Your Best Freight Forwarder Agent for FBA shipping

FBA Shipping | The ultimate Guide

FBA is an Amazon service providing fast shipping, customer service, quality, and even return using the vast network built by Amazon.

Amazon will pick, pack and deliver your goods to the buyers.

Hart Logistics’s FBA shipping is very popular and we hear many questions from our customers regularly.

So, we have prepared this complete FAQ guide on FBA shipping.

Table of contents

1. What Is FBA Shipping?

2. How Long Does Amazon Take To Process FBA Shipment?

3. How Does Amazon FBA Shipping Work?

4. What Are The Advantages Of The FBA Shipments Service By Amazon?

5. What Are The Disadvantages Of The FBA Shipments Service By Amazon?

6. What Are The Fees Of Amazon FBA?

7. How Many Items Can I Send To FBA?

8. How Do I Calculate How Many Products To Send To Amazon FBA?

9. How Do I Calculate A Break-Even Point For Amazon FBA?

10. How Do I Get Products Ready For Amazon FBA?

11. What Is The Process Of Packaging Sets Or Multi-Packs For Amazon FBA?

12. Can I Sell Overseas With Amazon FBA?

13. How Can I Start Doing Amazon FBA?

1. What Is FBA Shipping?

FBA means Fulfillment by Amazon which is a special service for sellers who want to sell their products using Amazon’s platform.

Amazon provides shipping assistance, storage, packaging, and delivery facilities for FBA shippers who ship products to Amazon to sell through their platform.

With this service a seller has no burden of marketing, selling, delivering products; rather Amazon takes full responsibility.

A seller can deliver his/her sellable items to an Amazon warehouse using an FBA shipping service from a freight forwarder..

Amazon will store the merchandise at its fulfillment center and sell them.

Moreover, Amazon employees will package, prepare and ship your products to the buyers.

2. How Long Does Amazon Take To Process FBA Shipment?

Typically Amazon takes 2-6 days to prepare your FBA shipping after you deliver your consignment to the Amazon warehouse.

Don’t include the time of FBA prep and ship with this time frame.

After you complete your Amazon FBA shipments they include your product in the inventory and make them available to sell in a few days.

However, you might have to wait some days more if you are shipping in the holiday season.

You can get the update from Amazon seller central.

After logging into their system you can check the status of when your products will be available for sale.

3. How Does Amazon FBA Shipping Work?

The process is simple, you sell, Amazon ships. You will complete your Amazon FBA shipments to an Amazon warehouse and they will store your shipments. From there Amazon takes the full responsibility of preparing, packaging, selling, and delivering your products. Here are the steps of how does Amazon FBA shipping works:

• You send your products to an Amazon warehouse using an FBA shipping service from a third-party freight forwarder..
• Amazon receives and stores your FBA shipments.
• After Amazon stores your shipment you can monitor the status of your shipment using their tracking system.
• A customer selects your item and orders it online. (This can be Amazon or another e-commerce platform)
• Amazon picks your product, prepares your product(s) to deliver.
• Amazon ships your product(s) using the shipping method the user chooses with tracking ability.
• Amazon manages the customer service and refunds orders.

Learn more on How you can Send your first shipment to Amazon FBA

4. What Are The Advantages Of The FBA Shipments Service By Amazon?

A seller can use all the benefits and resources of Amazon after they sign up for the fulfillment service. The benefits are as follows:

Use The Brand Name

This is the most important benefit you will get from the FBA service.

Most sellers prefer the FBA service because they can use Amazon’s name after their products. Buyer from all over the world trusts Amazon.

Therefore, having Amazon at your back increases the chance of selling your products.

Moreover, having your products on Amazon also increases buyers’ trust for your product.

As a result, you can get more sales even outside Amazon.

Amazon’s Powerful Customer Service

Amazon is popular for its customer service management.

Amazon provides 24/7 customer service all over the world.

Their customer service handles product inquiries, refunds, and return policies for their FBA sellers.

Can Offer Less Shipping Charge

Amazon has a strong shipping channel and they always maintain a good relationship with every shipping agency.

Shipping agencies also maintain a good relationship with Amazon.

As a result, the shipping charge is always less compared to an individual account.

Moreover, an FBA seller can offer free shipping for a specific amount of products from their FBA shipments as their products are eligible for Free super saver shipping and Amazon Prime.

Multi-Channel Amazon Fulfillment Center: FBA sellers can store their inventory at Amazon’s fulfillment centers.

Amazon is able to ship products quickly while handling inventory that is being sold on multiple channels, not just on Amazon’s marketplace.

Multi-Channel

This is another crucial advantage that every FAB seller loves.

Amazon warehouse stores and handles inventory to sell on other e-commerce platforms. So, you are not stuck with Amazon only.

Shipping Standardization

Amazon does not discriminate between their own items and FBA shipments.

They follow the same process they do for their own merchandise after receiving an order.

