How Amazon FBA Works: Everything You Need to Know

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There are 3 main models for organizing warehouse storage and delivery of goods to the buyer on Amazon:

1. FBA — physical storage of products in the marketplace warehouses. The platform takes full responsibility for packaging, logistics and customer service. One of the most profitable and easy ways to organize a business, but not the most budget-friendly.

2. FBM — the seller independently processes orders, stores and on page seo service organizes logistics. Suitable for those who have sufficient competencies to legally and economically organize their own warehouses in the USA and Europe.

3. Fulfillment services not owned by Amazon - an alternative method that can repeat the FBA model or offer a wider range of services. This method is chosen by those who want to save money, because the cost of delivery from Amazon warehouses is almost the highest on the market. It is also profitable if you trade not only on Amazon, but also on other American or European platforms.

From the point of view of savings, the FBM model certainly wins, but at the same time, it deprives you of many of the advantages of FBA, we talk about this in more detail in this article.


FBA (Fulfillment by Amazon): How does it work?
Fulfillment (English) — execution, implementation, accomplishment. Usually translated not literally and means "fulfilled by Amazon". With this model, the marketplace takes on most of the tedious and difficult tasks, in particular:



processing of incoming orders;
correct packaging/labeling;
timely and fast delivery;
notifying customers about order status;
after-sales service and return organization.
This does not solve 100% of the business owner's problems, but it definitely simplifies business management and gives a competitive advantage. The thing is, the buyer does not pay for delivery from the Amazon warehouse - the marketplace will earn on you and include this amount in the operating fees. And here it is important to know a couple of statistics:

54% of buyers abandon the goods in the basket due to high shipping costs. 83% of Amazon users choose the platform because of free shipping*

* official data from Amazon website


That is, thanks to the FBA model, you can attract more customers and provide them with quality service, which will certainly be reflected in the number of positive reviews for your store.

So what does a business owner do in this case? If we talk about working on the Amazon website in particular, your tasks are:

listing - creating and filling out product cards on the website;
Marketing - promotion of goods through advertising tools and increasing brand awareness.
You are responsible for finding the product, organizing production, branding, timely replenishment of stock and its delivery to warehouses.

FBA in Europe: simple and profitable

By delivering goods to an American warehouse, you can sell them not only in the USA, but also in other countries of the world. If, of course, your product is of interest to the European consumer and you yourself intend to expand the sales market so much.
To achieve these goals, there are subtypes of the FBA model:

1. Pan-EU - you send products to a warehouse in the USA, and the company independently deals with subsequent logistics and distribution (one entry point). This increases the speed of delivery to customers several times, and you cover the market of more than 100 countries. Important! To work under the Pan-European model, you must have a VAT number and sufficient turnover (we recommend from 1.5 thousand units per month). 2. FBA Export - you import goods only to those countries in which you are interested. For example, only to Spain and France. A popular way to test your product on the European market and start scaling with minimal financial investment.