E-commerce is growing far more rapidly than traditional commerce but the logistics and order fulfillment still presents itself as one of the biggest challenges online businesses face. Fulfillment by Amazon is a program for third party sellers that offer storage, packing, labeling and shipping services. Amazon has over 80 fulfillment centers across the US which handles the fulfillment for online retailers. In order to participate in the FBA program, sellers have to ship their inventory to Amazon’s warehouses and pay for storage fees.
In return, Amazon will manage the entire logistics process and also handle returns and customer service. By providing end customers with fast and free shipping options, it gets them the incentive to shop online more frequently and encourages them to become returning customers. This also enables retailers to build customer loyalty by providing consumers with convenience of saving money while shopping online. By outsourcing the logistics management and order fulfillment to Amazon through the use of FBA, online business are able to fully focus on their core business. In this article, we explore the benefits of using FBA shipment management.
Access to Amazon Prime Members
When sellers use the FBA program, they are able to tap into and access the Prime consumer base. By using this program, product listings on Amazon are automatically are enrolled in the Prime program and become Prime eligible. Prime members are most likely shopping for only products with a prime badge as it gives them maximum shipping and returns benefits. It is equivalent to a loyalty program encouraging customer’s long-term engagement with the marketplace. As a seller with product listings that are Prime allows you to be significantly more visible to prime members giving you access to over 90 million customers with Prime subscription.
Amazon is also much more likely to rank your product listings higher in the organic search results which will lead to higher visibility and clicks. According to an article by Fortune, Amazon Prime customers spend almost twice as much annually compared to non-Prime members. The prime badge will instantly attract Prime members who generally purchase prime products over non-prime products. Prime members receive a range of benefits including free and fast delivery options for eligible products and a hassle free returns process. Prime eligibility attracts customers as it incentivizes them with convenient shipping time frames and free returns.
This positively influences a customer’s purchase decision in turn leading to increased sales and revenue for your products. Catering to the Amazon Prime audience can lead to greater visibility on the marketplace and a higher velocity of sales. Leveraging FBA program and being Prime eligible ensures that you’re remaining competitive in this over saturated market.
Trust and Credibility
As an FBA seller, online merchants are able to take advantage of the Amazon brand name that everyone trusts. Buyers associate the Amazon brand with trust and credibility which will automatically enhance their trust with your brand and products having the Prime eligibility. Customers have high expectations especially when it comes to online shopping.
They want convenience, fast delivery, trust and familiarity. As an online seller using FBA, this can give you a competitive edge over other non-prime products because there’s already a built-in level of trust from consumers with the Amazon brand.
Scaling Your Business
If you are looking to expand your business, Amazon offers a multi-channel fulfillment option through the FBA program. This is a highly convenient and effective method to implement cross channel selling. These services allow you to scale your business by linking all your online ecommerce marketplaces and store with your inventory that is located within Amazon’s warehouses. It is a strategic way to keep all your inventory together without the worry of having to move inventory depending on which marketplace you sell on. Multi-channel fulfillment (MCF) is a great option to explore if you want to expand your business whether that is other online marketplaces or your own retail website.
When customers purchase products directly through your website or your storefront on another third-party sales channel, Amazon will receive the order and pick, pack and ship the order directly to the customer. Offering your customers with faster delivery options and simplified processes will improve their overall shopping experience.
With e-commerce sales growing at a rapid pace compared to traditional brick-and-mortar sales, retailers need to focus on finding alternative methods for cheaper and efficient ways to deliver e-commerce orders. Using FBA limits the merchants from having to focus on tedious tasks such as packaging, picking and packing. All these services are encompassed within the suite of services offered by Amazon through the FBA program allowing sellers to focus on their core business.
Amazon is able to ship products quickly at comparatively low costs which is beneficially for sellers and in result also valuable for the end consumer. By using Amazon’s FBA program, sellers can take full advantage of Amazon’s sophisticated supply chain and infrastructure while continuing to focus and scale their business.