After receiving an order from a buyer Amazon picks the item, packs following their procedure, and then ships the item to the buyer.

You can sell the product on your website and still, Amazon takes care of your product and sell just like their own products.

Access To The Prime Buyer

Upon some qualifications, you can enlist yourself as a Prime FBA seller and use the prime logo for your products.

5. What Are The Disadvantages Of The FBA Shipments Service By Amazon?

Every process has some disadvantages and Amazon FBA also has some. Here are some disadvantages of Amazon FBA

High-Fees

You have to pay the storage and fulfillment bill with the long-term storage charge and these charges can really pile up if you are dealing with slow-selling products.

You will also have to pay the removal fees if you have any unsellable, damaged, or defective products.

Moreover, you have to pay disposal fees for getting rid of unsellable products.

Some Mismanagement From Amazon

Sometimes you can face issues from Amazon like losing or damaging your products while performing the fulfillment process.

Though the error does not occur frequently.

Though Amazon has the policy to pay for your goods if they are damaged for their mismanagement sometimes something goes unnoticed.

We suggest you use a good FBA shipping service so that you don’t have to fall into any mismanagement.

Following Proper Guidelines

Amazon follows specific guidelines for its products.

Some products need special treatment like bubble wrapping, poly bagging, etc.

You have to follow those guidelines before submitting your Amazon FBA shipments.

You can also tell Amazon to do that for you with some additional charge.

Commingling With Other Products

Amazon stores the same products together.

If you are selling the same products as many other retailers there is a chance that your products will be commingled with other retailers’ same products.

If any retailer sells low-quality products that can affect the sale of your products as well.

Returns

Returning products to Amazon is easy. Therefore, your products can face a high return rate which can affect your profit.

With proper planning with your FBA prep and ship, you can earn a high profit.

6. What Are The Fees Of Amazon FBA?

Costs should be the prime concern for every business and Amazon FBA is no exception.

The charge for your Amazon FBA shipments depends on the type of product you are selling and for how long you are going to use their inventory.

There are three fees for FBA service: Standard Seller Fees, Storage Fees, and Fulfillment Fees.

Those who do not have a professional seller Account from Amazon have to pay 99 cents for each item.

If you are selling 40 items each month you should go for a professional account as that will reduce the price significantly.

Standard Seller Fees

The portion Amazon takes for each sale is approximately 15-18% on the price of the product.

The portion that Amazon will take largely depends on the type of products you are sending via FBA shipping.

Though the charge is officially 15% there are some hidden charges such as for refunds you won’t get the full price.

So, before you start your Amazon FBA shipping, calculate the profit margin carefully.

Inventory Storage Charge

You will have to pay per cubic foot of the inventory you will use from their inventory.

The inventory store charge largely depends on the calendar month.

There is also a product size tire for Amazon FBA shipments they receive.

If you store your items for more than 365 days Amazon will apply long-term fees.

The long-term fees will be applied to your monthly storage fees.

Fulfillment Fees

This includes many fees including pick and pack, handle, and ship.

Customer service and product return fees are also included in the fulfillment fee.

Fulfillment fees are not flat rates, it depends on the size of your product.

Fees for standard-size products and oversized products will not be the same.

Before you start your FBA prep and ship process it is better to calculate the costing and profit margin, or you can face losses in the long run.

Additional Labeling and Stickering Cost

Amazon maintains a strict policy for all of its products and wants every product to be packed following its standard.

If you can not pack your product yourself you can take their help.

You will have to pay an additional USD 0.2 to USD 0.4 for each labeling and packing but it can be beneficial if you don’t have the resources to do that.

7. How Many Items Can I Send To FBA?

Technically unlimited but wait that does not work that way.

But after crossing the 400 marks you are no longer eligible for the unlimited classification and Amazon will charge you extra money for occupying their warehouse.

You have to pay the storage charge from the day Amazon receives your FBA shipments.

The charge is significant and the minimum charge is USD 500.

The rate will increase according to the size and type of your product.

Moreover, if you are not able to sell enough to maintain the Inventory Performance Index Score (IPI Score) then they will impose limits and you will have to pay more for using their inventory.

If you are selling a substantial amount then the inventory charge won’t be an issue but for low sales, this can bring significant losses.

We suggest don’t sending the full Amazon FBA shipping of yours.

Send half and see the performance.

If the sale is not good enough, change the product. Don’t send too many items at a time.

8. How Do I Calculate How Many Products To Send To Amazon FBA?

A proper calculation is important before you send your Amazon shipments.

Don’t send too many products as you have to pay unnecessary inventory storage charges.

Don’t send too little either as that will lose money for paying additional restocking fees if your products get stock out.

Based on your calculation you will be able to identify the number of products you should send with your Amazon FBA shipments.

However, you will need the current data to precisely identify the number of products in our FBA shipping.

