Monday, April 07, 2008

More FBA (Fulfillment by Amazon) Advantages

Thanks to Nathan for passing along his recent experience with FBA.

He was selling a book listed as "good condition with writing and underlining" for $15, while the market was pretty much priced at $2.20 and the cheapest "New" book was selling for $2.99. Amazon did not stock the book so it was only available in the Marketplace.

The reason he got the sale was because the buyer wanted next day shipping, which he could offer because he was using the FBA program. The best any other merchant could offer was Express shipping which still might take 5 - 7 days to arrive.

Now, many of these other merchants may have been able to offer Next Day service from their location but that offering is currently only available with FBA. It cost him the same money to ship the item Next Day as it does to ship standard; $1.39

Let's recap some of the competitive advantages of using FBA on the Amazon Marketplace:
  • Priority placement in search (Price only sort rather than Price + Shipping like the rest of the marketplace merchants).
  • Eligible for Prime Customers (Regular merchants listings are not eligible for Prime customer)
  • Eligible for Super-saver shippers (Regular merchants listings are not eligible for Prime customer)
  • It has been my experience that I still get 25% of my orders from regular Amazon customers who pay the Amazon S&H fee in addition to my higher item price. (I add the S&H fee to product price)
  • Eligible for Next-Day and Second Day shipping (comes in handy during the 4th quarter).
  • Eligible for Gift Wrapping services (I know I never offered Gift Wrapping when I was shipping myself)
  • Same cost (for merchant) to ship an International, Next-Day or standard order.
  • Fantastic in-bound UPS rates.
  • Expand your business Internationally by using FBA in the country you sell in. No more delays from International shipments.
  • Competitive advantage over other Amazon merchants. I've been very successful competing with 1 cent sellers by selling my items for $2.97 (CDs and DVDs) I will always be at the top of search and consumers are leery of 1 cent items.

Another reason to try out FBA right now is so you can work through the process before the 4th Quarter. The advantages of FBA during the busiest quarter of the year are unbelievable.

Just my 12%


Cliff said...

You're absolutely killing me with these stories, Randy. I waited 3 days from my first email to follow-up with a second asking what happened to my package and all I got was they're looking into it.

My question is this, if you were me, would you send out the next shipment? I'm dying to start cashing in on this before everyone is doing it, but the trust level is about as low as you can go.

Should I (can I?) request a different fulfillment center?

Dying to tap into this customer base.

Not surprised you can get more $ per item in FBA, kind of counted on it, as a customer I'd always be willing to pay a little more to take advantage of my Prime membership. This is what I wanted to get in on while it was still early. The clock is ticking though I think, seeing more and more FBA listings every search, the zoo is just about open.

Randy Smythe said...

Cliff, I would send the second package, if it was me. If you can send it via UPS using Amazon's UPS rates. I would make it a small shipment just in case.

BTW, I do not believe you can select another warehouse.

I wish I had an inside connection that could solve your issue but I do not.

As far as the competition using FBA, the big guys will most likely not be commiting their inventory to FBA so while you may see competition right now for a particular SKU it will go away quickly.

Cliff said...

Another question, Randy (thanks for your reply by the way, don't worry, based on my experiences with you I know you'd help if you could, and it's not expected) -- I've never used UPS. Is there a charge for pick-up or setting up an account? Their site was a little confusing if I remember from last time I checked. I like USPS because I can print labels online and have free carrier pick-up, does UPS provide the same? Thanks, as always.

Randy Smythe said...

Cliff, if you use Amazon to print the UPS labels then there is no need for an account.

What I do is print off the labels in Seller Central and then just drop it off at the nearest UPS store.

Where I live there is one around just about every corner that may not be the case where you live.

You may have to call for a pickup and there may be an additional charge.

frank in montana said...

Just an FBA newbie here with only 120 items available and 7 sales so far in just a week. More items in transit. I sell mostly CDs with a smattering of books and haven't been exactly sure what to send. My first shipments have mostly been my CD inventory that is New and titles that listed for more than $5.00. I see that you have some CD listings as low as $2.97 so it looks like I should include those as well in future shipments. I have this fear of sending everything I have available and paying for it to sit in the wherehouse, so have only been sending what I deem is the cream of the crop. Do I err by doing so?

A stupid question. Removable labels or not? I first bought the regular labels and then saw that Amazon wanted me to use the removable ones. I went back and bought removable and they are almost twice as much as the regular. Just trying to save a buck.

