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Amazon Global Shipping How Does The FBA System Works

Amazon does not need an introduction. Nowadays, Amazon is one of the largest online marketplaces. Thousands of goods are purchased and bought on the online store daily. Users who have sold things on the platform at least once have definitely heard about the FBA system.

The Core of the FBA System

Amazon FBA is a system that allows anyone from anywhere in the world to sell products on the marketplace, the advantage of which is that you have the ability to physically store products in Amazon warehouses.

At the same time, the platform is responsible for deciding where to ship Amazon FBA parcels, shipping them to your customers, managing returns, and providing better customer service.

In other words, you send your product to the warehouse, and Amazon FBA is responsible for managing all the logistics work that the future sale of these products will entail.

The main advantage of FBA shipping is that a buyer on Amazon does not even think about whose product he/she is buying, namely the marketplace itself or a third-party seller. In both cases, he/she receives the same service (quality and speed of service, delivery, insurance).

How does the FBA service work?

FBA is a marketplace service designed to make the life of sellers who list their products on Amazon easier. Now, let’s see how to ship to FBA. The sequence of cooperation with the platform can be briefly described as follows (consider the US market):

  1. The seller fills out an Amazon FBA label template and ships items in the US to one of Amazon’s warehouses. With the current level of logistics, you can easily send a container of goods to the United States from any corner of the world, be it China or Ukraine.
  2. Amazon takes your goods and distributes Amazon FBA boxes to warehouses all over the country for the convenience of internal logistics and high-speed delivery.
  3. Customers order your goods, along with things from Amazon and other sellers. Amazon FBA accepts and processes orders.
  4. Upon being ordered, goods are gathered in Amazon FBA packaging in warehouses and then delivered to the buyer’s home.
  5. Amazon provides a full range of accompanying services for the sold things and is responsible for insurance, transportation, and storage.
  6. Every two weeks, the marketplace transfers the profit from sales to sellers’ accounts.

So, Amazon FBA takes care of:

  • order processing;
  • packaging;
  • delivery;
  • return service.

And all this is done at the proper level. For example, customers will be notified about the readiness of the order, and delivery time, and receive a tracking number for its parcels.

Upon reaching the endpoint, an Amazon confirm shipment letter is sent to the seller. The seller is only responsible to send goods to Amazon FBA centers, create a product page on the marketplace (listing), and marketing.

How to Deliver Goods to FBA Warehouses?

Arranging delivery to the Amazon FBA warehouse can result in significant losses if the seller has no experience. Thus, we strongly recommend using the services of transport companies with a great experience in international logistics.

Choosing a trusted international carrier will be the best way to ship to Amazon FBA centers.

When selecting an Amazon freight forwarder, pay attention to the following criteria:

  • experience in the market;
  • methods of transportation;
  • hardware and vehicle obsolescence;
  • equipment quality;
  • cargo insurance;
  • a price policy.

Hiring a trusted transportation company is the best choice since contractors have expertise in the sphere and take all the hardships associated with the organization of shipment on it’s shoulders. 

Requirements for Parcel Packaging

While being not only a marketplace but serving also as a large network of warehouses, Amazon treats parcel marking with special care and sets a set of requirements for labeling goods.

This allows for achieving proper and timely delivery and avoiding parcel loss on the way. Now, let’s see how to pack for Amazon FBA in order for the parcel to get to the warehouse.

Amazon has a special policy for product packaging. Applied Amazon FBA shipping requirements depend on the type of product, but there are general conditions for all goods. Thus, to send to Amazon, the box must include the following information:

  • an FNSKU barcode (obligatory). It stands for product identification. The platform does not accept parcels without this code.
  • Information about certificates (if required).
  • The name of your Private Label.
  • Information about the country where the product was manufactured.

Note that all products must comply with the following criteria:

  • Contain no more than 150 items inside one FBA box;
  • The maximum weight of a parcel cannot exceed 21 kg;
  • Each product is packed and labeled individually;
  • The country of manufacturing is specified;
  • Plastic bags should contain warnings about possible suffocation.

If the product is placed in a plastic bag, the seller needs to put the information that the package is not a toy and should not be given to children. You can find an FBA template on the website to ensure the correct form filling out.

