Detailed explanation of Amazon FBA logistics and its characteristics

Amazon is a large online e-commerce company located in Seattle, Washington, USA. It was founded in 1995. It initially focused on book sales and has now expanded to a variety of product lines, such as DVDs, music CDs, electronic products, etc. Amazon not only serves as an online retailer, but also provides FBA (Fulfillment by Amazon) services, which means Amazon opens its platform to third-party sellers and provides them with a full range of logistics services including picking, packaging, and terminal distribution.

Characteristics of FBA model

1. The cost of opening a position is low and the results are quick

The FBA model allows cross-border e-commerce export companies to directly use Amazon’s global warehousing and distribution system without the need to invest in fixed assets or station personnel overseas, thus significantly reducing overseas warehouse building and management costs, and enabling rapid business development.

2. One-stop service, convenient and fast

Amazon’s overseas warehouse system can provide cross-border e-commerce export companies with a series of services including overseas market warehousing, picking, packaging, distribution, etc., greatly improving the quality of international logistics services.

3. Due to the platform, the expansion of product categories and services is limited

The FBA model is highly constrained by the Amazon platform. Some specific commodities (such as flammable and explosive goods) cannot be stored in the warehouse, and it is difficult to provide personalized logistics and distribution services.

4. Low shipment rate leads to high warehousing costs

Warehousing costs under the FBA model increase over time, especially when goods are unsaleable and long-term storage will significantly increase costs.

FBA detailed process

1. The seller operates the application to issue FBA

• Register for FBA: Complete the registration process on the Amazon service page;
• Select FBA products: Select the products to be shipped to the Amazon warehouse on the “Inventory” page;

2. Operate FBA shipping process

• Set Quantity: Enter the shipment quantity;
• Prepare Products: Prepare products;
• Label Products: Choose whether to have labels placed by Amazon;
• Review Shipments: View the distribution warehouse;
• Prepare Shipment: Select shipping method and print outer box label;
• Summary: Fill in the logistics tracking number.

3. Return process

• The buyer submits a return application;
• Sellers check return applications and reasons on the seller platform;
• Process return requests in accordance with Amazon policies;
• If the return is approved, the system will send the seller’s address to the buyer;
• The seller will issue a refund on the platform after receiving the return.

FBA fees

• First leg cost: the cost from the origin to the FBA warehouse;
• Order delivery fee: charged based on the weight and size of the product after packaging;
• FBA inventory storage fees: divided into monthly inventory storage fees and long-term inventory storage fees;
• Removal order fee: charged per item removed;
• Return processing fee: applicable to specific categories of goods;
• Unplanned preparation service fee: Goods that are not properly prepared or labeled will be subject to additional charges.

Applicable enterprise types

The FBA model is suitable for companies that have just started cross-border e-commerce business, lack experience in cross-border warehousing and logistics, and have mature brands but low sales in the target market.

Amazon logistics features

• FBA warehouse is only responsible for receiving goods;
• Shorten delivery distance and time;
• Buyers and sellers do not need to contact each other directly;
• Limited logistics channels;
• Professional delivery.

To sum up, Amazon FBA provides convenience for cross-border e-commerce, but it also has its limitations and cost considerations. For different types of sellers, choosing the right logistics solution is crucial.