Also, I haven't figured out the formula to make my FBA listing first on the available for purchase list. Say the cheapest offering of an item is $10.00, how high can I price mine and still be first on the list?

Now I see Amazon is offering their Webstore free for 30 days. Should I take advantage of it? I have no clue how to operate or stock a webstore. I see yours has everything Amazon sells. How do you get that feature? I have no idea how to promote a store or drive traffic to a store. Right now I'm just intrigued and since I'm just now figuring out how to work FBA, not sure if I'm ready to jump into something else yet.

Cliff, I sent my first two FBA shipments USPS and will never do so again. First it took a lot longer to arrive and secondly, the Amazon UPS discount beats anything the post office offers and I've never had any trouble with those shipments. You don't have to set up an account, It's basically a click, print label and ship. Not sure if they will pick up.


Cliff said...

Thanks Frank in Montana, Randy,

I don't drive, so without pickup the UPS is a royal pain for me.

Frank, I had tried the Amazon Webstore 6 months ago, perhaps a little longer and it confused the hell out of me. I have a feeling the thing to do is pick up a copy of that eBook that Randy posted on. I haven't got mine yet, but from what's being said, and what I hope, is that it's basically a "For Dummies" type manual to using Amazon. Randy has it pinned to the top right area of the page.

Randy Smythe said...

Frank, hold off on the Webstore for now. They aren't open for Media sellers right now anyway.

The store I have in my sidebar links is just my amazon storefront which you have also.

Just go to your feedback page and click the link at the top left of the page. I think there is a way to get there directly but I'm not sure what it it.

As for the formula to get to the top of sort.

Take the lowest price for the SKU you are listing with comparable quality (New, Used Very Good, etc.)
add $2.97 for CD's and DVD and $3.98 for Video Games and Books. That will do it.

As for the CD's I have listed for $2.97 I have zero to 50 cents in product cost on those.

I send everything to FBA but I don't recommend everybody do that. I have a pricing strategy that works for me and my goal is to sell every item listed within a year. 75% sell within 30 days, 90% within 90 days and the balance make take a year. Just factor warehouse costs into your numbers.

Hope that helps.

Randy Smythe said...

Cliff, I know you can call UPS and they will schedule a pick-up. Explain to them that you are using Amazon's account for in-bound shipping to their warehouse. Hopefully ou will get a CS person who can help.

Cliff said...


Would you believe I woke up this morning to two e-mails from Amazon: FBA Inbound Shipment Checked-In and FBA Inbound Shipment Receiving -- Sure enough when I headed over to Amazon, my items are up and available for sale! The final timeline was as follows:

Shipped: March 14 (via USPS Media Mail)
USPS Delivered: March 21 (according to delivery confirmation)
Amazon Received: April 15 (Items received and available for sale).

Wow, hopefully it was just a freak delivery. I'm going to head into Seller Central today and adjust my pricing and my test can begin.

I wonder if the package was misplaced, or if they just take that long to check in USPS packages regularly.

Either way, I signed up with UPS, it looks like they charge $3/package for Ground Pickup (when requested online), so I'll take a look at the special Amazon rate and maybe it will be worthwhile to pay that surcharge from now on for me.

I really thought I was going to get screwed on this, but I'm happy enough now to put negative feelings behind me, give Amazon a clean slate, and see if they can make me some money. Thanks for your help again.

Thus ends...and begins the saga --

Randy Smythe said...

Cliff, thanks for the update. Hopefully future shipments will go off without a hitch.

Please let me know how it is going. Several readers are keeping me informed about their FBA progress.

Cliff said...

Will do, Randy. I only submitted a couple of dozen DVDs to start with, but now I have some stuff backed-up waiting to ship, so I'll do that this week. I just went in and repriced, trying to see what happens if I'm cheapest on more common titles and a little higher but still bottom FBA-guy on some of the better titles. Curious to see if customers will bite for the Super Saver and Prime rates even if it costs a few dollars more (some of your posts back up my initial thoughts on this, so my guess is that they will). Thanks again, Randy --

Nov1969 said...

Currently in the process of going 100% FBA. I did 3 test shipments of 50 each over the last few months and I am more than pleased. Finally deciding to work harder, not smarter and sending in all of it.

Anonymous said...

Hi Randy,
do you know if any body from Canada is using the FBA program.
You said that FBA has an 1800 number for help .
I would like to ask them about sending from Canada.
They have but I could not find anything like FBA.
Thanks for yopur help.

Zoran Ottawa Canada