AMAZON FBA. If you’ve been looking to start selling online over the past couple of years, you’ll have heard some success stories and fail stories,
FBA stands for Fulfilment by Amazon, a solution which allows you, as an online seller, to utilise Amazon’s numerous huge warehouses to store and ship the products you sell through the Amazon website. Sellers promote and sell goods, and Amazon handles the storage, packing, and shipping. It also takes on after-sales customer service and returns.
Now then, is it worth starting now in 2022?
The Cost of Amazon FBA
Let’s start with cost. On top of standard fees of £25 (without VAT) for a seller account and each item sold, there are further costs for using FBA. There are several components to these costs. Amazon provides extensive details of these and tools to estimate total costs.
In summary, sellers will face the following fees:
- A fulfilment fee per item sold. This varies depending on the item category, size and weight. The smaller and lighter the items, the lower the fee – much like any postal service.
- A monthly inventory storage fee. This is a monthly warehouse storage charge based on average daily volume. Rates are higher for peak months of October to December.
- A long-term storage fee. This is an extra fee that applies for items that have been stored in a warehouse for more than 365 days.
- Removal fees. Amazon charges one-off fees when items are removed from Amazon storage. Amazon can return stock or dispose of it.
- Return processing fees. Amazon offers free returns to customers, but will pass a fee onto the seller for each return received.
- Other charges. There are extra fees imposed for some situations. These include fees for exceeding storage limits and inventory delivered to Amazon in the incorrect way.
- Here’s an example, imagine an FBA seller listing T-shirts for sale.
- Amazon gives an example fulfilment fee of $5.07 for each item sold (assuming a weight between 12 ounces and 16 ounces).
- The monthly storage fee for inventory would be $0.83 per cubic foot, rising to $2.40 per cubic foot in peak months.
- The removal fee for each item would be $1.14.
As a business owner, you’re expected to have some fees you would rather not pay, but if amazon is doing this much of a shift for you and your business, it’s essentially an employee, and the fee’s count as their wage.
The pros and cons of Amazon FBA
|Amazon Prime features||Fees add up|
|No need for personal warehouse||Heavily Saturated market|
|Time saving||Product prep is complicated|
|International Sales||Popular items increase in value due to trends|
|Not tied to location|
|Expand Business without employee roster|
It’s up to you and your situation if those pro’s outweigh the con’s, if you are really thinking about starting, evaluate your options and your situation and them make your decision.
Amazon FBA Success stories
You may be thinking, oh this sounds great, how do I know if it’ll work and has it worked in the past? Take a look at some success stories here.
Tayo Adebisi – CEO, TILZ Prosperitas Ltd
“Started from their living room and grew to 8,000 sq feet of space
We’ve seen significantly higher sales of our Small and Light products [with FBA]
Koala Babycare sells some of the most sought after baby care products in Europe. They choose Transparency by Amazon to take proactive action to protect their products and customers from counterfeiting.
You can see from these happy clients that Amazon FBA really works for them. But what if you wanted to really simplify it, Make it easy enough to understand as a first time entrepreneur.
Why not Dropship?
EKM offers a dropshipping package that is built around simplicity, it’s cost effective and our helpful account managers will guide you through setup every step of the way. If you are not familiar with what dropshipping is, take a look at our blog on “A 2022 Beginner’s guide to dropshipping in the UK” This will really help you to get a grip on what dropshipping is and if it’s for you.
Is it worth it then?
Amazon FBA is still a new service in the grand scheme of things, it depends on your own situation, financial backing etc. The guarantees of storage, shipping and admin that Amazon provide are what you would need to set up for your online business anyway. If Amazon is handling these, think of the time that you will save. It’s a great way of earning passive income Selling online is a saturated market, and the longer you leave it the less chance you will have of succeeding, so get into it.