By: Hunter Hartman : Fulfilled by Amazon (FBA) is taking eCommerce sales by storm. I remember the first time I heard of it, I was at a community pool back in 2012 and talking to some friends. One mentioned that Amazon would allow you to subscribe to certain products and you didn’t have to pay sales tax, so the deal was incredible. Since this time, Amazon now forces customers to pay sales tax but the service and culture continues to take over. Next came free two-day shipping when subscribing to Amazon Prime. My wife and I were some of the first to market when we purchased Amazon Prime, now it’s everywhere. We couldn’t believe how great the product was and the service we were receiving. There was no possible way that Amazon was making money delivering products in two days and not charging shipping but we didn’t care, we just wanted our products as quickly as possible. I remember our neighbors would ask us what we were always buying online because it seemed like a truck was coming on a daily basis. This was just the beginning.
Fast forward a couple of years and now 65% of Amazon Sellers use FBA to provide two day shipping to Amazon Prime users, boost sales velocity and improve their rankings. So, what does it take to sell on Amazon FBA? There are three fees that are involved with FBA which include warehouse fees, fulfillment fees and inventory placement fees.
If you do not have an Amazon Professional Seller Account, you will pay 99 cents per label item listed on FBA. This professional account is a slam-dunk if you’re moving any volume on Amazon.
How do you calculate a break-even point for Amazon FBA? Most people get scared they’re going to lose money with Amazon FBA and many actually do. Costs are expensive and it is crucial to keep track of everything. The formula to break even in units = Fixed Costs / sales price per unit – Variable Costs.
Amazon makes it easy to figure out the clear guidelines for preparing products for FBA. Each product must be individually package for eCommerce and labels individually based on the product sticking requirements and they must be ready to go.
Lastly, what do you need to get started selling on FBA? You need a professional seller account, a TAX ID and an application date between January and September, FBA doesn’t allow you to apply during their busy season, understandably so. Once you’re ready to sell, you can visit the FBA page and easily sign up for the service.
Hunter Hartman is an eCommerce consultant based in Ladera Ranch, CA. His focus is on small-to-large eCommerce companies that are shipping business-to-consumer. Most of his clients are based in Southern California but he has clients nationwide. Through his shipping expertise he has helped hundreds of companies save money shipping small parcels and helped to integrate a more automated solution. For more information and a free consultation, please contact Hunter Hartman. Hunter also has his a secondary website, HunterHartman.com
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Hunter Hartman is a shipping consultant in the eCommerce world. He blogs about the changing landscape of shipping.