While Amazon offers many of its products, third-party merchants account for more than half of all sales on the e-commerce platform. Many of these things are stored and shipped by Amazon employees. Fulfillment by Amazon, or Amazon FBA, is the name of this system. It streamlines the shipping procedure for vendors while providing customers with the same level of care as if they purchased directly from Amazon. It also increases Amazon’s profit share from every third-party sale, and to know more, visit the below link:
What is Amazon FBA, and how does it work?
It would be best if you first grasped how Amazon FBA works before determining whether Amazon will be beneficial for your company.
Step 1: You ship things to an Amazon fulfillment center
If you do not manufacture your goods, the manufacturer can supply them to you instead. In the United States, there are around 100 warehouses. Depending on the product type, Amazon will advise you where to ship it.
Step 2: After Amazon receives your items, warehouse workers will sort them and store them with a tracking code. Damage and loss are uncommon; however, if your products are damaged or lost, Amazon will refund you.
Step 3: When a consumer orders for one of your products, Amazon will track it down and pack it for you. Your inventory will be updated regularly.
Step 4: Amazon will ship the goods according to the method selected by the purchaser.
Step 5: Both you and the customer will track the item during shipment.
Step 6: Any subsequent customer service, such as consumer questions and returns, will be handled by Amazon.
Step 7: You will be paid every two weeks for sales made through Amazon FBA.
It’s worth noting that Amazon FBA can also be used to fulfill orders from other e-commerce platforms, such as eBay and Facebook, as well as your website.
Is Amazon FBA still a good investment?
Sellers jumped at the possibility of simplifying the shipping procedure when Amazon initially launched its FBA service. Since then, Amazon has grown in popularity, resulting in increased competition and more significant fees. As a result, some people debate if Amazon FBA was still worthwhile in 2020.
It would be best to keep in mind that you are entrusting a large part of your business to another organization. While Amazon’s customer care is usually excellent, the sheer volume of purchases implies there will always be some errors. Your reputation could be jeopardized if Amazon makes a shipping error on your behalf. You can get a bad review or perhaps lose a customer due to your actions.
Taxes and Accounting in Amazon FBA
When you use Amazon FBA, accounting becomes even more complex. Unless you pay for a product that does it for you, it is no way to connect Amazon FBA to your QuickBooks account automatically. The manual entry of fees into a spreadsheet is another alternative. This could take hours of your time, depending on your sales.
And that’s only the beginning. It would be best if you also considered sales tax compliance. At any point, Amazon can elect to ship your things to a fulfillment center in a different state, and you will be unaware of this. Although some sellers have expressed worries about potential liability issues, there have never been any complaints yet.