For Vietnamese businesses who aim to enter the international market, there is no doubt that Amazon is one the best choices. It is clear that in order to sell goods on Amazon, businesses will need to ship goods to Amazon warehouses. For new entrants, there will be quite a few questions surrounding this process. So “What is FBA? How does FBA work? What is the growth potential of businesses using Amazon FBA?”. Here is some information about Amazon's FBA that has been compiled and summarized by SANTIFA GO.
Summary:
1. What is FBA?
4.1. Advantages
4.2. Disadvantages
6. Conclusion
1. What is FBA?
FBA stands for Fulfillment By Amazon, this is a service that supports warehousing and shipping for Amazon sellers. With the help of FBA, sellers only need to perform operations to receive orders from customers, while the shipping logistics will be fully handled by Amazon.
Since Amazon will take the full responsibility for delivery, sellers do not need to have their own warehouse or work with partners to manage and maintain goods. All they have to do is send the goods to Amazon's warehouse, then the staff will do the rest. When there is an order, the system will pack and ship it to the customer on behalf of the seller. Furthermore, Amazon will also take care of customer service and handle problems after delivery (exchange, refund, ...).
2. Two types of selling plans on Amazon: What's the difference between FBA and FBM?
Up to now, Amazon has launched two forms of shipping goods to customers, which are also two types of selling plans for Amazon sellers.
Fulfillment by Amazon (FBA):
Fulfillment by Merchant (FBM): This is an Amazon selling plan in which sellers list their products on Amazon and manage everything from storage, shipping to customer service by themselves. However, some sellers may not be able to cover all of this, so they tend to cooperate with a third party that specializes in providing a specific service, such as warehousing in the US.
3. The FBA process
When becoming an FBA seller on Amazon, the business will follow the FBA process including:
Step 1: Sellers set up an Amazon seller account and add products/packages on Amazon sales page (Amazon.com), or their own sales page.
Step 2: Sellers send packages/products to Amazon's FBA center.
Step 3: Amazon will manage and maintain the seller's product in the ready-to-ship area.
Step 4: When a customer buys a seller's product from the Amazon homepage or others sales page, the FBA center will directly receive the order and perform steps to pack the product from the previous warehouse.
Step 5: Amazon employees perform the delivery process.
4. Advantages and disadvantages of FBA
Like other forms of business, FBA also has certain advantages and disadvantages.
4.1. Advantages
Saving costs on storage and maintenance: Goods will be stored and preserved at Amazon’s fulfillment center. Moreover, since Amazon FBA service aims to support large-scale sellers, the costs for businesses will be minimized and often no additional costs. In general, if a business sells large quantities of goods, FBA operating costs will be lower than FBM costs.
Work easier and more effective: Sellers only need to send goods to Amazon warehouses, then Amazon will do the rest including storage, packaging, shipping to buyers, and customer service after the transaction. Amazon's 2-day fast shipping and after-sales care service promise to bring satisfaction to customers as well as creating more credibility for the seller's brand.
More opportunities because Amazon has better support policies for FBA sellers.
Increasing business growth by reaching out to a network of Prime customers or potential customers who are willing to spend a lot on shopping.
Easily manage inventoryon Amazon's Seller Management system, thereby creating effective sales strategies.
4.2 Disadvantages
Requires large and stable capital: Amazon FBA still collects a fee of 39.99 USD for this service monthly. In addition, the seller still has to pay the cost of shipping the goods to the Amazon warehouse. If goods have to be stored for more than 6 months, storage costs can be very high.
Restrictions on bulky goods.
Amazon FBA includes many strict regulations, so sellers will need to update regularly. If violated, the sales account will likely be suspended.
Amazon will deeply intervene in the business process, from closing orders, sending goods and taking care of customers. It seems that sellers and buyers do not have a direct relationship to develop customer networks.
Summary:
5. FBA's development potential
Amazon is currently the largest sales channel in the world. Therefore, the potential of Amazon FBA also promises to open up many opportunities for Vietnamese’s businesses:
Reach out to more potential customers and increase sales when you store your business on Amazon
Opportunities to generate passive income and make a fortune from Amazon
Get help with packing and shipping by Amazon
6. Conclusion
Here are the introductions to FBA - Fulfillment By Amazon. It can be seen that FBA is by far the best choice for businesses that want to expand their business and reach out to the international market. Hopefully, the article will help you have the most overview of this business form.
SANTIFA GO
Compact info regarding, thank you