The drawback of Amazon FBA
Recently, we described the benefits of Fulfilment by Amazon but unfortunately Amazon FBA isn’t suitable for all Sellers. Since Amazon takes responsibility for storing, preparing and sending your products to your customers, it is no surprise that Amazon has certain terms and conditions in place which may make Amazon FBA a less desirable option. Below are some of the issues which Sellers may have to deal with if they decide to use Amazon’s storage & shipping service.
What are the issues of FBA?
Using Amazon FBA does mean higher charges. For the use of FBA services, Amazon charges for storage and fulfilment fees meaning that Sellers may end up paying a lot more than they are making from sales. Moreover, if inventory remains in a fulfilment centre after a year, Amazon’s storage fees will skyrocket. Therefore, Sellers should make sure that the ASINs they apply for FBA with are worth the risk; both in how fast they sell and how much they sell for.
Products must be packed properly
Amazon can be a stickler when it comes to how your FBA shipment is sent to them. Issues such as being incorrectly labelled may end with extra fees being incurred. Equally if the courier misses the designated shipping time slot, they will be turned away by the fulfilment centre. This would mean that you will have to re-book another time slot which could affect your sales.
Responsibility of keeping stocked is on the Seller
It is up to the Seller to keep an eye on how much stock they are holding in Amazon’s Fulfilment Centres. This means FBA Sellers must remember to restock their inventory. It is the responsibility of the Seller to also determine how fast their inventory may sell. Moreover, it is not as clear cut as it sounds as every month will never be the same. To the untrained eye, FBA may seem like a game of chance but ultimately Sellers will realise things such as special holidays like Christmas & Prime Day and unexpected news is what will affect your Amazon sales the most. An inexperienced Fulfilled by Amazon Seller must accept that it will take some time to be able to understand and foretell the possible rise and fall of the speed in which their stock will sell.
Is FBA worth it?
There are many advantages of using FBA but it isnt a sensible option for every Seller. Fulfilment by Amazon may be worth the drawbacks if you are able to stay on track of it all and can still make a high profit margin despite the charges. On average, FBA sellers can gain a 30-50% increase in sales so if it is a valid option for your brand, it might be worth checking it out.
Is FBA the right option for you?
We at Molzi understand that FBA requires a lot of work and we are more than happy to use our expertise to make sure that FBA is the right shipping option for your brand. If Fulfilment By Amazon seems worth the drawbacks but seems a little full on, we can manage it for you instead. We have over 270 years of combined commercial and management experience in strategy, e-commerce, digital content and advertising so you can feel safe with the knowledge that we know how to optimise your sales!