Amazon FBA - Tips, Tricks and Things to Expect When Using Fulfilment By Amazon

Amazon FBA - Tips, Tricks and Things to Expect When Using Fulfilment By Amazon

Amazon FBA (Fulfilment by Amazon) can be a great service, particularly for new sellers who want to provide fast and reliable delivery to their customers without the hassle of fulfilling orders themselves. Amazon’s help pages do a great job at telling you the various benefits that come with FBA, but they don’t tell you the full story. From our own experience of it in the UK, here are the most important things you should know about Fulfilment By Amazon.

Prime Badge 

Amazon has become known as the place for cheap products and speedy delivery. Amazon’s prime badge guarantees to customers that their order will be delivered next day at no extra charge. In the UK, 39% of Amazon customers have access to a prime account, and it plays a huge role in buyer's decision of what product to purchase. Now, Amazon gives customers the option to filter their searches so that only prime products appear. Using Amazon FBA automatically qualifies you to get the prime badge on your product. For people going down the Fulfilment by Merchant (FBM) route, it is possible to earn the prime badge, however Amazon sets high fulfilment rate targets that if missed can cause you to lose the prime badge. If you continue to miss the fulfilment targets, you risk have your product pages suspended.  With such little room for error and much higher 24 hour tracked fulfilment rates from other couriers, FBA is great for sellers who are just starting out.  

Fulfilment Rates Are Cheap - Maximise Them As Much As Possible 

Based on fulfilment rates alone, Amazon FBA is the cheapest 24 hour tracked fulfilment option out there. Even factoring in the cost of shipping product to Amazon’s warehouses, it’s still going to be the cheapest way to get your items to the customer in a speedy manner. Amazon’s FBA fees are all based on size and weight. Ideally, you want to have a high value product that is remarkably light. That’s what makes items such as jewellery perfect for FBA. If you sell low value products that weigh more than 2 kg – unless you can sell a large quantity of them – you’re going to find it difficult to make FBA profitable. That being said, if you’re able to adjust the weight of your items, it’s worth taking a look at the FBA rate card and making your product weigh as close to the weight boundaries as possible so that you’re optimising the value of your item vs its fulfilment cost.    

If Customers Buy Multiple Products At Once, Fulfilment Costs Could Get Ugly

If you find that customers are buying multiple items at once, it’s worth noting that Amazon will charge you a fulfilment fee on each individual item. This can make Fulfilment by Amazon much more expensive than you initially thought. If you were fulfilling your products yourself, you’d only have to pay the cost of one delivery for orders of multiple items, as opposed to each item. Ultimately, this could be saving you two or three times the fulfilment cost, depending on how many items your customer is buying. Part of the reason Amazon does this is due to the fact that there’s no guarantee that your products are all stored in one fulfilment centre, so delivery could be coming from two different locations. If you do find a large number of your customers ordering multiple items at once, it’s worth considering switching to FBM.  

FBA Requires Trust 

The way Amazon ensures that every customer, no matter where they live, gets 24-hour delivery is by constantly spreading your FBA inventory across their various fulfilment centres around the country. Although it’s a great way to ensure fast delivery, it does mean that your items are transported more often, which increases the chances of them getting damaged in transit. In order to use Amazon FBA, you’re going to have to place a lot of trust in Amazon and their quality standards. Managing your FBA inventory can be a nightmare, and it’s not uncommon for Amazon to lose your inventory or for damaged products to arrive to the customer. It’s worth noting that Amazon will refund you for anything that they feel was their responsibility, but at the end of the day their word is final. 

Keep in Mind Amazon’s Referral Fees When Setting Your Selling Price

Here’s a quick tip when it comes to selling on Amazon in general. In the UK (2021), Amazon charge 8.16% on products that are sold for less than £10, and 15.3% on products that are sold for more than £10. A similar model is in place for all the Amazon marketplaces e.g. EU, US etc. A quick bit of maths will tell you that selling your product for £10.99 vs £9.99 will only earn you 14p more so if you’re thinking of selling your product around the £11 mark, it’s probably worth dropping your price to £9.99 as you will probably see an up tick in sales and ultimately make more money.   

All in All…

If you’re just starting out and want to dip your toe in the Amazon selling world, you’re better off using FBA. It will allow you to focus on your customer needs and give you a better chance at getting some sales and traction early on in the process. The Amazon Marketplace is highly competitive and any edge you can get will be greatly beneficial. That being said, expect your fair share of issues and frustrations with FBA, as they are (unfortunately) unavoidable. Like all these things, it’s just a case of what you believe is the best option for your business. 

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