What are the Key Differences Between Amazon Seller and Amazon FBA?

A common question among sellers looking to enter the Amazon marketplace is: what is the difference between an Amazon seller and Amazon FBA (Fulfilled by Amazon)? While both allow you to sell products on the popular e-commerce platform, there are significant differences in terms of fulfillment processes and associated costs.

Overview of Amazon Seller

As an Amazon seller, you are responsible for all aspects of your product's fulfillment, including inventory storage, order picking, shipping, and customer service. This includes managing your own warehouse if you choose to have one, or utilizing third-party logistics (3PL) providers.

Fees for Amazon Seller

Selling on Amazon as a seller includes several fees, such as:

Commission: A percentage of the sale price is taken as commission by Amazon. Monthly subscription fee: A monthly fee for having a professional seller account, which can cost around $39.99 per month. Referral fees: Additional fees charged when you refer new sellers to Amazon. Shipping fees: Costs related to returns, exchanges, and shipping. Storage fees: If you are storing products in one of Amazon’s fulfillment centers, you will need to pay a storage fee.

Introduction to Amazon FBA

Amazon FBA, or Fulfilled by Amazon, is a service where Amazon stores and ships your products on your behalf. This allows you to focus on selling and marketing your products, rather than managing inventory and logistics.

Key Differences Between Amazon Seller and FBA

Fulfillment Responsibility: As an FBA seller, you do not need to manage your inventory or handle shipping. Amazon takes care of all these tasks, ensuring efficient and consistent delivery times. Quality Check and Cancellation Rates: To qualify for Prime Fulfilled by Seller, you must have an order cancellation rate of less than 1% and successfully ship 99% of your orders on time during a trial period. This can last from 5 to 90 days, depending on the time you complete the Prime delivery requirements. Prime Fulfilled by Seller (Prime FBP): This is an advanced fulfillment service that requires you to maintain a high level of customer satisfaction. Once you successfully complete the trial period, you can display the Prime badge on your products, which can significantly boost sales and revenue.

Benefits of Amazon FBA

Time and Cost Efficiency: By using FBA, you can save time and reduce costs associated with managing your own warehouse and logistics. Quality Control: Amazon ensures that your products are handled professionally and delivered on time, which can improve customer satisfaction. Customer Trust: Having the Prime badge can significantly enhance customer trust and willingness to purchase from your listings.

Prime Fulfilled by Seller (Prime FBP) Details

To qualify for Prime Fulfilled by Seller, you need to:

Purchase shipping labels through the Buy Delivery Services or Amazon Shipping website. Ship orders with Amazon’s supported Prime Fulfilled by Seller carriers. Agree to Amazon’s Returns Policy and customer service policies. Ensure a 99% on-time delivery rate and an order cancellation rate of less than 1% within the 200 eligible Prime orders.

Challenges of Prime F/MPL FBP

While the benefits are significant, there are potential challenges. Notably, the trial period can be demanding and may require substantial investment in logistics and customer service. However, if you successfully complete the requirements, the benefits, including the prestigious Prime badge, can be immensely rewarding.

Conclusion

Ultimately, the decision between being an Amazon seller or FBA depends on your business goals and resources. For sellers looking for a hands-off approach to fulfillment, FBA is a compelling option. For those who prefer full control over their inventory and operations, being a regular Amazon seller may be more suitable.