Monday, December 15, 2008

Why I Love Fulfillment by Amazon (FBA)

As we enter the final week before Christmas, I'm sure many of my readers are busy trying to get orders out the door. Even with all the bad economic news I've been hearing, it doesn't seem to be affecting many of my seller friends. Several I've spoken with have been working non-stop since Thanksgiving.

This week and next are when Amazon's FBA service earns its money:
  • I have one last shipment of product going out Tuesday, so that it is checked-in by Friday and available for those last minute Amazon Prime shoppers.
  • I haven't had to answer one customer email -- Amazon handles all customer service on my orders.
  • My customers can have their orders gift wrapped at no cost to me. (They do pay Amazon for that though).
  • If I was shipping product myself, I would have to tell customers that Friday was the shipping cutoff for items to arrive in time for Christmas; without paying through the nose for expedited shipping. With FBA they can buy my stuff up to the 23rd and have it delivered next-day for $3 (for an estimated 4 million Prime customers).
  • I haven't been to the post office one time in the last 3 months. I just ship 300-400 pieces through UPS one day a week.
  • No shipping supplies to order or warehouse.
  • I only use one room in the house for business
  • No hunting through 1600 different DVDs and CDs to pick and pack.
  • My customers get world class service and I get the credit.
Now, to be fair, I am just a small business now and a year from now I expect to be much bigger so I can see this being a lot more work next year but there will also be more Amazon Prime customers next year as well, so my sales should benefit from growth in the program.

I recommend Amazon's FBA program highly, even for those sellers who still want to ship product themselves. My number one tip for 2009 and your business. Look into and test Amazon FBA.

Just my 15%

17 comments:

Joseph said...

Hi Randy,

Just to clarify, you sell on both eBay and Amazon, right, but all items are fulfilled by Amazon?

In other words, if I buy an item from you on eBay, it'll arrive on my doorstep in an Amazon box.

Randy Smythe said...

Hi Joseph,

Right now I only sell on Amazon and my WebStore. As soon as eBay gets rid of listing fees I'll be back selling on eBay and hope to be selling on Buy.com and overstock as well.

Yes, an order made on eBay would arrive in an Amazon box. Wouldn't that be funny?

2009 or Bust! said...

Randy, do you think eBay would ever really get rid of listing fees in all categories?

I have heard rumor this off and on for the last few years and wonder what your take is on this and what the positives and negatives might be.

Stefan said...

We have actually used Prime quite a bit this Christmas to fulfill eBay orders. If an eBayer buys an item from us and wants next day or second day air shipping, we just Prime it over to them and keep the difference.

Of course Amazon's price is higher than our wholesale price, but when the eBay customer pays $15-$20 for 2nd Day Air shipping and it costs us nothing to ship it, it all works out quite nicely.

Anyways, enjoy the home stretch of the shopping season Randy & all you FBA sellers, this is your time to shine!

Randy Smythe said...

They are going to have free listings in the media category in February but I'm not sure if they will expand that to other categories.

I think auctions will always have listing fees.

Anonymous said...

Free listing fees in media? Please write a post about what you are hearing.

Of course, if this happens, you know, this would mean many of your old readers will be toast.

A few large corporate retailers, so big, they buy DIRECT from the STUDIOS in bulk, will come in and own the dvd market on ebay. I used to work for one of these companies and believe me, they have the means to do this. They follow ebay and amazon more closely than you may expect....

Randy Smythe said...

Anonymous,

eMail me and I'll spill the beans. rksmythe at yahoo

You are right, some of the larger sellers on Amazon like ImportCDs and DeepDiscount will have no reason to stay away from eBay when there are no listing fees. Caiman is NARU so they would have to deal with that before they came back.

I think they will adopt the half.com approach to displaying product. (Which is a bad idea) 5 listings per condition.

Randy Smythe said...

Stefan,

What kind of reaction do you get from those eBay customers when they receive the order in an Amazon box.

Cliff Aliperti said...

Very happy to have received emails this morning that Amazon has both received and checked-in my latest shipment. Each of my last two shipments has left here on a Thursday and been available for sale on Amazon by Tuesday, which is excellent.

