What is Amazon FBA and How Can You Use it For Your eCommerce Business?



what is amazon fba

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What is Amazon FBA? Handling the delivery side of an eCommerce operation can be a nightmare for small business owners. Between scrambling to generate leads, stocking popular products and fulfilling new web orders, it’s becoming increasingly difficult to stay on the ball all the time.

That’s why more and more small eCommerce businesses are turning to Fulfillment by Amazon (FBA).

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If you’re operating in the retail space and not selling your products on Amazon (NASDAQ:AMZN), you’re probably missing a trick. Over the past couple of decades, the behemoth site has risen to become the globe’s leading e-retailer.

Last year, it brought in more than $107 billion in net sales in the United States alone. And fortunately for small business owners, Amazon relies heavily on a steady stream of independent sellers in order to keep those profits soaring.

If you haven’t already registered to become a Seller on Amazon, it’s dead simple. The site’s platform enables users to select from a wide range of product categories in order to set up their own online store based on a selection of various fee structures.

For example, Amazon’s Professional plan allows users to sell an unlimited number of products for a flat rate of $39.99 per month — while the Individual plan charges sellers $0.99 per product sold.


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Once you’re all set up as an Amazon seller, you’ll also have the power to promote and advertise your selling space across the site — but if you’re trying to kick your Amazon efficiency up to a whole new level, it’s worth checking out FBA.

What is Amazon FBA?

what is amazon fba

The platform’s FBA service is a tool that enables sellers to pre-emptively send and store their products in one of Amazon’s many fulfillment centers.

That means every time a customer orders something from your Amazon store, it’s Amazon that take care of finding, packing, shipping and providing subsequent customer service for that product.



It’s worth pointing out that various other costs are involved. Amazon generally charges an inventory storage fee — and so if your products aren’t selling well, this will be a constant overhead.

But for many eCommerce businesses, FBA is a fantastic way to scale regardless of such costs. Best of all, it’s incredibly easy to hop on the bandwagon and give it a try.

How to Start Using Fulfillment by Amazon

what is amazon fba

In order to start using FBA, you’ll need to register as a Seller. From there, you can simply add FBA to your account with the click of a button.



Once you’ve added FBA to your account, you’ll need to create product listings on the Amazon catalogue if you haven’t already. You can do this one at a time or in bulk if you’ve already integrated your company’s inventory software with Amazon’s API.

It’s usually easier and more cost-effective in order to let Amazon handle your product fulfillment, but it’s always worth doing your homework before sending away a chunk of your inventory. Amazon has got a handy comparison tool here that should help give you an idea of how much you stand to spend or save by using FBA.

After listing your products, it’s time to prepare them to get them shipping-ready and send them through to Amazon. You can create shipping plans, check out discount partner carrying options and track your shipments to Amazon’s fulfillment centers online.



From there, you can sit back and let Amazon do the rest. The web giant will fill all of your FBA store orders from web-to-warehouse without you having to lift a finger.

Steps to Start Using Fulfillment by Amazon (FBA)Description
Register as a SellerInitial step to start using FBA.
Add FBA to your accountThis can be done with a simple click once you've registered.
Create product listingsList your products on the Amazon catalogue. Can be done individually or in bulk if integrated with Amazon’s API.
Consider cost-effectivenessUse Amazon's comparison tool to evaluate the costs and benefits of FBA versus handling your own fulfillment.
Prepare and ship productsGet products shipping-ready, create shipping plans, and send them to Amazon’s fulfillment centers.
Let Amazon handle fulfillmentOnce products are at Amazon's centers, they handle all order fulfillments related to those products without your intervention.

Amazon FBA Tips

  • Embrace Amazon’s Power in Retail: Amazon has grown into the world’s leading e-retailer. To maximize visibility and sales, consider listing your products on their platform.
  • Utilize Amazon’s Selling Plans: Choose a fee structure that fits your business. The Professional plan, for instance, allows unlimited product sales , while the Individual plan charges per product sold.
  • Do Your Homework Before Using FBA: While FBA is beneficial, it comes with costs, like inventory storage fees. It’s essential to evaluate if the service aligns with your business model and product turnover.
  • Stay Informed and Flexible: Not all businesses are the same, and while many benefit from FBA, it might not be perfect for everyone. Always assess and adjust based on your business needs and performance metrics.

The Bottom Line

what is amazon fba

If you’re a small, independent business operating in any sort of retail space, it doesn’t make a whole lot of sense to shun eCommerce platforms like Amazon.

Amazon’s huge profits are driven by independent Sellers, and so the site wants you to succeed. That’s why its FBA initiative poses such an attractive opportunity for successful small businesses looking to start scaling more rapidly.



But as always, you’ve got to do your homework. Not two businesses are alike, and FBA won’t be perfect for everyone.

Amazon Tape Photo via Shutterstock

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Nash Riggins Nash Riggins is a Staff Writer for Small Business Trends and an American journalist based in central Scotland. Nash covers industry studies, emerging trends and general business developments. His writing background includes The Huffington Post, World Finance and GuruFocus. His website is NashRiggins.com.

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