FBA is an acronym for Fulfilled By Amazon. When you get into the Amazon FBA program, all the hard work is done by Amazon.
How it works:
- You source products and send them to Amazon. They, in turn, store the products in their warehouses.
- The products are inventoried then sorted. If an item is damaged in the warehouse, Amazon will pay you the full price.
- When a buyer orders your product on Amazon, the transaction will be handled by Amazon (the process is automated).
- Amazon packs the item and ships it to your customer.
- They also follow up after the product has been delivered to make sure the customer is satisfied.
So, what then is your job as an Amazon FBA seller?
- Picking products: you choose what to sell.
- Keeping the inventory in stock: you will be notified by Amazon when the inventory starts running low.
- Promoting and advertising: you have to put in work to make sure that shoppers notice your products.
The Cost of Selling on Amazon FBA
The fees are reasonable and sometimes, you can sell for free.
Amazon FBA seller accounts are categorized into two: individual seller accounts and professional seller accounts. The individual seller account is free but you will pay higher sales fees. The professional account costs $39.95 but the sales fees are low. If you will be selling many products in a month (more than 40), get a professional account.
Most of these fees are paid once you make a sale.
- Amazon charges a referral fee of 15% for all sales (not all categories, but most).
- You pay shipping and handling costs if you are using FBA.
- An extra flat fee on categories such as media.
- A $1.00 flat fee for individual seller plans.
- Long-term storage fees if the products stay in a fulfilment center for a long time.
Amazon FBA: What to Sell
You can sell using a number of methods. Here are four of the most common:
Arbitrage: get low-priced products from marketplaces (online or offline) and resell them on Amazon for a profit.
Wholesale: buy branded goods in bulk at a discounted price and resell them on Amazon.
Used book sales: find used books and resell them on Amazon.
Private label: make your own branded items and sell them on Amazon.
The last one is the best.
You contact a third-party manufacturer to make the product but you sell it under your brand name. That is, manufacture an already existing product then put your logo and brand on it.
Why do this?
- Easy sourcing
- Higher profits
- Price control
Finding a private label product is not that hard. Use Amazon’s Best Seller Ranking (BSR) to check a product’s demand. For better results, use the Chrome extension. You will be provided with a spreadsheet of data, showing how several products in the niche are doing.
With Extension, you will see:
- Average price
- Average Best Seller Ranking
- Average reviews count
- Opportunity score (if you have the Pro version)
Focus on the following areas.
Amazon Selling Coach
It provides you with personalized recommendations so you can increase the success of your Amazon business. You can only access this feature if you have a Professional Selling Plan.
Pricing and Shipping
Do you price your offers competitively against similar products? Do you offer your customers shipping incentives? Set your pricing to be adjusted automatically based on the Buy Box winner price or other events. Alternatively, research your competition extensively and come up with an enticing price point. Research shipping costs as well. When a buyer is deciding whether to buy or not, the shipping cost is usually a key influence. Go to the Manage Inventory section and look at Buy Box prices and lowest prices.
If you are using FBA, leverage the expertise and fulfilment networks of Amazon to give your customers Prime and free shipping. Amazon packs and ships the products for you. They also provide customer service.
Hub by Amazon
This comprehensive solution sets you and your staff free from everyday package management. You move to garden-style apartments from high-rise apartments. Your residents will not be charged a fee and an Amazon Prime membership is not required.
Online shoppers always look at promotional offerings (percentages or dollars off the price) and other things such as free shipping. Many customers return to Amazon because of free shipping. Offer promotions to make an impression on your customers.
There is an advertising service, Sponsored Products, that lets you promote what you have listed on Amazon. Choose the item you would love to advertise, enter keywords for the item and input a cost-per-click bid. When a buyer searches one of the keywords, the ad may be displayed together with the search results. You only pay the fee when a buyer clicks on the ad.
Products Descriptions and Details
When describing a product, mention its key features and list the benefits in bullet points. Write your product description well so the shopper can imagine the experience of having the said product. Don’t leave out information about the benefits, usage and fee of the item.
Your images should have high resolution and clear details. This stimulates the imagination of the customer, inspiring them to make a purchase. Offer many images too.
Enhanced Brand Pages
If you are registered as a Brand Owner, you are allowed to include a brand story in the product page, as well as text placements and enhanced images.
Some customers come to Amazon knowing what they want. Others, however, just browse by categories. Classify your product in the right category so buyers can discover it easily.
Each order should be followed up with outstanding customer service. In turn, you may get positive feedback ratings and others buyers will feel confident buying from you.
Amazon Global Selling will help you grow your international business. Visit the Amazon Global Selling section for more information.
Exporting for International Buyers
Subscribe to FBA Export for Amazon to enable eligible products for export. It is a great service for FBA sellers who want to go international.
