Ever since the Covid-19 pandemic has hit the world, many traditional marketers and sellers across the globe who have intentions to break into the e-commerce market have this question in mind- Is Amazon FBA still worth it? In a nutshell, the answer would be a yes. Due to the lockdown safety measures and shift to remote working cultures, the reliance of the general population on online shopping with Amazon grew in large numbers. The pre-pandemic and post-pandemic revenue figures of Amazon are proof of this statement. Amazon’s revenues witnessed a massive surge from $280 million in 2019 to a tremendous $386 million in 2020. The third-party sellers make up 54% of that revenue. Of those third-party sellers, 92% of them signed up to the Amazon FBA policy.
Let’s review the advantages and disadvantages of Amazon FBA to assess whether it is beneficial for the sellers or otherwise.
Pros Of Amazon FBA
Amazon FBA Allows Sellers To Have Access To Amazon’s Massive Customer Base.
Nearly 62% of people in their online shopping searches go to the Amazon site to begin their product search. Amazon has a loyal customer base of 300 million Prime subscribers and gets more than 3 billion website visits in a month. Amazon FBA sellers get exposed to this enormous legion of Amazon loyalists, which saves them advertising and publicity costs to market their products. On Amazon, it automatically happens, and their products get a million visits at times.
The Customer Service Is Taken Care Of By Amazon.
Amazon FBA sellers are not bothered by the logistics of their products. Amazon handles the packaging, storage, order picking, and delivery of the products. This assures the sellers that they do not need to worry about customer service, which is a huge difficulty. They are free of this load in the Amazon FBA services.
Sellers Avail Prime Services.
Amazon FBA sellers acquire a Prime badge giving them a huge benefit of getting hold of Prime customers. The Prime customers buy essentially from Prime sellers, which advertently gives a bigger customer target.
It Allows Sellers To Give More Focus On Efficiency Than Marketing.
As Amazon is a brand, Amazon FBA sellers do not need to invest in marketing. A little research is required to use the right keywords to enter the search listings in the Amazon search bar. This will bring more traffic to your products. This platform allows sellers to advertise special coupons and discounts during the season of the festival and high sales.
Cons of Amazon FBA
Sellers Are Required To Pay Storage Fees.
The products and items of sellers are stored in Amazon Fulfilment Centres for storage. For this, they need to pay storage fees of two types:- Monthly fees and Yearly fees. Sellers need to pay storage fees depending on the type and size of the product. Good inventory management and consulting with senior Amazon FBA sellers will help you manage the inventory, resulting in fewer storage fees.
FBA Fees Are An Added Cost For Sellers.
Sellers are supposed to pay FBA fees to Amazon to carry out the process of packing, shipping, and delivery of their products. It is calculated according to the size and weight of the product, which is usually 30%-40% of the item price.
Amazon’s Easy Return Policy Is A Hassle To Sellers.
The products purchased on Amazon can be easily returned due to its easy return policy. While it is convenient for Amazon and its customers, it is a huge concern for sellers.
