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Why is Amazon FBA Much Better than Merchant Fulfillment?

February 21, 2018

 

 

 

Welcome back Amazon Sellers! This week we will touch on an important topic of selling on Amazon – fulfillment methods. After you have created new product listings on Amazon, you have to decide to go for either FBA or Merchant Fulfill. FBA refers to Fulfillment by Amazon, meaning that you will need to ship cartons of products to Amazon Warehouse at the first place, and Amazon will take care of the delivery and returns for the future sales. In contrary, sellers who choose merchant fulfillment will have to handle the shipment on their own behalf whenever purchases are placed by customers. As seen from this blog’s title, I believe that FBA is a better option. In fact, FBA offers a lot of advantages that really makes sellers go ahead of the game, and I strongly recommend sellers to go for FBA right away when they first start off their Amazon business. Here are the reasons why.

 

#1 Time & Effort Saved

 

Since Amazon will handle all the shipment logistics, you can save tremendous amount of time working on other daily stuff of your Amazon Business, such as managing your PPC campaign and optimizing your product listings. Moreover, using FBA will help you to scale your Amazon business to the next level. While your Amazon sales increase, the logistics headaches that comes with it also increase (given that you do merchant fulfill). In such case, you may need to hire additional labour to deal with the inventory packaging and shipping, costing you a lot of time and effort. However, you can literally seat back and see your sales grow if you use Amazon FBA. Although FBA comes with product fees, the ability to scale and efficiency of FBA make it worth the price.

 

 

#2 Amazon Biased Algorithm

Amazon always prefers their sellers to use its own FBA services, and there are two major reasons for that. First, Amazon generates great amount of revenue out of their FBA sector. Second, Amazon will always put their customers first, and when sellers stock up their products in Amazon FBA warehouse, it signals that these sellers are legit with real inventory. It also implies that these sellers are less likely to scam the customers by simply uploading a fake listing.

 

To incentivize sellers in using FBA service, Amazon rewards FBA sellers by making their listings much more competitive in the search results. One method that Amazon uses is issuing prime badges, which is a symbol of seller’s privilege identity that increases search ranking. The screen capture below shows how Prime Badge sellers outwin the race: at the search result page of a keyword “USB Type C cable”, the first 5 listings are all awarded with prime badges, and for sellers who do not have the badges, their products only show up at page 10 and after! To further put Merchant Fulfilled sellers in worse situations, Amazon allows buyers to filter the result page to only showing prime products, hence filtering out all merchant fulfilled sellers from the search result page.

 

 

 

 

In addition, sellers who have Prime Badges, from buyers’ perspectives, are those who offer products with high quality. Therefore, buyers will tend to purchase from Prime sellers comparing to sellers without badges. In order to be competitive in such unfair Amazon game, it is a must to get the prime badges, meaning that sellers should definitely go for Amazon FBA.

 

3. Delivery Time & Account Health

 

There are a lot of factors contributing to the success of an E-commerce business, and one crucial factor is delivery time. Spoiled by Amazon’s fast delivery solutions, Amazon customers are now expecting 2-days delivery, and a lot of them are willing to pay extra money for same-day delivery. Therefore, most foreign sellers who sell on Amazon US and CA markets usually use Amazon FBA to achieve fast delivery results. For sellers who do merchant fulfil, it will be very hard for them to deliver products in 2 days like what Amazon FBA does, especially when the seller’s factories are in foreign regions. Thus, Amazon FBA serves as a level-playing field for sellers across the globe, ensuring seller’s service quality disregard of their geographical locations.

 

Another benefit of using FBA is the well-maintained account health. Sellers’ account health is affected by delivery performance, and when sellers use FBA service, the account health theoretically should be 100% positive. The reason is that whenever there are delivery errors such as lost parcels and delays, it is Amazon’s responsibility but not seller’s. Therefore when customers leave negative feedbacks about delivery on FBA Seller’s storefront, sellers can request Amazon to delete it and Amazon will usually remove it in no time. As result, only positive reviews will be shown on your storefront!

 

 

 

With all the benefits of using Amazon FBA, I strongly suggest sellers to use this delivery solution! FBA not only saves your effort in packaging, but also significantly increases your competitiveness in the Amazon race. If you want to know more about the tactics of selling on Amazon, you can always reach out to us at admin@rwn-solutions.com! Happy Amazon Selling!

 

 

 

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