Amazon has been offering high quality services and boasts of tons of satisfied customers. As soon as you add an Amazon Pay button on your site, buyers will expect to be met with the same work-class customer experience. Here is what they will expect:
- Contact information that is easy to find (phone, chat, email)
- Easy refunds and returns
- Clear policies
- Quick customer service
Amazon requires merchants to meet their buyer expectations by complying with their policies—and that includes their Customer Service Policy. This document offers tips and hints to help you keep customers satisfied.
Offering good customer service is in the best interest of the merchant. A high-quality customer experience will mean less transaction disputes and you could get repeat customers. When your buyer is unsatisfied and gets a hard time trying to find resolution, they could file a dispute. This may, then, escalate to a chargeback, increasing the potential resolution cost.
Importance of Good Customer Service
If a customer ever encounters an issue with a transaction or order, they will need a clear channel to contact you.
Look at your site from a fresh point of view. Can someone easily get help? At the very least, have a Help or Contact Us link at the bottom or top of every page. Even better, list the customer service email, chat or phone number link on every page.
Also, create an easy-to-find section with links to:
- Refund and exchange policy
- Terms and conditions
Handling Returns and Refunds
Every seller would like it if the buyers liked their items and kept them. However, not every customer will be satisfied. You should make it easy for a buyer to return an item and get a refund. This will encourage them to come back and buy from your site. It will also prevent them from filing an A-to-Z Guarantee claim.
Create a Help or FAQ topic to explain your policies and the steps a customer can take to return an item and get a refund.
Free return shipping, no-restocking fee and other customer-friendly policies could lead to happier buyers.
Buyers can file an A-to-Z Guarantee claim if the merchant is unwilling or unable to deal with the buyer directly.
Amazon Pay will talk to you on behalf of the buyer.
Amazon A-to-Z Guarantee
Once a customer files this dispute, you will get a notification from Amazon Pay on Seller Central and via email. You have to respond with the necessary information within the given timeframe.
Amazon settles the issues using the information they receive. You are encouraged to respond as quickly as possible to the A-to-Z Guarantee claim.
A chargeback may occur when the customer is dissatisfied, has ben charged several times or hasn’t received the product.
Best Customer Service Practices
- Go to Seller Central and update Claims Notification preferences and Customer Service email address.
- Have a process for resolving chargeback claims. Update the policies on your website pages.
- Make it easy for customers to contact you.
- Have a matrix for solving order issues.
Settlement reports show you a breakdown of your Amazon account activity for a certain settlement period. When you review this settlement report then match the data to what you have in the order management system, it becomes easier to assess your account activity.
Transactions and Settlement Report Data
A typical transaction flow occurs in the following steps:
- A buyer buys something from your site and an Order Reference ID is created in Amazon Pay. Alternatively, you can generate your own Seller Order ID and send it to Amazon Pay before you confirm the order. (It is otherwise known as ORO).
- You prepare the order for fulfilment. In this case, your system may generate a Unique Fulfillment ID. Sometimes, this happens in step 4.
- You make the sale and, during fulfillment, the merchant payable account increases. You will get a Capture ID from Amazon Pay for your capture transaction. You have to send your unique Seller Reference ID (which will be, ideally, the Unique Fulfillment ID from step 2) to Amazon for the sale to be processed into your account.
Note: some merchants prefer to carry out the three steps simultaneously. However, it is recommended that you wait until the order is ready for fulfillment to capture funds.
- Fulfill the order. Your system generates a Unique Fulfilment Order—if it was not generated in the second step.
Once an order has been made, a debit is generated to accounts receivable and a credit to sales.
As you can see from the above steps, the settlement reports in Amazon Pay have 4 ID fields. You can use them to track settlement and transaction activity. They are:
- Seller Reference ID
- Capture ID
- Seller Order ID
- Order Reference ID
In the order management system, you typically use one or two IDs to track a transaction. The Unique Fulfilment ID, according to above transaction flow, can be matched to four listed IDs. This is referred to as a Match key.
Note: if the Unique Fulfillment ID is not generated or is generated in step 4, one of Amazon Pay IDs will have to work as the Match key.
Best Reconciliation Procedure
This is supposed to be a daily process.
- Create a report for the previous day’s fulfillment activity in your system and download it.
- Log in to Seller Central.
- View Management Transactions current data or create a Date Range Settlement report and download it.
Date Range Settlement report: Reports menu > Payments > Date Range Reports then create a report and download it.
Manage Transactions: Orders menu > Manage Transactions.
- Use your Match key to match items between two reports.
- Mark an activity as reconciled once you get a match.
- If there is an activity you are unable to match, move the line item to open match set.
- Repeat the procedure on the following day. Begin step 4 with the open match set.
- Use the report downloaded in the above procedure.
- Get a bank statement showing your account’s disbursement details.
- Use the Settlement report and bank statement to match the amounts and dates transferred.