Amazon takes customer service very seriously. Therefore, it provides sellers with two fulfillment strategies to meet their customer needs: Amazon FBA and FBM.

Selling on the world's largest eCommerce platform can be overwhelming if you (as a seller or supplier) don't have enough information on how to ship products in a way that pleases both you and your customers .

As mentioned in one of our recent articles on Parcelhub.com.uk, one of the most exciting events for any shopper is receiving a long-awaited product.

So, if you want to make a great first impression on your customers, make sure you have the right implementation plan for your business. Read on to learn more!

What is Amazon FBA?

The Fulfillment by Amazon (FBA) program is a well-oiled machine that allows sellers to fulfill orders easily and smoothly. It's not a perfect machine, but it removes a lot of hassle.

To expand its Premium Shipping capabilities, this year, Amazon has invested more than $1.5 billion not only in infrastructure, but also in tools and services to meet the needs of its sellers and loyal shoppers.

These are some of the benefits of using FBA as your fulfillment option:

Perk #1 – Score

When you let Amazon take care of fulfillment, you don't have to worry about meeting all of their requirements. Bottom line, if you make a mistake, you're going to get hit hard.

If Amazon makes a mistake, they fix it, and the most important thing you can do is follow up to make sure customers are happy so you don't get bad reviews or negative feedback.

Benefit #2 – Shipping Convenience

You won't be able to manage inventory that easily, but FBA takes pretty much everything involved in order fulfillment off the plate.

You should still be wary of complaints and try to encourage positive reviews and feedback, but FBA means you can focus on this and other growth tactics instead of mundane fulfillment.

Additionally, FBA gives you the option of multi-channel fulfillment so that you don’t have to worry about the delivery of your own online store other than the other online sales channels you operate.

Perk #3 – Buy Box Boost

Shipping isn't the only factor Amazon considers when awarding Buy Package. Still, it's naturally important because it helps Amazon make more money. As an FBA seller, you can compare to using FBM and still win the buy box.

Perk #4 – Lower Costs

Since Amazon is so large, they have excellent third party arrangements for all shipping that they cannot handle themselves. That means lower prices than you might find on your own.

Perk #5 – Access to Prime with FBA

Prime is huge. Amazon customers are loyal to the marketplace because it offers fast and easy shipping.

Fulfillment by Amazon (FBA) gives you instant access to Prime instead of applying to get all of Prime's stringent requirements that the seller meets.

Let's recap...

Before we discuss the new fees that will go into effect in 2020, let’s take a quick look at the fees that have changed the way Amazon has handled storage fees in the past.

These changes also affect the Multi-Channel Fulfillment program.

2019 Long Term Storage Changes

On March 15, 2019, Amazon Fulfillment introduced the following storage changes:

long term storage

Amazon is waiving long-term storage fees for items that have been in a fulfillment center for 181 to 365 days. The last time fulfillment centers charged long-term storage fees for inventory between 181 and 365 days old was March 15, 2019.

minimum long-term storage

In 2019, Amazon lowered the minimum long-term storage fee from $0.50 to $0.15 per unit for items that have been in a fulfillment center for more than 365 days. The last charge at $0.50 per unit was March 15, 2019.

These changes also affect the Multi-Channel Fulfillment program.

monthly inventory

Amazon charges a separate monthly storage fee for dangerous goods that require special handling and hazmat (hazmat) storage. This change was first reflected in the July 2019 storage charges that occurred in October 2019.

2020 US FBA, referral and storage fee changes

On March 18, 2020, Amazon proposed a modest increase – about 3% – in fulfillment fees; however, referral fees will be lower than in 2019, and a new FBA selection program will also be launched.

US FBA Fulfillment Fees in 2020

Below is a comparison chart comparing some of the changes to FBA implementation fees, February 18, 2020:

Source: Amazon Amazon has also eliminated the $0.40 per-item surcharge on apparel.

Click here for more information on the new changes to FBA fees in 2020.

2020 US Referral Fee

Every year, Amazon reviews its referral fees to ensure they reflect changing industry dynamics and costs, and to respond to feedback received from sellers, all to help you grow your business on Amazon.

Below is a list of referral fee changes effective March 18, 2020:

Shoes, Bags, and Sunglasses – For purchases over $18, the percentage is reduced from 15% to 75.00%.

Outdoor Furniture – Amazon will consolidate outdoor furniture products into the “Furniture” category, reducing the referral fee percentage from 10% to 200.00% for any portion of the total sale price over $15.

Personal Care Appliances – Percentage reduced from 8% to 10.00% for items with a total sales price of $15 or less.

Activewear – now consolidated into the “Apparel & Accessories” category with a percentage of 17%.

Ring Accessories – Now consolidated into the Amazon Device Accessories category with a percentage of 45%.

Amazon Business – Amazon will eliminate the “tiered fee structure” and apply one referral rate per category, regardless of price. Products above $1,000.00 will be charged the same rates currently applicable to products of $1,000.00 or less in each category.

