FBA stands for Fulfillment by Amazon, which is Amazon Logistics. It is a consignment service provided by Amazon. That is, the seller first sends the product to Amazon FBA warehouse, and then Amazon provides warehousing, picking and packaging, delivery, payment, customer service, and return processing. At the same time, Amazon will charge a certain fee.
For example, if the seller’s main sales market is in the United States, then the seller can choose to send the goods to Amazon’s FBA warehouse in the United States.
What are the advantages and disadvantages of choosing FBA for both buyers and sellers?
For buyers, choosing FBA is extremely beneficial.
(1) Shorten the delivery time. Amazon has many years of rich logistics experience, warehouses all over the world, and a powerful, intelligent and fast logistics system that can shorten the customer’s delivery time and improve the shopping experience. Customers are more willing to choose products shipped by FBA.
(2) There is Amazon’s professional customer service around the clock, and customers have a better shopping experience.
(3) The products are more secure. Some buyers may not want to buy goods from third-party sellers, but they will trust FBA products. Products that can enter the FBA warehouse are selected by sellers and checked by Amazon, so the quality is more guaranteed.
(4) FBA products will have free shipping promotions from time to time, and buyers can enjoy more favorable prices.
(5) If buyers are not satisfied with the purchased products, they can return the products directly to the Amazon FBA warehouse.
For sellers, there are both good and bad sides. Let’s talk about the good side first.
(1) It can reduce costs in certain aspects. Sellers who choose FBA can use the powerful Amazon logistics system to solve common logistics bottlenecks and reduce time and delivery costs.
(2) It can increase traffic and conversion rates. Sellers who choose FBA can increase product exposure, help improve product rankings, increase the possibility of obtaining the gold shopping cart, allow products to be selected by more buyers, improve buyers’ trust, improve user experience, and increase product sales.
(3) Any negative reviews caused by logistics due to FBA can be removed by Amazon, reducing the seller’s customer service costs and also helping the store upgrade.
The negative impacts on sellers are mainly as follows.
(l) Storage fees are required every month. Although FBA can reduce the time and delivery costs of the seller, the storage fees of FBA are not cheap.
(2) The first-leg fee of FBA is high. FBA warehouses will not provide customs clearance services for the seller’s first-leg shipment, of course, except for those participating in the Amazon Dragon Boat Program.
(3) The product is out of the seller’s control and the seller loses the right to control shipment and return. If a buyer who has placed an FBA order is not satisfied with the product received and returns it, it can only be returned to the local FBA warehouse, and the seller cannot follow up on the after-sales situation.
(4) The customer return rate is high and the product damage rate is high. After receiving the return of FBA orders, the FBA warehouse will not assess the degree of product damage, but will directly handle the return and refund. Whether the returned products are returned to the seller or destroyed is decided by the seller, but the seller will also bear most of the losses.
Through the above analysis, we can clearly see the pros and cons of choosing FBA. However, FBA is a logistics method that Amazon buyers recognize. Generally speaking, choosing FBA has more advantages than disadvantages for most sellers.