Chapter 12 How to Leverage the Power of Amazon FBA

Gennifer Carragher / 10 min read

How to Leverage the Power of Amazon FBA

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Amazon FBA has become one of the most popular ways to earn income online. In fact, there are over 2 million people selling on Amazon worldwide.

Almost anyone can list an item for sale on Amazon, whether it’s something you’ve purchased wholesale, made yourself or simply a product you no longer want.

If you enroll in the FBA program, you can automate order fulfillment by taking advantage of Amazon’s advanced shipping and fulfillment services and earn more sales from Amazon’s coveted Prime customers.

About half of all sales on Amazon come from third-party sellers.

And out of the top 10,000 sellers, 66% of them use FBA.

What is Amazon FBA?

FBA stands for Fulfillment by Amazon.

What that boils down to is: you sell it, Amazon ships it.

The way it work is:

  1. You send your products to Amazon.
  2. They store them in their warehouses.
  3. When a customer orders one of your products, Amazon picks, packs, ships and tracks the order for you.
  4. They also handle returns and refunds.

All this does come at a price. Amazon charges both storage fees and fulfillment fees.

However, those fees include Amazon’s stellar 24/7 customer service, the cost of shipping goods to customers and access to one of the largest and most advanced fulfillment networks in the world.

Why Amazon FBA Matters: Stats to Know

Amazon has more than 300 million active customers, with 90 million Prime subscribers in the U.S. alone. Brands available specifically to Prime buyers are those that utilize FBA.

And, Prime customers spend more money with Amazon.

The average customer spends $700 per year on Amazon, while Prime customers spend roughly $1,300 per year.

This means that if you use Amazon FBA and are therefore more visible to Prime buyers, you can make more money.

How Amazon FBA Works

Amazon handles all the hard work for you within FBA, so the way it works is pretty simple.

1. Send your products to Amazon.

Amazon has about 100 warehouses across the U.S., some of which are over a million square feet.

You tell them what products you’re sending, and they tell you which warehouses to ship your products to.

2. Amazon sorts and stores your products.

Once Amazon receives your products, they’ll sort and add them to their inventory.

Your products are then stored safely in their warehouses.

On the off chance that anything gets damaged in the warehouse, Amazon will reimburse you.

3. A customer buys your product.

Amazon takes care of the entire transaction for you.

They accept payment and update your inventory automatically.

4. Amazon ships your product.

One of Amazon’s warehouse workers (or robots) grabs your product from storage, packs it into a box and ships it to the customer.

5. Amazon handles customer service – well, a lot of it.

Once the customer receives your product, Amazon follows up to make sure they’re satisfied with the shipment.

They also handle any returns or questions from the customer.

As for any feedback you receive on your product listing, it’s up to you to respond and take action.

6. You get paid.

Every two weeks, Amazon totals up all your sales, deducts your seller fees and deposits your profits directly into your bank account.

That’s it! Sound pretty easy? There are a few things you need to do to make sure you’re successful.

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What You Are Responsible For When Using Amazon FBA

Here’s what you’re responsible for:

1. Choosing which products to sell.

You can sell just about anything you like, but if you want to avoid storage fees, make sure you choose products that will sell quickly.

2. Keeping your inventory in stock.

You’ll need to check your inventory levels on Amazon regularly to make sure your products stay in stock.

3. Marketing and advertising your products.

If you’re selling highly-ranked brand name products, you may not have to do this.

But if you’re selling your own custom products, you’ll need to make sure people can find them.

There are over 350 million products in Amazon’s catalog, so marketing is vital if you want yours to be found.

Benefits of Using Fulfillment by Amazon (FBA)

The FBA program is one of the top ways to grow your business and get your products in front of more people.

Amazon has an army of loyal customers, which can mean increased sales for you.

Some of the biggest benefits of FBA are:

1. Effortless logistics and shipping.

If you’ve ever managed your own fulfillment, you know it can be quite time-consuming.

Higher sales mean more time spent packing and shipping, or more money spent hiring someone to handle it.

FBA allows you to outsource the entire process, taking advantage of their expertise and experience.

2. Discounted shipping rates.

Amazon’s contracts with the major shipping carriers give them steep discounts on shipping costs.

