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Amazon FBA - A Complete Guide

20 Feb 16

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Amazon is among the most reputed online retailers which has hundreds of merchants and even more buyers or shoppers. You can find almost any type of goods in this marketplace sold by different merchants from all around the world. Selling on this online retailer is now among the most sought-after ways to earn money from home. Thousands of people are now using this platform to earn a fortune which in turn has resulted in high competition.

Are you thinking of starting an amazon fba business? If so, you must understand that there are several factors and aspects that need to be considered before and after you launch an item to achieve success in such a tough environment. These include choosing profitable goods that can generate a high number of sales, selecting an economical method of fulfillment, discovering the most appropriate keywords and inserting them in title and description to land higher in search results, monitoring competitors, tracking reviews and much more.

One of the key traits of smart and successful merchants is that they utilize all the technologies and services developed for their ease. Talking about services, a great service available to Amazon merchants is FBA.

This program makes the fulfillment process very simple and easy for them. From the storage of goods to customer care, it takes care of everything on behalf of merchants. But of course, with services comes the costs.

Although this is not the only way of fulfillment and merchants can do this on their own as well, it is the conventional way of fulfillment used by many sellers from all around the globe. So, here we are going to discuss it in detail.

In this complete guide of selling on amazon fba, you will find everything from how to sell on it to the charges associated with it and the tools merchants can use for their benefit.

Amazon FBA Seller

When you think of offering something on this huge marketplace, the important questions you must focus on is where will you store all your inventory, what procedures will you use for their packaging, how will you ship them to the buyers and do you have enough time to manage customer support on time and effectively. This is where FBA, the fulfillment service offered by Amazon, comes in.

It is a program that is solely developed by keeping the comfort of sellers in mind. Through this service, the goods of merchants are stored in different storehouses of Amazon and they take care of them, pack them in a secure manner every time a shopper places an order for an item sold by a particular seller, ships them to the purchaser on time and most importantly deal with all the buyers and resolve their queries including refunds.

In addition to all these services, another great benefit of this program is that if your goods get damaged while in amazon’s custody, you will get the full retail price of that item.

Talking about the benefits, there are many other advantages as well. To start with, the goods that are shipped through this program are delivered to the purchasers within 2 days under prime shipping and that too for free. This is an efficient way of gaining more shoppers because who wouldn’t want free shipping? Moreover, since shoppers trust Amazon when your goods are their responsibility, they have trust in your items as well which means more sales. 

Furthermore, the seller using this method has more probability of getting orders when it comes to the buy box which is a huge benefit. Not to mention, the shipping charges are usually less through this method when you compare it to that of other methods.

Here, one must know that Amazon will not notify you when your inventory level is low, you have to monitor it regularly. Secondly, promoting the items is up to you as well.

How does Amazon fba Work?

It is truly a simple process with only a few easy steps. First, a seller account on this marketplace must be created where the merchants will mention the category and specific goods they intend to sell. This will help Amazon in determining which storehouse they want you to send your goods to. You will then get a packaging sheet on your account for shipping your items to the storehouse.

Once the units are received by them the rest will be up to Amazon. They will safely store them so that they don’t get damaged, a refund will be provided if they do. When an order is placed for your item, they will automatically pack it in a nice and secure manner and will manage the transaction as well.

Next, it will be shipped to the shopper. Furthermore, after it is received by the purchaser, Amazon will contact him/her to get the feedback and if in unfortunate circumstances they want a refund, it will be handled on your behalf. 

When a unit is sold, Amazon automatically updates the availability of the item. You should keep tabs on your stock and send more units as soon as the level is below a certain number.

Costs of FBA

There are different types of costs that are inherent in the process of selling on this platform. You must determine all of them beforehand and compare them with your budget to figure out how much investment do you need.

Seller Plan Charges

When you set up an account on seller central, you have to select one of the two seller plans to proceed. These plans are named as individual and professional and can be chosen on the number of units you are expected to sell per month.

If your sales per month aren't more than 40 units, the individual plan is the best fit for you. The subscribers of this plan pay $1 on every unit sold but there are no additional subscription charges. On the other hand, if sales are more than 40 units per month the right choice would be a professional plan as you won’t have to pay per unit and only a monthly fee of $39.99 has to be paid. For those who want to sell items such as DVDs, there will be additional charges.

