The expense of renting out warehouse space may be unacceptably high for certain small and medium-sized vendors, which would reduce their profitability and force them out of business. Every product merchant has a fantasy scenario in which they would not need to own any warehouse space and Fulfillment by Amazon (FBA) makes this dream a reality. As a wise Amazon seller you should know about how to sell on amazon without inventory.
What is FBA and how does it work?
The main advantage of using Amazon to fill your orders is that you won’t have to worry about anything between the time you deliver your inventory to them and any potential customer refunds. Retailers use the company’s shipping and storage facilities while fulfillment businesses charge fees to retailers and take advantage of bulk shipment discounts. Fulfillment companies have been around for a while. FBA differs differently from traditional fulfillment because, as a marketplace, Amazon has a vested interest in the success of the products listed on its website.
Three advantages of adopting FBA are as follows:
- Think about the following two situations: scenario 1: you are a regular Amazon seller; scenario 2: you are an FBA seller. The majority of FBA products are eligible for Amazon Prime and super saver shipping. Therefore, consumers who require goods right away will always pick FBA over a traditional merchant. A scenario 2 vendor can raise the price to compete and earn a greater payout while a scenario 1 seller is required to include shipping in his product pricing.
- All seven days a week, customers can order and have Amazon fulfil their orders for products. You are finished once you deliver your goods to Amazon’s warehouse. We’re talking about increased visibility with less work.
- A little over half of all Amazon customers prefer FBA because they are confident that Amazon would handle their order and that it will come quickly. Furthermore, the same buyers are even willing to pay more for Amazon to transport their identical product than for a seller from a third party.
You can therefore start selling on Amazon even if you are a tiny store without having to worry about a number of issues of online sales. The product quality is one thing to consider. You cannot just accept the consignment from the producer of your goods and transmit it unmodified to Amazon. To make sure that every product you deliver is in sellable condition, you’d still need to do your own Quality Control, which lowers your odds of receiving a refund.
How can you replenish an invisible inventory?
For the majority of retailers, inventory management is a challenging problem, and it becomes much more challenging when using more warehouse space results in higher costs. Your seller rating will suffer if you run out of stock, but your money will be held up in inventory if you stock too much. Be sure to monitor sales and replenishment separately for each product if you offer many products through FBA and each of them has a varied procurement time.