Amazon is a textbook example of how technology creates and transforms businesses. The e-commerce giant came into existence only in the 90s but has been scaled up to an unprecedented level in the last 10-15 years.

As per some latest reports, Amazon is now operating from around 300 million square feet of space that includes all its offices, data centers, and warehouses. It is also quickly racing to get into the elite club of 500-billion dollar company. In short, all is going well for Amazon as a company. The good thing about this amazing growth is that Amazon has spilled and trickled down its benefits to small e-commerce vendors through an ambitious fulfillment program.

The Fulfillment by Amazon (FBA) facilitates all small and medium-sized e-commerce platforms with the packaging, storage, and shipment of their items. One estimate suggests that more than five million sellers are operating with Amazon through its FBA program right now.

If you also want to start an FBA-affiliate venture, then it is really important to be aware of all the upsides and downsides of working in that business model. For that matter, we are going to discuss some of the noteworthy pros and cons of doing business through the Amazon FBA.

Upsides of Working with Amazon FBA

There are definitely many advantages of working with Amazon FBA.  There is a reason why millions of people willingly work in that business model. Let’s see what some of the most winning features of FBA are.

You Can Set Aside All the Hassle of Packing and Shipping

Stating the obvious, the most noteworthy benefit of using Amazon FBA is that you can easily outsource your packing and shipping work to an entity that has the expertise and resources of doing it in the most professional manner and at a really reasonable cost. If you are operating a small e-commerce platform that can’t afford to hire dedicated packing staff and a private shipment, then you have to deal with these important logistical requirements on your own.

As a result, you will be stuck in the cycle of packing and shipping a limited number of parcels without doing much regarding scaling up your business. With Amazon FBA, you can get around all the time-consuming and least-productive aspects of an online delivery business. This will allow you to concentrate all your focus and attention on expanding your operations.

You Are Not Bound to Sale on Amazon Only

This is another winning feature of Amazon FBA that is yet to be replicated by any other fulfillment program. Amazon offers multi-channel fulfillment to every vendor connected with them through FBA. Even if you are a small business, you don’t have to worry about losing your identity in the vast Amazon marketplace. With multichannel fulfillment, you can use the logistical prowess of Amazon to sell things through your own website. You can use this program to operate on other sales channel as well. The multichannel fulfillment feature of the FBA program also shows that Amazon has transcended beyond regular market competitions.

You Can Become a Prime Seller

Amazon offers a Prime incentive to make sellers its long-term partners. By getting the Prime membership, you can offer free two-day shipment to your consumers. Also, the best thing about Amazon Prime is that you don’t need to do anything extra to qualify for it. Just remain consistent with your FBA program and you will eventually earn the Prime tag.

When customers see the same product offered by a regular and a prime seller, they will definitely choose the latter. This single feature can boost your sales to the next level.

You Can Land Your Product Into the Buy Box

It is actually the suggestion box that shows similar products when you open the page of a certain item listed on Amazon. It actually helps the marketplace with up-selling and cross-selling. If you work with FBA, then your products are more likely to land in buy boxes to make the most of upsells and cross-sales.

If you are convinced with these upsides then find out the answer to the question: how much money to start Amazon FBA?

Downsides of Working with Amazon FBA

We suggest that you do not make any rash decision regarding an Amazon FBA business. So, also factor in some of the downsides that come with this logistical model.

It Might not Suit Part-time Sellers

If the e-commerce platform is not your main gig, then affiliating with Amazon FBA might not yield the desired results for you. You have to pay a substantial amount of fees and there are least chances that you will be able to enjoy the facilities of Amazon Prime and Buy Box.

Keeping the Track of Inventory Becomes Difficult

When your average sales exceed a certain amount, then it becomes quite difficult to keep the track of your inventory when it is laced to the FBA program. You can’t get the fair estimate of which products are short and which items are just laying there and deteriorating.  However, there are some management software that can help in this regard.

 A High Return Rate

No e-commerce vendor wants to deal with a high number of returns. However, it sometimes becomes challenging to keep the rate of return low. Amazon offers its end-customers an easy return process and this is where working with an Amazon FBA can become tricky. You can experience a high rate of return due to all test and impulsive buyers surfing at Amazon.

The Verdict

The above discussion clearly indicates that the benefits of using Amazon FBA outweigh its downsides in most of the cases. If you are planning to set up a small or medium-size e-commerce platform as your full-fledged venture, then affiliating with Amazon FBA can give you a rousing start. There is also more room of scaling up your operations when you distribute your workload with Amazon FBA.

However, people who are not going to fully adopt e-commerce might not find Amazon FBA as beneficial and lucrative as it is for dedicated online platforms.