Understanding Amazon’s FBA Business Model
A new internet business model has emerged in recent years: the Fulfillment by Amazon (FBA) business model.
In this article, you will learn what it means to use an FBA business model and how you can use Amazon’s fulfillment service to make money selling products online.
What does it mean to have an FBA business model?
When you sell items through a traditional ecommerce site, you are responsible for fulfilling your orders. This means that when someone places an order on your site, you need to ship the item to them.
Product packaging, shipping, and other logistical concerns are all handled by the seller in a traditional ecommerce site.
With an FBA business model, however, you don’t have to worry about those things. Instead, Amazon handles those logistical concerns for you. The company ships your items out as they’re ordered by customers.
Amazon is one of the biggest ecommerce platforms in the world, with over 300 million active customers worldwide. In 2018 it reported sales of $232 billion, and a net income of $10 billion.
Amazon is known for many things: its Prime shipping services, wholesale selling, its music and video streaming service, its Kindle readers. But more than anything else, Amazon is known for being a marketplace — a place where anyone can sell their products online.
Today we’re going to look at one of the ways Amazon enables sellers to sell online — Fulfillment by Amazon — and how you can use it to grow your ecommerce business.
Amazon fba benefits
If you’re selling on Amazon, you are probably aware of the Fulfilment by Amazon service. In short, it allows you to send your products to an Amazon warehouse where they will be stored and handled for you. When someone buys one of your products, Amazon fulfils it and ships it to the customer.
Advantages of Using FBA
Better seller rating on Amazon – this is a huge benefit. Customers are more likely to buy from sellers who have good seller ratings and use FBA. If your seller rating is not high enough or if you don’t use FBA, your competition will eat up all your sales.
It frees up time so you can focus on growing your business instead of shipping products all day long. You should spend less time handling the product side of things and more time finding new products to sell, building listings, increasing sales, and growing your business in other areas such as branding and marketing.
It saves you money on shipping costs as Amazon receives massive discounts from UPS and USPS which are passed on to you when using fulfillment by Amazon.
Fulfillment by Amazon (FBA) is a fulfillment method where you store your procuts in Amazon’s fulfillment centers.
This enables you to take advantage of Amazon’s world-class logistics and customer service, while focusing on the core competencies of growing your business.
In the FBA model, when a customer orders your product, Amazon stores it in their warehouse, picks it, packs it, ships it to the customer, and then provides after sales services such as customer service and returns processing.