They pass those discounts on to sellers in the form of reduced shipping prices when sending your inventory to Amazon.

Customers also benefit because many orders on Amazon are eligible for free shipping.

And Prime members get free two-day shipping on all FBA products – a huge incentive that leads to higher sales.

3. Management of returns.

Processing returns is a pain.

From dealing with upset customers to inspecting returns and handling all of the administrative aspects, Amazon takes care of all of that for you.

They manage customer inquiries, return shipping labels and reverse logistics.

They do charge a returns processing fee, but it’s worth it for the amount of work they take off your shoulders.

4. Customer service management.

Amazon has a reputation for providing excellent customer service.

They offer 24/7 support via phone, chat and email.

That eases customer’s minds, and takes a huge load off your plate.

5. Potentially unlimited storage space.

Using FBA means you don’t have to worry about how much or how little storage space you need for your products.

You don’t have to pay for a warehouse or worry about what size warehouse you need.

There are no inventory minimums, so you can send in as little as just one product.

Plus, sellers with high inventory performance scores (meaning your products sell quickly) get unlimited storage.

6. Quick delivery.

Amazon has hundreds of fulfillment centers all over the world.

So no matter where your customers are, they can reliably get products delivered to them within just a couple of days.

Once an order is placed, Amazon automatically figures out which fulfillment center is closest to the customer and ships their order from there.

7. Fulfillment of orders from other channels.

Amazon’s Multi-Channel Fulfillment (MCF) service allows you to sell products on other channels (like BigCommerce) while still getting Amazon to fulfill those orders.

You can even automate the process for free by using the FBA Shipping app.

It automatically sends orders from your BigCommerce store to Amazon for fulfillment.

It also pulls order updates and tracking information from Amazon, sending that data to your customers from your BigCommerce store.

Disadvantages of Using Fulfillment by Amazon (FBA)

Even though Amazon is an incredible selling machine, there are a few drawbacks you need to be aware of.

1. FBA costs money.

Amazon charges both storage fees and fulfillment fees.

You’ll need to understand how quickly your inventory moves in order to minimize storage fees.

And you’ll want to make sure your products are still profitable after paying Amazon’s fulfillment fees.

2. Long-term storage fees.

Storage fees aren’t too bad unless your items sit for over six months.

Amazon is in the business of selling products, not storing them.

So they make sure you pay if your products aren’t selling.

If you let your inventory sit too long, you could be faced with sky-high storage fees.

3. You may see more returns.

The flip side of having an easy returns process is that customers are more likely to make returns.

You may see more impulse and test buys from customers, which can result in higher rates of returns.

4. Product prep can be difficult.

Amazon has strict guidelines on how to prepare and ship your items to them.

Products must be correctly entered into Amazon’s database, properly labeled and then shipped to the right warehouses.

It takes time to get the hang of all the details when you’re first starting out.

5. Tracking inventory can be difficult.

It can be challenging to stay on top of what products you have available, what you need to order, and what’s not selling when everything is out of view.

Out of sight, out of mind.

It’s especially difficult to keep inventory changes in sync if you sell on multiple channels.

Fortunately, the ByteStand app can automate inventory management between BigCommerce and Amazon.

6. Sales tax can be difficult.

Every state in the United States has different rules for sales tax collection.

It’s simple if your business operates in just one state, but Amazon has fulfillment centers in virtually every state, and they shuffle inventory between warehouses constantly.

  • So do you only collect sales tax for the state where your business is located?
  • Or for every state Amazon operates out of?

There’s no easy answer.

Tax partners like Avalara can help automate complicated tax rules for different regions.

7. Commingling merchandise can be scary.

To increase efficiency, Amazon gives you the option of commingling, or pooling, your products with the same products from other buyers.

If you accept, you save time on labeling and prepping your products.

But some unscrupulous sellers have been known to send in counterfeit or damaged products.

There have been instances of legitimate sellers receiving negative reviews and even being banned from selling on Amazon due to this.

14 Tactics to Successfully Sell on Amazon FBA

1. Research competitors to find profitable products.

Start by looking at Amazon’s best sellers.