Source: Amazon

What is "Referral Fee Discount"?

Amazon is iving you a limited-time discount on referral fees to help grow your business. These discounts can save you up to 70% on your referral fees, allowing you to add new items, offer competitive prices, and increase the availability of popular Prime-eligible products.

Here's how it works:

These promotional fee discounts apply when orders are placed on any eligible item during the promotional period.

Referral fee discounts appear in your individual line item transaction details.

Seller fulfilling Prime. Get a 60% discount when non-Prime ASINs are added to Seller Fulfilled Prime. learn more.

Competitive prices on popular products. Reduce your price to get up to 70% off your referral fee. learn more.

2020 Monthly Inventory Storage Fee

Monthly inventory storage fees for standard-sized items will increase by $0.06 per cubic foot from June 2020 through June 2020.

For storage that occurred in October 2020, the first changes were reflected in December 2020.

Source: Amazon

Summary of "small and light" changes for long-term storage in 2020

In short, these changes came into effect on March 18, 2020:

Amazon Integration Order Processing, Pick & Pack, and Weight Handling charges are calculated as a single unit charge by weight.

2. There will be a new fee of $0.10 per unit for the optional FBA labeling service.

3. There will be no charge for small and light equipment that has been in the fulfillment center for 181 to 365 days.

4. Amazon will stop the long-term storage rate for small and light.

5. Effective March 15, 2020, all standard FBA storage fees apply to Small and Light, which reduces the per-unit charge from $0.50 to $0.15.

How to Set Up FBA – For Beginners

Step 1: Create an Amazon Seller Account

Basically, before setting up FBA, you need to create an Amazon seller account.

Read the "Before You Sign Up" section on that webpage for information about the two types of Amazon Seller accounts, professional and personal.

Professional account. It gives you the opportunity to sell an unlimited number of products for a $39.99 monthly subscription. (This is the best option if you plan to sell more than 40 units per month.)

personal account. It has no monthly fee, but charges $0.99 per item sold. (This is the best option if you have fewer products.)

Sign in or create a new Amazon account, then:

Provide your business name and address

Confirm Seller Agreement

Provide your cell phone or phone number

Provide your preferred billing method/bank deposit information - chargeable credit card for professional accounts

Provide tax information for professional accounts

Choose a display name for your business - the name buyers see next to the items you have for sale

Verify your identity by phone or SMS

Step 2: How to List Items on Amazon

Now that you have an account, you need to list an item for sale.

To add your first product, you want to go to "Inventory" at the top of the screen and click "Add Product".

After clicking Add Product, you will be prompted to search for a product. You can search by barcode or product name.

After selecting a product, you will be taken to a screen to enter important product information. You must enter three main items:

The price you want to sell your item for – the price you feel you can easily sell it for, but consider competition as

What state is your item in – be as honest and descriptive as possible. All you need to enter is an option from the drop-down menu:

"acceptable"

"good"

"new"

A good description will help you sell more.

To set up Fulfillment by Amazon, make sure you select: "I want Amazon to ship and provide customer service for my items for sale."

This is essentially "I want to use the FBA option".

You will be redirected to a registration screen where you need to accept Amazon's terms of service.

Tip: You can also check out Amazon Product Listing Optimization Best Practices and learn more about what an Amazon ASIN number is.

Step 3: How to Convert Your Items to Fulfillment for Amazon Listings

You may be asking yourself: "If I just selected a listing to be fulfilled by Amazon, why do I need to convert it to an FBA listing?"

Using Amazon FBA is optional when you set up FBA, but it doesn't have to be mandatory for every item you sell.

You may want to ship it yourself. There are also some items that cannot be shipped through Amazon FBA. In this case, go to your account and manually select the allowed items that you would like to achieve with FBA.

Go to the "Inventory" tab on your Seller Central account.

Click "Manage Inventory" and "Actions" to reveal the drop-down list, then select "Change to Fulfilled by Amazon".

While processing, your listing will be temporarily unavailable on Amazon.com until your inventory is received at Amazon's fulfillment centers.

After changing your inventory to "Fulfilled by Amazon", you will be asked for two preferences:

Inventory tools for monitoring long-term storage

You can use the Inventory Age and Inventory Health reports to identify which ASINs in your inventory will be charged long-term storage fees on the next inventory clearance date. For each ASIN, you can view your inventory by the time it has been in an Amazon fulfillment center:

0 to 90 days

91 to 180 days

181 to 270 days

271 to 365 days

365 + days

FBA Label Service

Instead of doing it yourself, you can have Amazon put stickers on your items.

In 2020, Amazon charges 30 cents per unit to have them label your items. For FBA Small and Light, the fee per unit is $0.10.

However, if you want to maintain a higher profit margin, you can still consider printing your own stickers or discuss product labels with the manufacturer.

Self-adhesive mix stock

This means that Amazon will not separate your inventory from other sellers' inventory of the same type of unit.

If someone orders from you, Amazon may ship a matching device that was actually purchased from another seller but in a warehouse near the customer. This is done to provide faster shipping for better customer service.

