Fulfillment by Amazon (FBA) is essentially an inventory and shipping service provider for Amazon sellers. In FBA, the seller ships his product to Amazon's warehouse and then doesn't have to worry about anything else until delivery and refunds, aside from keeping their Amazon selling account up to date.
Every business has
advantages and disadvantages. I have described the pro and cons of the Amazon
fulfillment business.
Pros
1. Your customer will receive free delivery.
You can provide free delivery of purchased products to your customers without any direct involvement with an Amazon FBA subscription; your consumer receives free delivery with their Amazon Prime subscription, which helps improve your sales.
2. Operating expenses
You'll save time on storage, administration, and shipping if you utilize Amazon to fulfill your orders, and you'll be able to cut the amount of personnel you need.
3.
Quick
customer service
If you're an Amazon customer, you've probably noticed that Amazon's online ordering and delivery system is faster than yours, allowing your customers to receive their products sooner than you can.
4. Enhances product visibility
The critical
distinction between Fulfillment by Amazon and other fulfillment strategies is
that FBA includes shipping expenses in the product's quoted price.
As a result, customers using the price filter will display higher search results because products from alternative fulfillment models may have numerous prices. As a result, your listed product's visibility among potential purchasers will improve.
5. Increases the likelihood of receiving Buy Box
When Amazon sells similar products to your listing, they get that buy box for each one; and if your product listing has a buy box, it's likely to include an Add to cart button.
6.
Amazon's
goodwill is a plus.
Amazon is one of the
most well-known and profitable online marketplaces.
Joining Amazon FBA gives you access to billions of people who will visit your store since they know they can return to Amazon for a replacement or refund if something goes wrong.
Cons
1.
Cost
Of course, FBA is not a free service; it charges 10 to 20% of your sales depending on various parameters such as storage space, product specialization, etc.
If you hold your inventory for a long time, Amazon will charge. You have more money. Therefore, if you sell less, you will have to pay more to Amazon. As a result, newcomers may find it challenging to create a comfortable profit when establishing a fulfillment business.
2. Return policy
Amazon has a highly liberal return and refund policy managed by fulfillment services; thus, it will harm your sales volume.
3. Cash-flow
Because withdrawals are only available for 14 days, cash-flow management for your Amazon fulfillment firm might be challenging.
4.
Sales tax