It’s best not to go head-to-head with the highest sellers as a newbie, but you can get an idea of what kinds of products are popular.

Plug those products into a service like Unicorn Smasher or AMZ Scout, and you’ll get all kinds of juicy data like estimated monthly sales, competitor intel and fee calculators.

2. Be smart about what products you sell.

Always consider the sales rank.

High ranking products sell fast, but there’s a lot more competition.

Low ranking or even non-existent products can be slow sellers that result in long term storage fees.

But since there’s little to no competition, it’s easier to become the dominant seller for those listings.

If you know the sales rank, you’ll know what you’re up against.

3. Consider bundling products.

If there are dozens of sellers on the same listing, it can be hard to win the buy box.

You can get around this by creating a new bundled listing.

For example, combine a popular board game with an extra dice bag.

That allows you to create a unique listing that still shows up when people search for the main product.

Everyone who clicks on your listing buys from you, so no more competition.

Plus, you can charge more since you’re offering an added bonus.

4. Start small.

You don’t have to have hundreds of products to get started.

Learn the ropes by adding just a few products initially.

It’s much simpler to create an organized, streamlined process when you just have a handful of products.

Once the process is in place, it’s easier to scale up and add more products as you grow.

5. Build a brand.

If you want to stand out from the sea of Amazon sellers, you’ll need your own unique brand.

That means having a deep understanding of your target buyers, knowing how to position your brand, and creating consistently styled product images, titles and descriptions.

Creating your own online store where you control the customer experience to complement Amazon sales is the best way to do this.

You can also use unique packaging and inserts to make sure your brand personality stands out upon delivery.

Packaging that encourages customers to sign up for your email list or follow social accounts is a good starting place as well.

6. Use good SEO practices.

Amazon is a massive, highly competitive marketplace, so it can be difficult to get your products discovered.

But just like Google, Amazon is a search engine with ranking factors that determine which products to display for any given product search.

You can get higher in the search results by researching which keywords people use when searching for your products and using those keywords throughout your product listings.

7. Get excellent product photos.

Amazon requires that the main product image show only the product (no people, text, etc.) against a white background.

You can then add up to eight more photos (depending on the product category).

Since your images are a customer’s first impression of your products, make sure they are perfect.

Remember, people can’t hold your products when you’re selling online, so you need your photos to be as detailed as possible.

Show the product from different angles, show it in action, show close-ups of various features, and show a person holding it for scale.

Consider getting 360-degree images and videos created to make product pages that more engaging.

8. Optimize your product titles.

Ever notice how a lot of Amazon products have really long, detailed titles?

That’s sellers trying to stuff their keywords in.

Amazon allows up to 250 characters for titles, but that doesn’t mean it’s a good idea to use all 250 characters.

In fact, Amazon has been known to suppress product listings with excessively long titles.

So the goal is to be descriptive and to the point while still getting your main keyword into the title.

Try following this format: Brand name, product name, important features like color or size.

Here’s a good example: OXO Flexible 3-Piece Silicone Spatula Set, Heat Resistant And BPA Free (Green).

It includes the important information without going overboard.

9. Optimize your bullet points.

Once a customer clicks through to your product, one of the first things they’re looking for are your bullet points.

If those bullets don’t answer their questions or contain the details they need, they’re likely to bounce.

So make sure to give customers all the information necessary to make a purchase decision.

Address common questions, focus on your product’s benefits and include important product details.

Just like with your title, you want to get those keywords in without going overboard.

10. Create an in-depth product description.

Here’s your chance to go overboard.

Provide comprehensive instructions, add more product photos, throw in some videos and tell your brand story.

You want customers to understand exactly what they’re getting and who they’re getting it from when they purchase your product.

11. Answer questions.

One of Amazon’s unique features is the question and answer section.

Anyone can submit a question about a product, whether they’ve purchased it or not, and anyone can submit an answer, whether they’ve purchased the product or not.

Most sellers think they have to wait for customers to ask questions.

But you can increase engagement by getting the ball rolling yourself.

Ask a friend to post a question that’s commonly asked about your product.

Then you post the answer, and customers see that you’re an involved and helpful seller.

