Selling on Amazon – a Beginner’s Guide (with FBA explainer)

Amazon FBA – Fulfilment by Amazon

If you don’t want to manage your own package and shipping process, then you can utilise the Fulfilment by Amazon (FBA) feature – whereby you sell it, and Amazon ships it.

With FBA, a customer stores their products in one of Amazon’s 30-plus UK-based fulfilment centres. These centres, also known as warehouses, are tasked with directly picking, packing, and distributing your products to customers around the country. Amazon also provides customer service support and manages returns on your behalf.

How do I set up FBA?

In order to begin using Amazon’s fulfilment service, you need to complete the following steps:

1. Create your Amazon seller account, login to Seller Central and select ‘set up FBA’
2. Whenever you add a product to the Amazon catalogue, specify the product as ‘FBA inventory’- this will pull the product into the FBA inventory tab
3. Prepare products to be securely transported to one of Amazon’s fulfilment centres. For this, you must follow the Amazon packing guidelines
4. Ship your products to the Amazon fulfilment centre – ensure each product has an Amazon shipment ID label

Once you’ve followed these steps and Amazon receives your products, they will become immediately available for customers to buy.

Daniel Davies, a former Amazon seller turned social media strategist for Love Energy Savings, discussing Amazon FBA, says:

“As a company that operated on selling in volume in order to make business feasible, it was essential to us that we could easily and quickly replenish stock which FBA easily enables you to do. The fact you can arrange the majority of the shipping process on the Amazon system with a discounted rate due to the shipping contracts they have makes it a viable choice for anyone.”

What are the benefits of using FBA?

Using FBA allows you to scale at speed

Amazon has the infrastructure and logistical setup to deal with increasingly large orders in short spaces of time. If you were managing your own fulfilment in-house, and orders for your product blow up, you may find yourself overwhelmed and lacking the infrastructure to manage.

Amazon has a trusted returns service

One of the biggest issues facing online retailers is the difficulty of handling returns. And as they make up on average 33% of a retailer’s existing inventory, it is important that the returns policies and procedures in place are watertight to ensure customers remain happy. With Amazon FBA, all returns are managed by its online returns centre, so you can rest assured that you have a reliable returns policy in place.

Your products are more appealing to Prime customers

Let’s face it, every Prime customer uses the plan because they can get next-day (or in some cases same-day) deliveries free of charge. If you use FBA, your products will also receive the same treatment, meaning Amazon’s 15 million UK-based Prime users are more likely to buy your product than purchase an item that is going to take a few days to arrive.

What are the costs involved when using FBA?

There are no additional set-up charges or subscription fees when you add Fulfilment by Amazon to your seller account. But you will need to pay fulfilment and storage fees.

Fulfilment fees vary depending on the type of item (media or non-media), its dimensions and weight, and the shipping method used. We’ve included an example below provided by Amazon, on how fulfilment fees would be estimated per product.

In terms of FBA inventory storage fees, these will differ depending on the time of the year. During the months of October to December, fees are more expensive and will cost you between £0.60 – £1.05 per cubic foot per month.

Whereas from January to September, customers can expect to pay between £0.43 – £0.75 per cubic foot, per month.

Ultimately, using Amazon for your fulfilment needs can be cost-effective. However it really depends on the number of items you are selling and shipping each month. If you are selling low volumes of products each month, it would be more beneficial from an affordability perspective, to manage your own order fulfilment.

Either way, to see whether the service would be right for you, we recommend you add up the costs of overheads you could be spending on warehouse space, packing supplies, postage and labour, dealing with customer service inquiries and returns handling. From there, work out whether the Amazon charges will be cheaper.