Overview:
Amazon is the world’s largest and most efficient shipping center. Because of their volume, Amazon also has the lowest shipping costs in the world. With FBA, you can leverage their shipping experience and low costs to work for you. Amazon fulfillment is like having your own personal drop shipper, but with one important distinction. Unlike a drop shipper, where you do not actually own the merchandise in the warehouse, with FBA the products they pick, pack and ship are all yours.
Amazon has a great 5-minute video overview tour of an Amazon Fulfillment Center here.
How it works:
Amazon fulfillment services, like all things Amazon are easy to implement. Each item that goes to Amazon gets a special adhesive label. These can be printed on your own printer with special Avery 5160 Address Labels, or with a dedicated Label printer like the Dymo 450 Turbo. You can ship to Amazon as many items as you want, and ship them at Amazon’s discounted shipping rate. This is about 20% the cost of retail. For example, I can send a 40 pound box from Salt Lake City where I live to the Amazon Fulfillment Center in Phoenix Amazon for under $8.00. Once items arrive, Amazon will add the items to your active inventory on the Amazon Marketplace. If they sell on Amazon, they will automatically ship, as well as handle all customer inquiries, returns etc. You can also have Amazon send the items anywhere in the world, although the fees are slightly higher than if you have them send the item to an Amazon buyer. If you want the item back or destroyed, then they can do that, too.
Amazon Fulfillment Centers in the US:
Arizona
Delaware
Indiana
Kansas
Kentucky
Nevada
Pennsylvania
Texas
Virginia
To check for additional centers worldwide click here.
Amazon FBA Fees:*
Items selling on Amazon are charged the standard Amazon selling fees.
Shipping items to Amazon: Currently items can be ship to Amazon at Amazon’s low rates using UPS, or other providers based on weight and size.
Order handling fee: There is no handling fees for FBA items sold on Amazon. Amazon charges $1.90 and up depending on speed of the shipping service for items sold and shipped to third parties.
Pick & Pack fee: Amazon charges $0.50 and up for items sold on the Amazon Marketplace, and $0.60 for items shipped outside of Amazon.
Weight Handling: $0.40 per pound for Amazon sales, and $0.45 and up for items shipped outside the Amazon Marketplace.
Storage Fees: $0.45 per cubic foot per month. Storage fees do not change based on where you sell and ship the inventory.
Fees shown are based on media items; check on Amazon for FBA rates on other items.
Fees may change. For current Amazon fees, or non-media fees click here.
Amazon provides a handy rate calculator to find your profit and fees using FBA here.
Advantages of FBA:
- Access to the lowest shipping rates in the world.
- No additional cost based on distance in the US, including Alaska and Hawaii.
- Outsource your shipping time and fees to the most efficient shipper in the world.
- Amazon will handle all shipping, customer support, and returns.
- Items ship 24/7.
- Additional sales on the Amazon marketplace. Estimated 40-50% of all Amazon buyers only buy items fulfilled by Amazon.
- Eligible for Amazon Prime and Free standard shipping, 2 day shipping, and overnight shipping, at fixed prices.
- FBA items can be shipped to sales made off Amazon.
Disadvantages of Amazon Fulfillment:
- Item has to be in the Amazon catalog to be eligible.
- Requires a special label printer, or special label paper.
- Inventory is tied-up and unavailable for 3-4 days while it is shipped and processed.
- Unsold items accrue storage fees.
Conclusion:
While Fulfillment By Amazon may not work for all business, it should be considered, as it has many advantages for the seller in increased sales, and decreased storage, shipping & handling fees. Amazon buyers win, too, as they show a clear preference for items shipped from Amazon.