12. Get reviews.

If you do nothing else on this list, do this.

It’s been proven time and time again that people are more likely to buy products when they have positive reviews.

When people are unsure about something, they look around to see what other people are doing or saying.

If 100 people say Product A is great, and no one’s saying anything about Product B, guess which one people are going to buy?

13. Choose the right repricing program.

Prices change constantly on Amazon.

And although the lowest price doesn’t always win the buy box, it often does.

Most Amazon sellers use repricing software to automatically change their prices throughout the day.

If you’ve only got a handful of products, you may be able to keep up with repricing manually.

But you’ll see more success if you automate the process.

Many sellers use rule-based repricers, but that often ends up in a race to the bottom, with prices eventually going so low that there’s no profit left. Algorithmic repricers are more advanced, and typically lead to higher profits.

14. Use Amazon Marketing Services (AMS).

You know the “Sponsored products related to this item” section?

Those are ads created through AMS.

This marketing tool allows you to create ads for your products and target them based on keywords or similar products. It also provides performance analytics so you can optimize your ads.

Executive Summary

Amazon’s FBA program allows any business, no matter how small, to get their products in front of millions of customers and take advantage of the largest fulfillment network in the world.

It also allows you to leverage their first-class customer service and storage capabilities.

Plus, customers are more likely to trust your products when they’re backed by Amazon, so it’s a great way to get more sales and increase brand recognition.

Amazon takes a huge load off your plate by handling all this.

And the best part is that FBA integrates seamlessly with BigCommerce.

You can sell on both channels and have Amazon handle fulfillment and inventory management for you.

Although there are a few disadvantages to the FBA program, you can easily minimize them by using the strategies presented here.

Want more insights like this?

We’re on a mission to provide businesses like yours marketing and sales tips, tricks and industry leading knowledge to build the next house-hold name brand. Don’t miss a post. Sign up for our weekly newsletter.

Table of Contents

    Table of Contents

    IntroThe Definitive Guide to Selling on Amazon [2019 Edition]
    Chapter 1 How Rollie Shoes’ Amazon Channel Manager Hit Amazon Selling Success in Less Than 7 Months
    Chapter 2 Is Your Business a Good Fit for Amazon?
    Chapter 3 Reselling on Amazon – Thoughts from The Former Head of Selling on Amazon
    Chapter 4 A Handy Amazon Seller Account Setup Checklist to Drive Sales
    Chapter 5 Amazon Selling Strategies to Get You Started Now
    Chapter 6 Amazon Selling Pitfalls Even the Savviest Sellers Forget [Infographic]
    Chapter 7 If You Aren’t Selling Your Products, Someone Else Is – Dealing With Amazon Fraud
    Chapter 8 The Amazon Buy Box: How It Works for Sellers, and Why It’s So Important
    Chapter 9 How to Master Amazon SEO and Move Your Products up the Search Rankings in 2019
    Chapter 10 How to Successfully Market Products on Amazon & Think like a Buyer [2019]
    Chapter 11 8-Figure Private Label Seller Shares His 9 Steps to Success
    Chapter 12 The Secret Amazon Pricing Strategy to Crush the Competition
    Chapter 12 How to Leverage the Power of Amazon FBA
    Chapter 13 Amazon Seller Fees in 2019: Costs and Metrics to Consider to Increase Profit Margins
    Chapter 14 How to Make $5K an Hour Selling on Amazon
    Chapter 15 The 4 Secrets of Long-Term Amazon Success [including FBA]
    Chapter 15 Amazon Advertising & PPC: What You Need to Know, How to Get Started and a Tool to Help You Along the Way
    Chapter 16 6 Brands Discuss How Amazon Pay Increases Their Customer Experience
    Chapter 17 55 Essential Selling on Amazon Tips to Grow Sales and Win Market Share
    Chapter 18 Using BigCommerce to Sell on Amazon

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    Gennifer Carragher

    Gennifer Carragher

    Gennifer Carragher is the Customer Support Magician at ByteStand, where she lives and breathes customer service education, specifically around helping online brands sell more and better on Amazon, while sipping coee in her pajamas.

    View all posts by Gennifer Carragher

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