Amazon's revenue was a whopping $469 billion in 2021, up from $386 billion in 2020 — and roughly one-quarter (22%) of that revenue will be driven by third-party vendors! Fulfillment by Amazon (FBA) is used by 89% of third-party merchants to handle their Amazon business.
Is Amazon FBA worth it? Making the decision to sell through Amazon FBA is crucial to your long-term success. Read on to find out more about FBA if you are still considering this selling program.
One thing quite interesting about FBA is that this program has been around since 2006. Sowhat is FBA, how did it get that far to be here with us today? FBA stands for Fulfillment by Amazon, it is an Amazon order fulfillment service for e-commerce sellers.
This is how FBA works. As a seller, you choose and send your products to Amazon Fulfillment Centers for storage. When you make a sale on Amazon, your products will be shipped from Amazon storage to customers. In other words, Amazon handles the majority of e-commerce fulfillment tasks, such as inventory storage, order packaging, shipping, return processing, and even customer service.
The FBA form's detailed operating procedure is as follows:
Sellers like the FBA program because it is simple and easy to use. It lets retailers focus on core activities while delegating others to their partner, Amazon.
Both FBA and FBM have their own strengths to enhance sellers' sales and improve their bottom line. Many sellers find that they are at a crossroads when they have to choose between FBA and FBM. Todecidewhether Amazon's FBA is worth it, let's compare the pros and cons of both FBA and FBM.
FBA is a great idea for sellers who want to increase their sales by making use of Amazon’s free traffic and reaching more customers. FBA assists with all stages, from packaging to shipping to customer service. Businesses that use FBA save time, effort, and resources while they still manage sales.
In essence, FBA will help your business operates in a seamless manner. This program is suitable for anyone who feels okaywith Amazon having more control of the process.
What is FBM? FBM is an acronym for Fulfillment by Merchant, this is a form of order processing where Amazon sellers are responsible for packaging, shipping, and completing orders that customers order on Amazon. FBM can be managed through direct sellers or through fulfillment providers.
Sellers who use FBM Amazon have complete control over the entire process, from purchase to shipping and receiving. The disadvantage of this approach is that merchants are not eligible for the Buy Box feature because Amazon prioritizes FBA service users.
If you require more control over your client, FBM is the way to go. At the same time, you might consider doing fulfillment by the merchant if you have good customer service methods, a sluggish inventory turnover, deal with large or enormous products, and can save expenses while fulfilling product orders.
If it is still hard to consider between FBA and FBM, take a look at these figures below, thesewill help you decide whether Amazon FBA is worth it.
According to a survey of JungleScout, Amazon FBA is the most popular fulfillment option for third-party sellers;89% of sellers use Amazon FBA (Fulfillment by Amazon) as their selling method, 59% of sellers use the private label model to build their own product and brand.
Amazon sellers have better profit margins than other traditional businesses such as brick-and-mortar.
The actual figures for each seller can vary greatly, but on average, Amazon sellers can makefrom$1,000 to $25,000 a month. New sellers can make an average of $42,000 each year. According to The State of the Amazon Seller 2021 survey, 62% of sellers saw an increase in profit in 2020, encouraging them to continue selling on the platform in 2022.
When it came to earnings, the data varied greatly. Nearly half of vendors earned between$1,000 and $25,000 per month, while a small percentage, around 20%, earned between$25,000 and $250,000 per month.
According to Junglescount's survey, the majority of Amazon merchants (65%) sell with a respectable profit margin of 11% or above.
Approximately one-third (32%)of these merchants have a profit margin of 20% or above.
It can not be denied that FBA is a program that brings in multiple benefits for sellers.
Taking advantage of Amazon's large traffic has resulted in many firms increasing their sales by up to 20%. Tens of millions of people visit Amazon every day, and it is because of this free traffic that businesses may prosper even without spending a lot of money on advertising!
FBA is also a good way to increase your passive income. The goal here is to choose the correct products, run the appropriate promotions, and keep effective inventory levels.
FBA is a wonderful alternative if you own a small business and lack the capacity to manage and transport items to clients. FBA assists with every stage of the process, from packaging to shipping to customer service. FBA allows businesses to save time, effort, and resources.
Amazon creates a favorable condition for sellers that uses FBA to reach the buy box.Amazon gives FBA a perfect score for multiple variables including shipping method, on-time delivery, and inventory depth. That’s why FBA sellers can easily win the buy box while FBM sellers find it hard to win this box.
Amazon has a system to distribute your products in many different storages. This will shorten the shipping time and meet the need of customers living in the US.
Your product will be labeled Amazon Prime if you use FBA. According toBacklinkioresearch, the number of Amazon Prime members has surpassed 200 million people. Amazon Prime will be available in 22 countries worldwide by October 2021! Amazon Prime members receive free shipping, receive it quickly, and save time in just two days after ordering!
Here are a few of the drawbacks of Amazon FBA.
It does not a surprise that selling on Amazon in general and selling by using FBA specifically is expensive. Sellers must pay fees in addition to the monthly charge of $39.99 or $0.99 for each product sold while using FBA:
When using FBA, you have to accept the fact that many processes have been handled by Amazon and you may not know what really happens with your products and customers. FBA is a program that provides sellers a way to get started quickie and simply. Your business can freely go its own way without you keep watching it all the time. If you want to handle everything in-house, FBA is not for you.
Is Amazon FBA worth it in 2023? Yes! FBA Amazon is compelling because it offers continuous support for sellers to run their business seamlessly and smoothly on its platform with cutting-edge technology, and broad distribution from a logistics standpoint.
Start selling on Amazon with FBA today! And if you are looking for an affordable print-on-demand supplier to choose products from, give Printway a try. We will be an eager beaver helping you choose the best products for your store.
With the help of Printway - Print On Demand Fulfillment Supplier, selling on Amazon and other platforms has never been easier. We help businesses withprinting, packaging, brand building, shipping, and more.
Excited to find out more?Drop us a message and our supporting team will contact you in no time
Being one of the leading Print on Demand Fulfillment Platforms in the eCommerce industry, Printway is proudly offering POD fulfillment services globally with more than 500+ products & more than 1000+ SKUs.
With our key strength & advantage in manufacturing experience, Printway is operating our in-house factory in Vietnam which is focusing on Home Decor & Kitchen products, especially on some key materials such as wood, metal, acrylic, ceramic…
Aiming to build more line up to the Home Living products range, Printway also has fulfillment networks & printing services in the US, EU, Canada, Australia, UK & China.
Ecommerce sellers now can easily choose within our 500+ products (t-shirt, hoodie, sweatshirt, phones, shoes, ornaments, tumblers, mugs, metal signs...) to build their online stores and get their Print on Demand orders fulfilled by Printway via our Custom API, Shopify App, Order Desk…
Our current offering services as of now:
- Print on Demand Fulfillment
- Product on Demand
- Custom branding & Private label
- FBA, FBM, OEM, ODM
*, <a href="https://www.freepik.com/free-vector/staff-working-logistic-storage-isolated-flat-vector-illustration-cartoon-stockroom-workers-loaders-taking-boxes-from-cargo-pallet-stockroom-delivery-service-warehouse-interior-concept_10613655.htm#query=amazon&from_query=FBA&position=8&from_view=search&track=sph">Image by pch.vector</a> on Freepik