Fulfilled by Amazon, or FBA, is a method in which you utilise Amazon’s services as the world’s largest ecommerce retailer to warehouse and distribute your items to Amazon consumers who have purchased your item through their site.
In some ways, owning an ecommerce business is comparable, except you’re in charge of the site and platform, as well as working out your own delivery. Then it appears that FBA would be a superior option for a new company.
Well, all scenarios have advantages and disadvantages, and it’s important to understand them so you can decide which is best for you.
In this post, I’ll go over all you need to know about each so you can make an informed decision.
The most significant advantage of having your own ecommerce business is having complete control over payments. You have complete control over which payment methods you accept. Paypal, credit and debit cards, and even bitcoin can be used in this way. Yes, you may take bitcoin on your site as long as your consumers use it or know where to purchase it.
Only credit and debit cards are accepted at Amazon. This is ideal for Amazon because they want to keep things simple. However, having a variety of alternatives for your consumers makes it easier for them to make a purchase in your own business.
Is it better to keep your hands off or keep your hands on?
Which approach is best for you will be determined by how much of the operation you want to be in charge of. If you want to be completely hands-off, FBA is the way to go. You may order your items straight from the manufacturer and have them sent to Amazon’s warehouses, where they will be shipped for you. Apart from deciding how much to charge, you don’t have to handle the merchandise or make any judgments about it after it’s been shipped to their warehouse.
When you manage your own ecommerce shop, you may be more involved, including processing incoming orders and shipping them personally. Of course, you may hire a fulfilment company to handle the warehousing and delivery of your purchases, but this is a more difficult method to set up.
Customer service is important.
Owning an ecommerce store puts you in direct touch with your customers and puts you in charge of keeping them satisfied. Because you are not engaged in the process at all with FBA, Amazon is responsible for handling returns and dissatisfied consumers.
However, being more involved has the advantage of allowing you to do more to ensure that the consumer is satisfied and that they return to you.
Having Amazon handle the procedure, as you might expect, comes at a cost. There are several expenses that will eat up a significant portion of your margins and over which you have little control. And, since so many people expect Amazon to have the best pricing, you’re obliged to operate on razor-thin margins to keep your costs low.
There are fees associated with having an online shop. You are responsible for the payment processing, any shipping expenses, and more. However, you will be able to better include these costs into your pricing, resulting in larger profits.
FBOn behalf of Paxful, this article was written. However, the information given herein is not intended to be investment, financial, or other advice, and it is not intended to be.