What Is Fulfillment By Amazon? How It Benefits?


Have you ever heard that half of all Amazon sales came from third-party sellers rather than Amazon directly and ⅔ among those sellers are using Fulfillment by Amazon (FBA)? FBA is not a new concept as it has been successfully applied to optimize many businesses’ profit margins for decades.

It is undeniable that FBA is a huge brick that builds Amazon giant. If you inquire what it is and why it is so hot, Gearment is here to break down all of these wonders in this blog.

Let’s get started.

1. What is Fulfillment by Amazon?

Fulfillment By Amazon or FBA is a service offered by Amazon where it helps sellers take the burden off of fulfillment things, such as storage, packaging, and shipping. If sellers choose FBA, they will be charged with some specific fees that cover all processes.

2. How does Fulfillment by Amazon work?

Sellers send their items to Amazon to be stored in Amazon fulfillment centers. After Amazon receives your inventory, you can monitor it through your tracking number. It is stored in Amazon warehouse until a customer orders your items from Amazon (or another eCommerce platform). Amazon is then responsible for picking, packing and shipping these sold items to customer’s hands

3. Why sell Gearment products with FBA?

Free picking up fee

The process of your inventories being shipped into Amazon warehouses is a huge burden for sellers since there are a bunch of fees they need to cover. Gearment will lighten this heavy load on your shoulders by covering the picking up fee to Amazon.

Leverage Amazon’s reputation for your business 

One of the biggest benefits of FBA is that Amazon is a trusted brand. Your items with an FBA shipping label can gain much more credibility and reputation to customers more than ever. Most shoppers believe that products with FBA are those with Amazon’s quality – a brand your customers have grown to trust. With this huge benefit, you can easily grant a privilege from Amazon to boost your sales and gain trust from your customers.

More secure stock on holidays

Stocking and shipping on holidays are always a huge nightmare to most sellers. It may not only decrease your store’s performance on most ecommerce platforms, but seriously disappoint your customers. Being ready for the worst case is always necessary. Stocking Gearment’s products in FBA warehouses as soon as possible is the best preparation for you on the overloading-order days.

It’s much easier to win Buy Box

Buy Box on Amazon is the box next to a listing that allows customers to click “add to cart” which helps generate 82% of Amazon sales. This is a competition between Amazon sellers who sell the same products. Since the Amazon algorithm tends to prefer FBA sellers so those who use FBA can leverage this to boost your sales more than ever. Buy Box helps your products be more visible to customers which have 82% to generate sales for your e-commerce .

Faster shipping time and discount shipping rate

Shipping fee and delivery time are two main reasons for cart abandonment during checkout. But they will no longer bother you since Amazon surely gives excellent 2-day shipping services for FBA sellers’ customers while this  is quite extreme for FBM sellers (Fulfillment By Merchant).

With 175 fulfillment centers around the world, orders placed through Amazon are processed and shipped faster than those sent out from FBM retailers. Through FBA, sellers are going to spend less on shipping fees than operating your own shipping. FBA also makes your products eligible for Amazon Prime free two-day shipping, free shipping on qualifying orders and other similar options, which most customers are crazy in love with. 

Customer service and return management

If you choose FBA, customer service will no longer bother you since Amazon offers their own customer service, returns, and refunds for FBA sellers. They hire professionals to ensure that your customers always have a positive experience. They tackle issues 24/7 and save you the trouble and the money of having to find qualified professionals to handle customer issues. This takes one more huge thing off your plate. 

A chance to join Prime Day

Despite being exclusive to Prime shoppers, Amazon Prime Day 2021 is the second-largest shopping event for Amazon sellers after Black Friday. This tells how giant the Prime Day is to sellers. Using FBA as your fulfillment method will definitely help you get a precious chance to join it. Regardless of your business model, by joining Amazon as an FBA seller your products will automatically be considered for Amazon Prime. Leverage this opportunity to significantly boost your sales as well as your brand awareness to this massive Prime customer segment. 

Multi-channel fulfillment

FBA isn’t only for selling on the Amazon platform. You can also use FBA to access new multi-channel fulfillment solutions. MCF is a program within FBA allowing you to ship your inventory to both your Amazon customers and the ones from other ecommerce platforms while still having Amazon fulfill them. Managing fulfillment across omni-channel can be difficult, expensive, time-consuming and inconsistent. Letting Amazon handle it for you, ensures you’re giving customers the best experience possible. 

Amazon’s quality assurance

Once you choose FBA, you will get a reputable product supervisor. Before being stored into Amazon’s warehouse, all products have to go through a stringent quality inspection process examined by Amazon. If the product doesn’t satisfy quality requirements, it will be returned directly to the manufacturer. Sellers can simply sit on the couch while an automatic quality management system from a reliable giant Amazon monitors your works. Thereby, preventing customer complaints, improving your stores’ performance and the product’s ranking.

4. The costs of FBA:

Despite the huge benefits of using FBA, there are a few things that sellers should consider before joining this giant path.

Long term storage fee

If you are a starter, jumping right into FBA is quite risky since you have no idea which products are worth being fulfilled by FBA. Amazon will charge a fee for products that are stored in their warehouses for up to 365 days. This long-term storage fee may heavily kick in your profit margins. 

To minimize the risks as much as possible, start fulfilling at Gearment and pick your best-selling variants to be fulfilled by FBA. This way will definitely help you know exactly what kind of products are easily sold to completely prevent the long term fee from FBA.

FBA long term storage fee
Long-term inventory storage fee, date: 27th August, 2021. Source: sellercenter.Amazon.com

Fulfillment fee  

The FBA fee is a per-unit fee charged to fulfill items to customers for purchases in the Amazon store. The fee varies depending on an item’s category, size and weight. The fee is quite high for FBA sellers. You pay storage fees and fulfillment fees with the Amazon FBA program. The more inventory you have stored, the more it’s going to cost you. Use the FBA revenue calculator to estimate fees and see how to preview your fees.

Monthly inventory storage fee

Besides long-term storage fee, Amazon also charges monthly inventory of the space your inventory occupies measured in cubic feet in the fulfillment center. The inventory is classified into 2 categories: Non-dangerous and dangerous goods which use different card rates as shown below.

FBA monthly inventory storage fee
Monthly inventory storage fee, date: 27th August, 2021. Source: sellercenter.Amazon.com

Return fee

Charged on orders that Amazon provides a customer with free return shipping. Return processing fees are charged on each item returned in the Apparel and Shoes categories. Items returned in Watches, Jewelry, Luggage, Handbags & Sunglasses are not charged return processing fee.

FBA return fee
Return processing fee, date: 27th August, 2021. Source: sellercenter.Amazon.com

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