Selling on Amazon doesn’t mean you have to shoulder all the responsibility yourself, such as shipping and warehousing your products. Streamlining both the user and merchant experience is Amazon FBA. The primary benefit for sellers enrolled in the program is that Amazon handles the storage, packing, shipping, and even customer service for FBA orders. Otherwise, sellers are responsible for all the above, which is known as Fulfillment by Merchant (FBM).
There’s also an element of trust to consider when it comes to FBA, which can be valuable to sellers. With more than 200 million global shoppers signed up as Amazon Prime members alone and more than half of the company’s revenue coming from third-party sellers, it makes sense that shoppers would sooner make purchases that are handled by Amazon directly.
The Private Label Approach
For the sake of clarity, let’s focus on creating or selling products under your own brand, as nearly 75 percent of all Amazon sellers utilize this sales approach. Why? It’s effective, drives loyalty if products are well-received, and makes managing your sales much more streamlined. This process, via either an individual or professional seller plan, involves finding products that are well-made, in-demand and aren’t being sold by everyone under the sun – the fewer competitors, the more eyes on your company. Sourcing them from a supplier who strikes the right balance of best value and dependability is important, as they’ll be sending your products to Amazon for storage and shipment to consumers, so be sure to check out samples and inspect accordingly before jumping in.
Creating compelling listings with high-quality imagery and text content is essential as well, along with accurately targeted sponsored ad campaigns driven by raw data. If you can convince a prospect to convert and place an order, Amazon handles the rest and you can focus on other aspects of your operation.
Amazon's Role for Sellers Enrolled in FBA
Amazon will accept products with your labels and branding from either you or your supplier. These are organized, stored, and counted within their fulfillment centers across the US (and globally, based on the marketplaces and regions where you're selling).
When someone places an FBA order, it is automatically processed without any necessary involvement from you as a seller. With the spread of fulfillment centers, shoppers are able to get their products in two days or less.
Beyond fast shipping, Amazon handles:
- Customer service issues
- Returns
- Package tracking
Now consider what you already have on your plate: product sourcing, monitoring sponsored ad spend, listing management, calculating profit margins... The list can easily get overwhelming. With FBA, sellers have greater flexibility and benefit from streamlined sales management.
What's the Cost of Amazon FBA?
Many first-time sellers end up losing substantial income potential because they don’t have a firm grasp of their profits and expenses.
Calculations are made by factoring in your target profit margin, manufacturing expenses, all shipping, and overhead costs, and, most importantly in the case of FBA, all Amazon-associated fees. These fees can include everything from storage and return-related expenses to seller insurance, taxes, unsold inventory penalties, and more. Shipping and storage, in particular, can vary depending on the weight and dimensions of the product in question, whether special handling is required, and even the time of year that it needs to be stored (for instance, the holiday season can cost almost ten dollars more per month for standard-sized packages).
A Beginner's Guide to Amazon FBA
Creating a Listing
There are several steps associated with producing a compelling, high-quality listing, but that’s not all; you also need to ensure you’re targeting the right shoppers with an attractive offer.
- Ensure your listing has high-resolution imagery with a white background that clearly showcases all product angles, dimensions, and any special features. Lifestyle imagery and videos that show the product in use are beneficial as well, as they act as a means of demonstrating features in action.
- Pro Tip: Enroll in Brand Registry as soon as possible (where applicable) to unlock features like A+ Content and Amazon Storefronts.
- Include a brief description and bullet points that detail features, ideal use cases, etc. Keywords can be worked into this content but do so sparingly as, then, it doesn’t read as spam. All text needs to be engaging, worthwhile and high-quality.
- Pro Tip: Use Trellis' Keyword Discovery Tool for opportunities to include throughout your listing.
- Purchase a UPC barcode for your listing. This is required by Amazon. They can be purchased directly here.
- Utilize any and all spaces available for information in your listing. You want to keep your shoppers as informed as possible to increase purchases and decrease returns.
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Launching a Product
Creating a compelling product listing is only a portion of the battle. New listings and sellers get a bit of a "honeymoon period" where Amazon may include the product listing higher in the results as the algorithm works to figure out where it falls in the overall catalog.
In the world of eCommerce, advertising is a necessity from day one. Work with a trusted partner or scalable platform like Trellis to assist in your Amazon FBA product launch.
When it comes to generating profit and moving product, bear in mind that your product selling rate (sales velocity), sales history and the number of shoppers making a purchase (converting) contribute to what is known as your Best Seller Rank (BSR). Increasing this rank by encouraging further sales, whether through review accumulation, competitive pricing or otherwise, is critical to generating more income.
As you're launching, it's easy to make a lot of quick decisions and changes because you think something may not be performing. Remember that you need ample data. Keep a close eye on your listing and ads, but let some time elapse to see what's working or what needs your attention.
Make the Most of Amazon FBA
Amazon FBA has proven to be a great resource for brands and sellers looking to take their business to the next level. It's tablestakes for most categories with the volume of sellers relying on Amazon Prime products for quick delivery and high quality.
Working with a trusted platform like Trellis, or engaging with one of our preferred partners, can give you a leg up on the competition (which is critical as you're growing). Book a demo today!