What’s Amazon FBA Mean And How Does It Work?

The first step is to set up an Amazon seller account on Amazon Seller Central. You can choose either the individual plan, which will charge you $0.99 each time one of your items is sold or the professional seller account plan, which costs $39.99 a month.

Seller central will be where you add products and manage inventory, as well as interact with your customers.

Once you have an Amazon seller account, it's time to add fulfillment by Amazon. Go to the FBA page and click on the "Get Started" button to add the service to your account.

Once you have your seller account ready and you're signed up with FBA, it's time to begin listing your products. 

You can create a new listing or select an existing product in Seller Central by clicking on the "Manage Inventory" button in the left sidebar. Then, click the "Add a Product" button at the top of this page.

From here, you can provide product details:

After creating listings for your products, the third step is to prepare your products for shipment to meet Amazon's requirements. 

Preparing your product for shipping is a reasonably straightforward process. You must consider two key elements: getting the suitable packaging materials and making sure that you use the designated shipping label so that your product matches what you have listed in Amazon's database.

The final step is to ship your products to one of Amazon's many fulfillment centers. You'll have to create a shipping plan with the following information:

For more information, you can check out the Amazon guidelines for sending inventory.

As mentioned above, you can either select the individual or professional plan—if you're selling more than 40 items/month, it makes sense to choose the professional plan since Amazon charges $0.99 per item sold under the individual service. 

The professional plan is also a better choice if you want access to advertising or if you wish to rank in top placements on product pages. This service also gives you access to advanced selling tools like API integration and inventory reports.

Amazon charges a referral fee for every item sold that usually ranges from 8% to 15%. The fee percentage depends on what product you are selling—the highest is at 45% for Amazon device accessories.

Fulfillment fees are generally lower if you use fulfillment by Amazon FBA, and they depend on the dimensions and weight of your product. There are also different fees for apparel versus other products. 

Using fulfillment by Amazon, these fees include the services provided by the fulfillment center: packing, shipping, and handling orders, as well as customer service.

In addition to these prices, there are a few other fees you should be aware of:

Many variables will determine how much it costs you to use FBA. Rates vary by the size of the package, the weight of the item, and the type of product you are selling. You should also account for long-term storage fees and potential refund costs if your customers aren’t satisfied with your product.

If you are looking to start selling on Amazon but do not have a lot of capital for buying inventory, FBA is the perfect solution. You can start making money as a seller without any significant cash outlay or credit line needed.

The low investment makes fulfillment by Amazon FBA an excellent option for sellers just breaking into the eCommerce world since they can sell as little or as much as they want to start.

With FBA, some of your products may qualify for Amazon Prime shipping, a premium membership program that offers free shipping and exclusive deals. Having your products available for Amazon Prime memberships can increase sales by giving customers an incentive to buy your product over others who are not eligible for free two-day shipping.

Amazon FBA is an excellent service to use when starting out, and you need to focus on marketing and scaling your business because the service takes care of the more mundane tasks.

Since you have control of the inventory you want to sell, you can quickly expand your business and delegate all the fulfillment to Amazon.

Amazon has a reputation for being able to provide fast and efficient customer service. With FBA, your customers enjoy the added convenience of knowing that Amazon will handle any inquiries through their customer service. 

This access to customer service is extremely valuable because it's likely to increase your overall satisfaction rate among customers, which equates to more good reviews and higher ratings.

One of the most critical factors in your success as a seller on Amazon is winning the Buy Box. Winning this coveted spot means that you will be the default merchant that customers purchase from, and therefore, you will get more sales and drive up your rankings and product reviews.

You can become eligible for Buy Box if you have a professional seller account and meet Amazon’s criteria based on seller performance, including having competitive pricing, updated and available stock, and excellent customer ratings.

Amazon charges for storage fees, so you need to ensure that the market will support your inventory and that you will be able to sell your products quickly.

There is also the possibility of your inventory getting stranded, which means that the listings will appear on Amazon but customers won't be able to buy your product until you resolve any listing issues. Meanwhile, you'll still have to pay storage fees.

No matter how extensive your catalog is, you can only list items for sale on Amazon that are also available through the regular Amazon Marketplace. Therefore, very niche products might not be allowed by Amazon even if they are perfect for your store. This list of restricted products will give you more information about the possible selection.

You will need to make your products ready for Amazon before you can sell them. Preparation involves:

If you have a lot of different items to list, this task can be time-consuming and tedious.

Regardless of whether your products sell, you still have to pay the Amazon FBA fees. If you aren't successful in your sales at first, these fulfillment fees can cost more than they benefit you.

It can be tempting to dump your inventory using FBA and think you can hand over the sales process to Amazon. However, this strategy does not build brand recognition or any online presence outside of Amazon's platform. Instead, you should constantly be marketing yourself with good product photos, innovative titles, and engaging descriptions.

FBA can be a great way to supplement your business and drive up revenue, but some products will rarely be profitable when using FBA, so you should avoid those items.

If you are looking to sell multiple variations of the same product, FBA is an excellent choice. This way, you can expand your brand without flooding your customer's feeds with similar products.

You should constantly monitor the sales of your products to see if you are using competitive prices or whether there are any glaring mistakes with your listings. You can also monitor competitor prices using tools like Keepa. Keepa is an Amazon pricing tracker that shows the prices of inventory over time. You can use this tool to make sure your prices are similar to other sellers and to watch for fluctuations.

Make sure your products have good pictures and descriptions to encourage customers to read your reviews before they consider buying your product. Good customer service will also help you form a personal connection with your customers and increase the likelihood of them leaving a positive review.