Pros and Cons of the FBA System

The main benefits of using the program include:

  1. Your customers get super-fast service. As a rule, the processing speed of orders in Amazon centers is much faster than in alternative options and even more so compared to servicing orders yourself. And we’re talking about a business with hundreds of orders a day, not a hobby of selling a dozen units a month.
  2. Free shipping for Prime buyers, and there are already more than 103 million of them in the USA alone. These are the people who shop regularly on Amazon to take full advantage of the paid Prime membership.
  3. More chance to get the “Buy Box” button. If there are several sellers on the product page that offer similar products, then the “Buy” button is more often linked to the store of the seller who uses the FBA program.
  4. Save on Employees: You don’t need to hire the staff to process orders, deliveries, and communicate with customers; Amazon takes care of that part. The use of FBA leads to an easier organization of business and the ability to conduct it completely remotely.
  5. Seller rating is another point that no one thinks about before the start of sales. Each seller on Amazon has its own rating, which determines the place of the product in the search on the platform and which is influenced by customer reviews. So, when using the FBA service, all the negativity due to delays in the delivery of goods falls on Amazon, and not on the seller’s rating.

Does FBA have cons? Yes, of course, there are quite a few of them.

Disadvantages of the FBA Program

  1. The high cost of maintenance and the inability to influence it. If Amazon wants to raise prices, it will do it; if it wants to impose penalties, you will get them.
  2. Irrational use of FBA for heavy and bulky goods. The employees of the marketplace are not always too careful with garden furniture, sports equipment, and also large household appliances, as well as fragile items. Thus, sellers should pack such things in special FBA boxes.
  3. Special conditions that are imposed by the FBA program + the inability to brand the packaging in which the goods are delivered. It is also not allowed to put promotional products in it (a box can be marked with the Amazon logo and a couple of exclusive marketplace partners only).

Still, special Amazon FBA shipping box requirements are not just a whim of the marketplace. This is what allows the system to find and pack goods as quickly as possible. At Amazon warehouses, robots work alongside humans to move racks and distribute goods around the warehouse in a specific pattern to make them easier to access. Thus, meeting Amazon FBA box requirements speeds up and simplifies processing works.

The Cost of Participating in the FBA Program

Jeff Bezos does not look like an altruist at all. Thus, naturally, participation in the Amazon fulfillment packaging program for sellers is far from free. Let’s say more: prices for warehousing services and order servicing are growing with enviable regularity, and, as a rule, price increases occur 2 times a year. So, Amazon entrepreneurs working under the FBA program pay 3 types of fees:

  1. Fulfillment fees – these ones cover the cost of collecting, packaging, and shipping orders, as well as customer service and returns;
  2. Monthly storage fees – the cost of storing items in Amazon warehouses
  3. Long-term storage fees are a kind of penalty from Amazon that applies to stock left in warehouses for more than a year.

Long-term storage fees were introduced relatively recently, only 1.5-2 years ago, and their task is to encourage sellers to work with high-turnover goods that are not stored in warehouses. Previously, there was a quota for the number of goods in warehouses from one seller, but it is clear that the quota did not work well since additional fees had to be introduced.

FBA fees are determined by the size of packaged goods. This, for small and light goods, fees will be small, and for bulky and heavy goods (garden furniture, sports equipment) the commission is higher.

A Few Statistics

To draw the line of the article, let’s mention some statistics. In December 2018, 73% of American Amazon sellers used the FBA service. And this is the largest indicator among all marketplaces where this service works (Canada, Spain, Britain, Germany, France, Italy, Japan, and India).

The lowest FBA usage rate is 33% on Australian Amazon. The reason for this is very simple – FBA in Australia was launched only in March 2018, and by the time, the statistics were collected, it had not yet gained proper popularity. As of today, there are 104 FBA centers in the US alone.

Now, you know how to send to Amazon FBA centers and can do it correctly. Still, even if you pack parcels in accordance with Amazon seller templates, it is better to entrust parcel delivery to reliable contracting companies that are well versed in international logistics.

A reputable shipping company will advise you on how to ship products to Amazon fulfillment centers and help pick the best transport means for this purpose, insure goods during delivery, etc. Thus, contacting an international career will allow for avoiding numerous risks and being sure of quick and safe parcel shipment.