Amazon Fulfillment Fee    

It is the total of the costs for storage, packing, and shipping services rendered by Amazon to the merchants. It also includes the charges for customer care provided to your buyers.

How much you will be charged for these services depends on the weight and dimensions of your goods and is charged per unit. For a beginner who is launching his/her first product, it is wise to select the one which is smaller in size and doesn’t have much weight. Such items are easier to deliver, hence have less shipping charges.

The storage charges depend on how much space your items occupy and are calculated on the basis of per cubic foot. The storage charges have to be paid on a monthly basis which means you shouldn’t send more than necessary items to Amazon’s storage center to reduce your costs.

To determine how many units you should store in the warehouse of Amazon, pay attention to how much time your goods take to sell. If they sell quickly, you should send a good number of units to prevent a low inventory level. On the other hand, if there aren’t much sales per month, don’t send the inventory which will last more than 2 months. To reduce the costs, you can store extra inventory by renting a place with low rent.

The fee structure is updated by Amazon regularly based on the changes in shipping charges and other costs.

Referral fees    

One the basis of cost and category of the goods, Amazon takes a fixed amount on the sale of every unit which is called referral fees. Most categories have less than 15% fee but some categories such as clothing and accessories or Gift cards have a higher fee. This means the category of goods should be selected very carefully.

Categories such as outdoor items and office products have 15% fees while electronics and computers have fees as low as less than 10%. A beginner with a limited budget should try to choose such categories. These items are easy to sell and have the potential to produce high income.

Suppose, you are selling a smartphone case for $30, the referral fee will be $25.5 which is 15% of the selling price.

Calculating Fulfillment Costs

To calculate these costs you need to determine all of the charges mentioned above individually and then sum them up but doing this manually means the results can be inaccurate due to human error and it is time-consuming as well. You mush be aware of how the fee is calculated to choose the most economical item but the smart move is to calculate them through the estimator tool designed for this purpose.

Many different reputable brands are offering this efficient tool. It automatically calculates the total fee within a few seconds by asking you to provide product details such as weight and dimensions etc. Furthermore, some tools even calculate the fulfillment by merchant fees so that you can compare the costs of both methods.

How to Find the Best Products to Sell on Amazon fba?

The key element for generating high sales on this marketplace is to choose the appropriate item. Note, the right or appropriate item is the one that doesn’t have a lot of competition but has high demand which means it has the capacity to produce a high number of sales and in turn a high revenue and income.

However, the question here is, how to know which products are best and how can the be discovered? Well, to determine if an item is worth the investment or not you need to analyze the data of similar goods such as their no. of sales, average revenue and ratings, etc. But if you do it manually, it would take a lot of time and the results can be inaccurate due to human error. This is why many merchants are using product research tools.

These tools have thousands of Amazon goods in their database and bring you the most accurate results based on real-time data within a few minutes. Not to mention, they also help you in determining the revenues and profits that you are expected to make after paying for all the expenses. This will help you in making a more informed decision. 

It also aids in determining a profitable selling price for your goods because you know all your expenses.

Below we have listed some of the most effective and efficient tools you can use for this purpose.

  • IO Scout
  • Viral Launch
  • Jungle Scout

 

  • IO Scout

selling on amazon fba

Many merchants consider IO Scout as one of the most effective tools for selling successfully online this tool is developed to produce accurate and exact results with the help of a huge database of over 120 million Amazon goods which is updated after every hour. From private label goods to retail arbitrage and wholesale goods, the tool can help you discover any kind of goods.

The real-time data ensures that the users get the exact details of the items. To pick the right item for selling, the total sales and revenue, average review and ratings and average sales rank of the similar items offered by different merchants can be examined through this tool. These statistics are very useful in determining the capacity of the item.

The results can be viewed by simply selecting the item’s category and entering its ASIN. A list of items along with all these important calculations will then be displayed. If have any specifications about no. of reviews, price, and rank of the goods, etc. you can apply filters.

Confused about which item to sell? Simply select the category in the tool and a list of best selling items will be displayed, one of these items can then be selected if they interest you.

