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What is Amazon FBA and How Does It Work?

Published on:

Thursday, January 19, 2023

Amazon’s FBA service, also known as Fulfilment by Amazon, is designed for sellers who want to expand their sales or reach new markets – uniting their products with Amazon’s in-house picking, packing, and delivery service for a seamless, straightforward fulfilment process.

At present, around two thirds of Amazon’s sellers use the FBA service, with many working through external companies like Social Loop to optimise their Amazon marketing and to ensure that the entire process of marketing through to selling is as cohesive as possible. But what does the FBA service itself involve and how does it work?

Let’s take a closer look.

What is FBA?

The best way to understand the FBA service is to look at the process of selling a product. As a creator or business owner, you market and sell your product, before shipping it and paying for it to be delivered to the buyer.

When you work with FBA, Amazon holds your stock in its own inventory warehouse and does all the hard graft in picking, packing, and sending every product that is sold – completely removing responsibility from your shoulders. Not only that, but Amazon also takes on any returns and refunds necessary, with the fulfilment service literally offering sellers an outsourced solution to the entire logistical process of selling stock.

Of course, this service comes at a cost – but when compared with the ease and convenience of the end-to-end service, it becomes a matter of personal preference and how you choose to operate, rather than a financial exercise.

Amazon parcel

What are the benefits of Amazon’s FBA service?

We’ve already looked at and touched on the convenience of Amazon’s FBA service, but what are the other benefits?

For one thing, FBA manages everything on your behalf and delivers under its extremely efficient Prime service – which means that customers get their products quickly. This does wonders for customer satisfaction particularly in the age where people want everything at the touch of a button – with Amazon Prime the closest people can get to instant gratification.

Another benefit is that you don’t have to pay for shipping with every single sale, and you don’t have to travel to and from your postal office or facility to send every product that is purchased. FBA takes care of everything from delivery to returns and is expanding into multichannel sales which gives FBA sellers access to more platforms and a wider pool of potential customers if they choose to sign up to the multichannel fulfilment service.

Safe to say, Amazon’s FBA offers interested sellers an opportunity to scale their business with very little in the way of upheaval to their standard way of working – providing all the warehousing space they need, and managing all manner of customer enquiries to streamline the service and fulfilment process.

How does FBA work as a seller, and what are you responsible for?

As a seller accessing the FBA service, there are costs and fees that you need to pay – and you might find that not only do costs rise when your products aren’t selling, but they are subject to change at any point. Having said that, the ease through which sellers are simply required to keep Amazon in stock with an adequate number of products means that it couldn’t be easier to keep on top of inventory – with the backend FBA system letting you know how well different products are selling and allowing you to manage inventory in line with demand and forecasted sales.

How do you control your marketing through Amazon FBA?

For fulfilment to be a necessary service, you need to be selling products – and for that to happen, especially on Amazon with its millions of products and competing brands, you need to fine-tune an effective and efficient marketing plan.

One of our top tips for sellers using Amazon FBA is to consider whether they want to sell globally or locally, and if they opt for the former to always ensure that they are localising their marketing as per the destination and audience. Product descriptions need to be portrayed in the correct language and using the correct lingo, and images need to be clear and enticing to appeal to buyers.

Likewise, your marketing strategy needs to consider the cost, ensuring that your pricing is fair but competitive, and that where possible you offer bundle deals and other incentives to drive sales.

Is Amazon FBA worth it?

Here at Social Loop, we work with sellers to optimise their Amazon listings and FBA profiles, driving sales through clever, innovative, and effective marketing. If you’re looking to expand without needing to source a larger warehouse for your own goods, or want to take a step back from the logistics of selling and focus on building better brand presence and products, Amazon FBA is a versatile solution that can help – and our team are here if you need a little extra support!