After nearly 4 months using their service, here's what I've found:
- The process is simple. I receive my product from the consumer, inspect it, clean it, label it for FBA, etc. and then package it up in one box to send to Amazon's Reno warehouse. I can do this from my home.
- Amazon provides UPS labels allowing me to use their superior shipping rates to ship the package to the Amazon warehouse.
- Once Amazon receives the package they make the inventory live on the site and my product is available for sale. I've shipped them over 2000 items and have never had a problem and if I did they have an 800 number to handle any issues.
- I just repeat the process as I receive new product.
- An item that is listed as fulfilled by Amazon exposes my product to an entirely new Amazon customer. Because the item is being fulfilled by Amazon, my customers can utilize Super Saver shipping and Amazon Gift Wrapping. Also, FBA is the only way for a 3P seller to get access to Amazon's Prime customers a growing segment on the site. Prime customers pay an annual fee for free 2-day shipping.
- Over the last 4 months I've sold 10% of my items to Amazon Prime customers, 20% to regular marketplace customers who pay the S&H and 70% to Amazon customers who use Super Saver shipping.
If I was listing the product on Amazon and fulfilling myself, my items would not be eligible for Super Saver shipping or Prime customers. So I immediately have very little competition for those customers. Pretty much just me and Amazon.
- I only sell on Amazon, so I can't address how Amazon handles outside fulfillment for off-site sales, but that service is also available.
- As an FBA fulfilled item, my inventory also shows up at the top of search. Regular marketplace items are listed by total price (Price + S&H) but my items are listed by price only so I can price my items close to the lowest total price and be the first item in the list.
- When I was selling with Glacier Bay DVD I had a full-time staff of 6 and 4 part-timers and paid $4500 a month for my warehouse. With Amazon FBA, its just little ole me out of my house. In fact I don't even need to handle Customer Service. Amazon handles all of that for me; including returns, refunds, mis-shipped items etc.
- I sell 70% of my items within a month so my monthly warehouse fees are minimal. An avg. DVD costs 2 cents a month to store at Amazon's warehouse.
- S&H costs are reduced. When I sold full-time with Glacier Bay DVD, it would cost me roughly $1.40 to ship a DVD (including direct labor, packaging and postage) Amazon FBA costs me on average $0.57 cents to ship a DVD.
- My average Gross Profit margin is 25% and most of that is Net profit, after I subtract my Advertising costs to acquire new product. When I was selling on eBay under Glacier Bay my Gross profit was 10% and net in the 2-3% range (when I actually made a profit)
- If your product does not sell quickly you will incur monthly warehouse fees (minimal charges if small items) and if you choose to remove the product from Amazon's warehouse there will be a fee to remove each item.
- Items are out of your control but Amazon has a world class operation so this is a minor concern.
- If you are a large seller and sell on multiple marketplaces you might be concerned about using FBA. I would suggest that you segment your inventory and let Amazon handle your Amazon.com orders. You can continue to ship your eBay, Half.com and other site orders.
- I deal in media items, but Amazon FBA can ship anything that they sell on the site so if you have Golf Clubs, Consumer Electronics etc. you can still use Amazon's FBA program.
I share this with you because it has been a great program for me and though I'm in essence inviting more competition for my items, I don't see that as a terrible thing (I'm not building another Glacier Bay here). I do believe it would be well worth investigating if Amazon FBA would work for you.