A detailed explanation of Amazon’s self-operated logistics model and its characteristics

Fulfillment by Amazon (FBA) is a comprehensive logistics solution provided by Amazon. Through this model, sellers can send goods in batches to Amazon fulfillment centers, and the goods will be stored in Amazon warehouses. When a customer places an order on the Amazon platform, Amazon will be responsible for sorting, packaging and delivering the order, as well as providing customer services such as buyer consultation and returns for these goods.

Features and advantages

Logistics delivery speed

A major feature of Amazon FBA is its fast logistics and delivery speed, which can significantly improve customers’ shopping experience and thereby promote more sales.

Convenient returns and exchanges for customers

Shops using FBA services can provide a more convenient return and exchange process, and high-quality after-sales service can help reduce negative feedback, thereby improving the overall performance of the store.

Cost control

For sellers, shipping in bulk through FBA can enjoy more favorable logistics rates, thereby effectively reducing logistics costs and increasing profit margins.

Prime logo display

Product information using the FBA service will carry the Amazon Prime logo, which gives it an advantage in the competition for the Buy Box and makes it easier to attract buyers to place orders.

Funds and Inventory Management Challenges

Although FBA brings many conveniences, there is also the problem of needing to prepare goods in advance to overseas warehouses, which may increase capital investment and affect the speed of capital turnover. In addition, due to rapid changes in market trends, improper product selection may result in unsalable goods in overseas warehouses.

Service Mode

As one of the self-operated logistics service models, Amazon FBA covers a series of service links, including but not limited to product packaging, packaging, distribution and after-sales services, all led by Amazon FBA logistics warehouses. After choosing the FBA model, sellers do not need to worry too much about logistics-related matters and can devote more energy to business development.

Advantages

• Seize the shopping cart position: Amazon provides certain traffic support to merchants using FBA services to help them better occupy the front position of the shopping cart;
• Improve distribution efficiency: Compared with non-self-operated logistics, FBA can significantly speed up the delivery of goods to customers.

Disadvantages

However, it is worth noting that FBA service fees are relatively high, and not all sellers can easily afford them.

Transportation methods

In addition to the FBA services introduced above, Amazon also provides a variety of different shipping methods for sellers to choose from, including commercial parcels, air parcels, and maritime shipping parcels.

• Commercial parcel mainly refers to the fast shipping services provided by the four major express companies (such as DHL, UPS, FedEx and TNT). Although it is very time-sensitive, due to the huge increase in freight costs during the epidemic, Rising prices have made it unbearable for many sellers;
• Air parcel refers to the method of leasing airline warehouses to transport goods to the destination airport and then sending them to the FBA warehouse by local cooperative logistics providers;
• Package shipping by sea As one of the most commonly used forms of logistics in current global trade, it occupies the vast majority of the foreign trade logistics market and is also the preferred logistics solution for many Amazon sellers.