By providing a robust retail platform and a ready-made audience of eager shoppers, Amazon has long made it easy for online sellers to run successful businesses
Now, with its Fulfilment by Amazon (FBA) service, it’s removing more of the hard work, giving you the chance to make even more money with less stress.
Let’s take a closer look at FBA, what it offers and a couple of potential downsides.
How does being an Amazon FBA seller work?
Launched in the US back in 2006 and now available in Europe, Fulfilment by Amazon is a service that gives sellers the ability to utilise Amazon’s market-leading order fulfilment and customer service infrastructure.
Instead of storing, packaging and posting items to buyers yourself, becoming an Amazon FBA seller means that you ship inventory to an Amazon warehouse and the team there takes care of everything whenever one of your customers completes a purchase. The only thing you need to think about as an Amazon FBA seller is keeping Amazon well-stocked with your products.
How do you pay for FBA?
In return for Amazon’s heavy-lifting capabilities, you pay two Amazon FBA seller fees for any items sold: one for fulfilment and another for storage. This works on a pay-as-you-sell basis, and the amount charged will be influenced by factors like item size and weight, and whether the customer is in the UK or elsewhere in Europe.
These fees will be charged on top of the sales fees you’d usually pay Amazon for having your product on the website.
Unfortunately, there’s no easy way of showing how much FBA is likely to cost you as a seller – it really depends on your business and what you sell. Amazon’s own pricing guide is eight pages long, but it gives plenty of examples to give you a decent idea of what to expect.
The benefits of being an Amazon FBA seller
There are several reasons to subscribe to FBA; below are a few of the most obvious to consider.
1. More sales through Amazon Prime
Amazon Prime promises “super-fast, flexible delivery options on millions of items”, and by signing up to FBA, your products will be eligible for it.
Knowing straight away that they can get hold of your items the next day without paying any extra, shoppers are more likely to click ‘buy’, and that should mean more sales – and more profit – for you.
There’s data to back this up too: studies in the US have shown that the average Prime member spends almost twice as much as the average non-member ($1,300 vs $700), and that they shop on the site 25 times a year, compared with 14 for non-subscribers.
Need another stat before you’re convinced? There are now more paid-up Prime members in the world than there are people in Germany.
2. More convenience for you
With Amazon taking care of all the donkey work – picking, packing, posting and dealing with customer queries - you’re free to focus on other aspects of your business. That means more time for marketing, researching new products and staying on top of consumer trends.
When you’re running things yourself, the business tops when you stop; but when Amazon’s on your side, you have the flexibility to stop, slow down or take a break whenever you like. Ready for a holiday? Jet away for two weeks without any stress – providing Amazon has enough of your stock, the wheels keep moving while you’re gone.
3. An opportunity to scale up
When you’re reliant on your own property to store inventory, it can be difficult to grow your business. Your spare room only has so much space for new storage units and shelving, and warehousing is expensive.
However, if after sourcing new stock you can quickly move it onto Amazon, you’re left with a clutter-free space at home and more room to scale up when business starts to build. A ready-made and experienced customer service team will be useful here too – more customers will inevitably mean more queries.
4. An easy way into Europe
With different postage systems and customer service language barriers to consider, International selling can be complicated. But with Amazon taking care of everything, Europe needn’t be a step too far for your business.
Just pass your stock on to your chosen Amazon Fulfilment Centre and tell Amazon you want your products to be available to shoppers across Europe; they’ll use their own continental infrastructure to take care of the rest.
The potential pitfalls of FBA
It all sounds great so far, doesn’t it? Well, there are a few pitfalls you might want to consider before signing up.
If you’re selling smaller, lighter items like the t-shirts and memory cards used as examples in Amazon’s pricing guide, and you have a lot that you expect to sell quickly, FBA is a bit of a no-brainer. However, if you’re selling larger, more slow-moving products, the storage fees could well start impacting your profit margins.
Consider as well that, while FBA opens Europe up as a new market for your business, selling there will cost a little more than selling to shoppers in the UK.
Being a pay-as-you-go service, there’s nothing to say you can’t try FBA out for a little while and then withdraw if it doesn’t work for you.
How to get started with FBA
Getting started couldn’t really be any easier; assuming you’re already signed up as a seller with Amazon, you just need to select the ‘Fulfilment by Amazon’ option when listing your products on the site. Amazon will then tell you what steps to take next.
FBA makes international selling a whole lot easier, but you’ll still need to consider the complexities of dealing with more than one currency. This is where we can help – a moneycorp online seller account can hold both euros and pounds, allowing you to collect your international revenues quickly and cheaply as an Amazon FBA international seller instead of having to rely on the costly exchange services of a high-street bank.
It couldn’t be much simpler: you sell to European customers using FBA and the money goes straight to your moneycorp account. You’re then free to transfer your funds back to an account of your choice whenever you’re ready, all with impressively low fees and some of the industry’s most competitive exchange rates.
Ready to start expanding your ecommerce business across Europe? Sign up for your moneycorp online sellers account today.