Amazon Fulfillment Drawbacks and What to Do About Them

Fulfillment by Amazon, or FBA as it is more commonly known, is a great way to delegate warehousing, shipping and its associated logistics. However, is it the best solution for your Marketplace store? There are several drawbacks you need to know about, so you can avoid them or find a solution that works better for your brand.

1. Not Blending Systems

FBA works in tandem with several of Amazon’s own programs, and in conjunction with several third party apps. It is very important to not just assume that Amazon has all the best solutions for your business. A new business may want a more hands-on approach to things like inventory and accounting, then shift to Amazon’s automated system and use accounting software that is compatible with Marketplace and Seller Central. When you start out it is vital to have your hand in every part of the business, so you know which apps and programs will best work for you. Simply signing up for everything Amazon offers could have you overlooking some efficiencies that are better suited to your needs.

2. Forgetting About, or Not Understanding Sales Tax

Each seller must go into their settings on Seller Central to adjust the tax rate. But what happens if your business is operating in one state and the FBA warehouse is in another? Sales tax is per state and per locality. You must understand your tax liability in the states you, or the FBA warehouse you use, operate in. If you don’t, you could wind up paying back taxes and some hefty fees.

3. Not Watching Your Numbers

This point ties into the first one above. FBA is efficient and saves time, but for new sellers, or those with specialized products where quality trumps quantity in sales, is FBA the best choice? You really need to weigh the costs – and there are costs to using FBA. Consider if the fees are worth it now, or will be worth it when you grow larger. If shipping and warehousing on your own works best in terms on numbers and your time, strongly consider that. Work the numbers from every angle.

4. No Room for Those Little Extras

Read reviews from buyers and see how many rave about the handwritten thank you note or extra little touch in their packaging. If you are selling a hand made, personalized product, these little extras go a long with in customer engagement. Consider this before signing up for Amazon FBA.

5. Not Learning More About FBA, and Updates to the Service

The draw of ecommerce is that you “set it and forget it,” right? You find a product, brand it, set up FBA, then sit back and let the passive income roll in. Not so fast. An ecommerce business is still a business and it needs oversight. FBA changes in scope, permissions and algorithms, as does Marketplace and other aspects of Amazon. Additionally, there is a lot to know about running a business in general. Learn more by staying connected to the online seller community. Meet ups, podcasts, a blog, networking, guest speakers – you can get all this at Wizards of Ecom. Here you’ll find both free and membership content; and more than enough to keep your business growing at every stage. Learn more at from Wizards of Amazon.

Carlos Alvarez

Alvarez sums up his mission to help online sellers with a quote he heard early on in his career. New sellers constantly compare their Chapter 1 to another seller’s Chapter 20. They see what other veteran sellers are doing and they judge their success and failures by this benchmark. His goal is to show sellers a realistic path to success, and how they can enjoy every chapter of their own, unique journey.

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