(Be aware of the risks if you choose mixed inventory. If other sellers sell counterfeit products, they may sell them in place of your genuine products before Amazon notifies you, giving you a bad reputation.)

Also, note that this option is not available for private label products.

After selecting an option, you will be prompted to "Convert Only" or "Convert and Send Inventory".

If you want to send stock of all products, please convert and send stock. If not, select "Convert Only".

Your listing should now appear in "Amazon Fulfilled Inventory" under the "Manage FBA Inventory" option in the main "Inventory" tab of Seller Central.

Step 4: How to Create an Amazon FBA Shipping Plan

When you "Convert and Ship Inventory" or add additional items, you will be prompted to create a shipping plan.

Prepare to ship from the address (now in stock) and note whether you are sending a single product or several items in a box ("packaged product").

If you are sending all items of the same type in a box, use "Box Product"; otherwise, use "Single Product".

After setting up your shipping plan, you will be prompted to add items to be sent to Amazon warehouses.

You can also add more items to the same shipment by selecting "Add to Existing Shipping Plan" instead of "Create New Shipping Plan".

Step 5: How to Ship Items to Amazon for FBA

So, now that everything is included in your shipping plan, it's time to finally ship your item. Navigate to Inventory, then Manage FBA Shipments, then click Proceed to Shipment Planning.

Enter the number of units you want to send and choose whether you want Amazon to prepare and/or label them.

Schedule an Amazon pickup based on what you want to send.

After your shipment is approved, you can purchase it from Amazon. However, you should be aware of the weight of your package. You can put it on a bathroom scale, or root

Estimate the weight based on the contents of the package. However, if the weights differ significantly from your estimate, Amazon could get you in trouble.

4. Print out the label and stick it on the package, and it's ready to go!

What is Amazon FBM? Fulfilled by Amazon Merchant (FBM) refers to a system in which sellers (also known as merchants) fulfill customer orders themselves. This program allows you to better protect your brand and make money on Amazon even if you don’t sell a lot, as long as you can manage fulfillment efficiently to keep Amazon customers happy. It also gives you some freedom when you sell large and/or heavy items (including cheap bulk items), but remember: you need to have a great seller rating to do so. Fulfilling the order yourself puts you in control of the entire process. As long as you can maintain quality control to the point where you rarely make mistakes, and if you do you can keep your customers happy, this can be a great advantage. FBM is only great if you can maintain a good seller rating so that you can top the search results and have a decent chance at the "buy box". Here are reasons why FBM may be the best option for your Amazon business: #1 – Reduce Costs If you sell large or heavy items, you can ship them for less than Amazon asks. This can save your margins, especially if you don't sell too many of a particular product. FBA also involves complex fee structures that can be hard to wrap your head around. This includes higher long-term storage fees, which can be a headache when you're just starting to figure out sales for a particular product. You may pay more to ship experimental quantities or have excess inventory. This is a non-issue with Amazon FBM. #2 – Inventory Convenience Amazon FBM makes it easier for you to manage your inventory, stock levels, and quality. This is very convenient, especially when dealing with returns and exchanges. also:

• For example, you can see the exact damage to a returned product and most likely know exactly how it happened.

• No need to rely on Amazon to inspect the item for you (which is not always reliable) or pay to have the item removed and shipped to you so you can view it yourself.

• You will also make a partial replacement of the product you have on hand (eg when only one of the 3 packs is defective) instead of just choosing to send a brand new 3 pack and have the other two perfect as a loss.

#3 – Brand Protection If you’re worried about mixing products with other sellers, FBM is a great way to keep your listings separate. This helps you control what you know about your customers and avoid problems due to shipments of poor quality products and their impact. #4 – Better Customer Service Amazon does put customers first, but it does lack a personal touch due to the sheer volume. It's also very far from your specific product, and there's really no substitute that will give you a deep understanding of a product. #5 – Start Selling Immediately With FBM, you can start selling your products as soon as they hit the market. No need to wait as your order will be shipped as soon as it is entered. For cheap items that typically don't make Amazon's $25 add-on minimum, FBA can get in your way because customers won't buy the item if they can't get the shipping benefit. FBM enables you to ship these items out, so customers are likely to place more orders. But wait, why not take advantage of the best of both worlds? Amazon FBM forces you to get more involved in customer satisfaction, and that's not a bad thing. Even with FBA, you really need to be involved in customer service because at the end of the day, customers will always blame you if there is a problem with the order. FBM gives you more flexibility to try out different items, or simply sell what's available for a lower price. In other words, you are free to engage in retail arbitrage without worrying about long-term commitments to any particular product. If it doesn't sell, there's a good chance you'll be returning it and taking it elsewhere. If you see advantages to both fulfillment methods, there is no reason to choose between Amazon FBA and FBM. You can fulfill yourself well where it makes sense and use FBA for other orders. Using the Fulfillment by Amazon calculator can help you better understand which option is more viable for you for each product. You can then separate them and have your cake and eat it.