I think the key point (this minute) is this one: "With FBA they can buy my stuff up to the 23rd and have it delivered next-day for $3"

I also agree these are huge benefits:
I haven't been to the post office one time in the last 3 months.

I only use one room in the house for business

No hunting through 1600 different DVDs and CDs to pick and pack. (I like this one a lot actually).

I'd also like to say that the FBA storage fees are still negligible. I was charged $4 and change this month for hundreds of items including many bulkier VHS that I'd tried out. I'd imagine that tiny fee would be even lower if my stock was 100% DVDs and CDs.

And let's not forget one that you've implied but didn't outright say, I love that I shipped out just 1 box to Amazon instead of 80+ little packages to customers this week.

And from my last statement others can tell that I use Prime on a much smaller scale than Randy--it works for big and small sellers alike.

One statement that while I agree with I also see potential downside is this: "... but there will also be more Amazon Prime customers next year as well, so my sales should benefit from growth in the program."

--This works the other way as well. There will be more FBA sellers as well, leading to more challenges in moving product. I couldn't help but to notice this "inetmediasource" guy popping up as competition on a few items I sent out this week--he prices low enough where I didn't feel my effort was best spent in competing, but instead priced my items a few bucks higher hoping his would sell first and there would be enough demand for mine later on. I also, for the first time, ran into a couple of more common items which had 3 or 4 fellow FBA sellers competing--that's certainly going to grow. So I'd expect to see any advantage of being an early adapter decrease somewhat in '09.

Still, rather that viewing this as a total negative, spin it around: the time to try FBA is now! For the very large majority of my items I'm still the only FBA seller on the SKU, advantaging me in small but real ways over other Amazon sellers. Give it a shot!

Thanks, Cliff

Randy Smythe said...

Hey Cliff,

I hate that InetMediaSource guy :) I'm not sure the FBA competition will be huge in 2009 until Q4 and by that time hopefully the economy will have turned around.

At some point though the same pricing pressures that affect the marketplace right now will affect FBA, though the real large sellers will not commit much inventory to FBA

Anonymous said...

Amazon FB woulda come in REAL handy during this ICE STORM.

Rain was warm, ground temp was freezing.... coat after coat of ice went onto everything, trees bowed, bent and power poles snapped. LOTS of power poles. All night long you could just hear pop popp pop then BOOM and the sky turned purple as the main transformer in town blew itself to bits.

Never understood why they dont cut the power as things start to get hairy... and save some equipment. but thats just me :)

The mayor gets on the radio and says "I dont get it, we sent a man to the moon but we still transmit power over wooden sticks"

and

"We are going to cut power to everyone who complains that they dont have cable!"

very funny guy.

Will look into this FBA of yours.

krl said...

I have been sold on FBA for a while now but the past several weeks only reinforced my impression of FBA program. In retrospect I could not have been as successful without it.It is best business decision I have ever made. Kelly
PS Have a nice Christmas, Randy!

Randy Smythe said...

Thanks Kelly,

Glad to hear FBA worked out well for you. You have a Merry Christmas also.

martin said...

In regard to your using FBA, I was just wondering how some of you go about printing the Carrier labels, i.e., UPS and FBA, Amazon provides in PDF format, especially if you need to print 20 or more for shipping large quantities. I'm assuming that everything that's purchased requires a shipping, i.e., 20 books, 20 shipping labels. Any feedback regarding this subject matter is appreciated.

Randy Smythe said...

Martin,

I'm a little confused about what you are asking.

There are two labels required by FBA:
1. Condition label and barcode for each book you send them.
2. In-bound shipping label for UPS to put on box you are sending the individual boxes in.

For in-bound shipping to FBA you only need to print one shipping label per box you intend to send to FBA. If 20 books will fit in one box than you only need one label and you can just print it our on plain paper and use clear box tape to stick it to the box.

If you are talking about the labels for each book so they can be managed by FBA then you just need to buy the Avery 5150 labels or whatever number label Amazon suggests.

Hope that helps.

Nikkicute said...

Hello, I'm new to this blog.
Randy do you have employees?

Zarinah el-Amin Naeem said...

How do you build a customer base with FBA by Amazon? It seems that they keep all customer information. What if 100 people buy from you one year and then Amazon decides they don't want to do FBA anymore...how do you connect with your previous customers?