Before signing up as an Amazon seller you need to understand how does FBA works as if you know the mechanism of FBA then you will be able to fetch the benefits of Amazon FBA.
What is Amazon FBA?
Amazon FBA stands for Fulfillment by Amazon. Amazon established this fulfillment program to facilitate sellers with smooth and hassle free deliveries to their buyers.
Amazon owns warehouses in multiple locations and these warehouses stores seller’s products. FBA is a service that picks, packs, ships, manage returns and refunds on behalf of sellers to their customers.
How does FBA work on Amazon 2022?
This info graphic above outlines the summary of how does FBA works now let us go into detail,
- Seller is required to create a shipment on Amazon Seller Central when their stock is ready to ship to Amazon warehouse. Amazon provides a warehouse address to the seller where they need to ship the whole stock to.
- Amazon receives the order and store the stock in the warehouse.
- Customer sends the order on seller’s Amazon detail page.
- After the order is received from the customer, Amazon picks, pack and ship to the customer.
- Amazon delivers the product. FBA also manage returns and refunds from customer as well on behalf of seller.
How does Amazon FBA charges to sellers?
Amazon groups the products into size tiers according to their dimensions and shipping weight. Each size tier has the fulfillment fee. Fulfillment fee is also categorized into 2 factors. One is Peak Fulfillment Fee and the second is Non-Peak Fulfillment Fee.
Peak Fulfillment Fee: When there is higher number of deliveries overall on Amazon they charge peak fulfillment fee. For 2022 the period is October 15, 2022 to January 14, 2023
Non-Peak Fulfillment Fee: When there are fewer deliveries overall on Amazon they charge non-peak fulfillment fee. For 2022 the period is April 28, 2022 to October 14, 2022
Amazon charges sellers different rates for products related to apparel and non-apparel. You can find rates of all Size tiers below,
Non Apparel FBA fees are lower than Apparel FBA fees. If you wish to know the fees of your specific product then you can visit Amazon FBA Calculator.
Copy and paste your competitor ASIN or similar product in the FBA calculator.
Click on search and FBA fees will be displayed.
FBA Storage Fees is also there to consider because if your stock is staying much longer in the warehouse then it will cost you and you might incur lose on the product. Before sending the stocks to Amazon forecast the estimated sales and then create shipment.
Types of FBA Programs Sellers can Enroll in
There are 5 different FBA programs that sellers can choose,
- FBA Small and Light
- Subscribe & Save for FBA
- FBA Dangerous Goods
- Multi-Channel Fulfillment
- FBA Export
FBA Small and Light:
Sellers can save approx. 24% on FBA fulfillment fees if they choose to enroll into FBA small and light program. This is only applicable to 2 size tiers and that is “Small Standard” and “Large Standard”.
FBA Small and Light Product’s Eligibility Requirements:
Sellers can enroll into this Amazon FBA Small and light program if their product falls into the below criteria.
- Product price is $10 or less
- Product condition is new
- Weight should be less than or equals to 3 lbs
- It should not fall under restricted products, FBA prohibited products, Adult products, Dangerous goods (hazmat) and Temperature-sensitive products
Subscribe & Save for FBA:
This program is for those sellers who sell daily use products and wish to grow their business organically. With this program sellers enable a Subscribe and Save button on their detail page near to the buy box. If a customer subscribe to the product then they become your repeat customer and receives a discount of 5%-15%.
FBA Dangerous Goods:
Amazon also provides deliveries to dangerous goods but there are limitations and some conditions to fulfill. Sellers who sell goods that contains Lithium batteries, Magnetized material, Flammable gases, Flammable liquids and etc
These dangerous goods seller needs to comply with the applicable policies of Amazon and apply for FBA Dangerous Goods program.
There are some prohibited classes as well in the dangerous good category that Amazon does not allow and that is mentioned below,
- Explosive substances
- Toxic gas
- Substances liable to spontaneous combustion
- Substances dangerous when wet
- Infectious substances
- Radioactive material
Multi-Channel Fulfillment:
This FBA program is for Amazon and non-Amazon sellers both. Sellers can use Amazon FBA service who sells from any other channel such as Website, Shopify, Facebook, Instagram or any other source.
Sellers can use Amazon FBA service instead of any other shipping courier as Amazon has a strong fulfillment network and timely deliveries wins repeat customers.
Charges for FBA MCF starts from $4.75 and the storage fees starts from $0.83 / cubic feet.
For full rate card you can click here.
Where is MCF available?
MCF is available USA, Australia, Canada, France, Germany, Italy, Japan, Mexico, Spain and United Kingdom. If you are selling in these countries you can use Amazon FBA MCF program.
FBA Export:
Amazon enables sellers to sell their products to international customers. With this program sellers can explore more markets and increase their revenues.
Which one is Better FBA or FBM?
FBA is fulfillment by Amazon and FBM is fulfillment by Merchant. To know which better for the seller depends upon various different factors.
- FBA is better for those sellers who sell small size products as the fees of fulfillment and storage is less in compare to other local fulfillment network.
- FBA fulfills free deliveries to customers who own prime benefits (Regular Amazon Customers).
- FBA automates storage, packing, delivery, customer returns and refunds on behalf of seller that saves a lot of time for seller.
- FBA is also better for winning buy box on Amazon as Amazon will prefer FBA sellers over FBM sellers
- FBM is better for seller who sells oversize products as the fees of fulfillment and storage can be higher in compare to other local fulfillment networks.
- FBM is better for seller who owns a storage place at their home and this is how they can save a lot of money from free storage.
- FBM is better for seller who can package the products themselves and save money on packing.
Sellers can choose the best option from these but we recommend a new strategy and that is a hybrid method. Seller can use both FBA and FBM. With this method seller will have the inventory at their own storage place and can deliver themselves if FBA stock is finished.
Seller will have more control on the inventory in this way and while they deliver the stock to Amazon warehouse their product listing will not get suppressed.
Conclusion:
In this blog post we have summarized the mechanism of how does FBA works on Amazon 2022. You will be able to make an informed decision as to which fulfillment network you should start with. If you would need to know more about it or if you have any suggestions you can comment down below and let us know
