done individually, by groups, or using Amazon’s API.
Step 3: Pack your products well to transport them to Amazon’s fulfillment centers. You can also create shipping plans that suit you the best.
Step 4: Amazon takes care of your orders — packing them with Amazon’s branding and shipping to customers. FBA services will also take care of returns and customer support.

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