Monitoring the performance of competitors is very important for success in this competitive marketplace because it lets you understand their strategies which in turn will help you in gaining a competitive edge. For example, tracking their prices will aid you in adjusting the prices of your goods

Since the competition on Amazon is quite high, this app brings you the product tracking feature through which you can monitor the goods of your competitor to learn about their strategies and gain a competitive edge. You can analyze their retail price to sell your goods at a reasonable price.

The performance of any items can also be analyzes through charts and graphs of their price and sale history etc.

There is also a sales estimator in the toolset through which you can accurately determine all the costs and expenses of selling. Because the fees of fulfillment are determined by the dimensions and weight of the goods, you will have to put in these details. It also lets you predict the sales you are expected to generate and the income you will earn through a certain item. To see the details instantly on the product’s page, you can use the chrome plugin of IO Scout.

The toolset can be accessed by subscribing to one of the 3 pricing plans named start-up, seller and business. Newbies will find the start-up plan ideal for their needs and it is available only for $174/per or you can also buy a monthly package for $29/month.

The seller and business packages are designed for those who want to use more advanced features and can be purchased for $294 and $414 per year respectively. Monthly subscriptions of both packages are also available for $49 and $69 respectively. All three packages also come with a free trial.

  • Viral Launch

Efficiency, accuracy and simple interface are what users like the most about this toolset which is packed with all the tools that an online merchant needs. By displaying accurate data of different kinds of items, the toolset helps you in picking the right product quickly. Additionally, the estimated income and sales can also be calculated accurately.

Search filters are also available for those who have specific criteria for sales and prices etc. The performance of the goods can be evaluated through the “Product idea score” and “Opportunity score.”

The trends and history of different similar items will also help you determine if the product is worth the investment. You can also monitor the best selling items through the app.

The process of PPC can be time-consuming so if you want to automate it utilize the “Kinetic PPC” tool whereas if you are looking to enhance your listing through keywords, a keyword research tool is also available.

Viral Launch offers 4 subscription plans; beginner, pro, builder and kinetic. These are available for $51, $85, $127 and $199 respectively. The more advanced the package, the more features can be accessed.

As the name suggests, the beginner package is designed for newbies while the pro plan is ideal for emerging sellers. Builder plan helps the merchants in dominating their niche while the Kinetic package has the features that will fit the needs of established merchants.

  • Jungle Scout

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This complete toolset is also loaded with a lot of important features for online merchants. From estimating the income to discovering the suitable keywords, everything is possible with this tool.

It will show you the average price, total sales, best seller rank and many other useful stats of hundreds of goods so that you can decide which item is right for you. To get estimates of expected sales and income, users can use the profit calculator. An option to apply filters is also available.

“Opportunity Finder” is another feature embedded in this toolset that assigns a score to the niches based on its data. This score helps in determining the potential of the niche.

Price history trends can be examined through charts and graphs which will give useful insights into the performance of the goods. These can be used to track the performance of the goods of your competitors as well.

An important step to becoming a successful seller on this platform is to pick suitable manufacturers, vendors or suppliers. That is why Jungle Scout brings you details of thousands of manufacturers embedded in the supplier’s database.

Furthermore, the appropriate keywords can be discovered through the keyword tool. These will help you in getting a better rank in search results of the shoppers. The “Jungle Scout Academy” is another great feature that consists of a lot of material on how to become a successful online merchant.

Different sites of Amazon such as the USA, UK, Spain, Canada, and France are supported by this app. A chrome plugin is also available which shows instant data while you browse the items on Amazon

The web app costs $468 per year or $49 per month whereas the plugin can be purchased for $228 per year or $39 per month. A combination of both of these is also available for $69/month. A refund can be claimed within 14 days after the purchase.

Final Words

Selling on Amazon involves a lot of factors and elements which must to accessed carefully if you want to achieve success on this platform. Before opting for FBA, one must know the benefits it will provide as well as all the expenses associated with it. There are different kinds of expenses that can be determined through the FBA calculator tool. 

Picking the appropriate goods plays a major role in your success because if an item is not desired by the shopper it won’t be able to generate sales which means low income. You can use one of the many top-notch tools such as IO Scout etc. to conduct the product research. These tools not only provide accurate details but saves time as well.

FAQ

Q: What is the criteria of becoming fba seller?

A: There aren’t any strict requirements such as high qualifications etc. Anyone can become a seller but you have to make an account on seller central. Different types of fees have to be paid as well.