Let’s demonstrate how many products you should send with your FBA shipping with a case study.

Identify Turns – First, you have to predict the time for a product to move in and out.

There is no standard time for this but for demonstration purposes, we are assuming the time is 2 months.

Find the Sales Velocity – How many are products you going to sell per turn?

For demonstration purposes, we are assuming you will sell 500 products per turn.

The ordering Costs – You should calculate the ordering cost perfectly.

The cost includes multiple costs starting from ordering your product to move into the FBA.

You should calculate the actual ordering costs, FBA shipping costs, inventory placement, management cost, labeling and packaging cost, fulfillment cost.

To calculate the profit you should include every cost you have paid before and after it reaches the FBA facility.

The Calculation

Suppose the weight of your product is 1 pound and the selling price is USD 25. The order demand for the product is 1000 units per month.

Based on this data we can calculate the following costs.

USD 7 (ordering costs) + USD 0.35 (FBA shipping cost) + USD 0.15 (inventory placement cost) + USD 0.25 (management cost) + USD 0.50 (packaging and labeling) + USD 2.5 (fulfillment cost) = USD 10.75

The storage cost – You have to identify the storage costs and other management costs from your end.

For the product we are assuming weighs 1 pound, selling price USD 25, and approximate selling time 6 weeks the equation for Amazon FBA should be like this.

Carrying Costs = USD 0.25 + USD 0.2 = USD 0.47

Calculate EOQ – Economic order quantity helps you to identify the number of goos you should send to Amazon by FBA shipping.

 It is based on the ordering costs and storage costs. Here we are assuming inventory placement costs, direct costs and Amazon FBA shipments cost with additional labeling and packaging costs.

In this case: $0.35 + $1.10 + $0.45 = $1.90

EOQ (Economic order quantity) = square root of [(2 x product demand annually x ordering costs) ÷ Carrying costs per product annually]

Square root of [(2 x 12000 x 1.9) ÷ 0.47] = 311

The general law is you should send more products if the ordering cost is higher.

If the demand for your product reduces, the storage costs rise.

And, if that happens you have to pay the long-term costs which will increase the storage costs significantly.

9. How Do I Calculate A Break-Even Point For Amazon FBA?

Amazon FBA charges high, so many business people are afraid of investing in Amazon FBA.

As the costs are it is not easy to balance the profit from Amazon FBA.

It is better to calculate the break-even cost to determine your profit. Here is the formula for break-even cost.

Break-Even Point in Units = Fixed Costs ÷ Sales Price Per Unit – Variable Costs

You have to calculate the entire costs of business including the following:

Fixed Costs: Calculate the costs irrespective to sales volume.

These costs should include Rent, employee salary, warehouse costing, software bills, tax for property, Charged by Amazon, etc.

For demonstration purposes, we are assuming the cost is USD 50,000 per year.

Unit Price: You should calculate the unit price of your product.

Let’s consider the unit price is USD 20.

Variable costs: You have to calculate this cost from the sales volume.

Here you will include the manufacturing cost, FBA shipping cost, the percentage that Amazon will receive, and other Amazon fees.

For demonstration purposes, let’s consider the cost is USD 13.

Break-Even Point = USD 50,000 ÷ USD 20 – USD 13.00 =USD  2,487

The total cost is the key here. Because if you don’t remember to include a cost that will impact the whole calculation by a lot and you will lose money.

To be on the safer side it is better to add a 10-15% margin with the total costs to make sure that you have covered everything.

10. How Do I Prepare My Goods For The Amazon FBA?

Amazon has a proper guideline for FBA sellers so that every seller can prepare themselves for FBA prep and ship.

The products you are sending using FBA shipping must be packed individually for e-commerce sale.

You have to put a label on every product following the product requirements procedure.

Your product has to be ready for sale when it reaches the Amazon warehouse.

However, you can take Amazon’s help for packaging and labeling your products with some additional charge. It is a nice option to have if you don’t have the resource to do that.

• If the product you are selling is a unit then you have to package all the parts together.
• You have to package your products individually and prepare them as ready to ship. You can use clear plastic, cardboard, or opaque for packaging.
• Every product you export to the Amazon FBA must contain a scannable barcode with an ISBN, UPC, FNSKY, or EAN. The barcode type depends on the stickering settings when you were setting up your account.
• You can not use a scannable barcode for cartoons containing multiple units.
• Sometimes Amazon sends your goods to the buyer using your packaging. So, consider your packaging as the final package for our FBA prep and ship process.

To learn more about creating your FBA Shipment plan watch the video

11. What Is The Process Of Packaging Sets Or Multi-Packs For Amazon FBA?

You can easily create a multi-packs or sets package for Amazon FBA.

First, create an FNSKU or ASIN and package your product as a single item.

Remember, Amazon does not accept different parts of a set, the product must be packed together.

You can deliver the package in a cartoon, sealed sleeve, or box. After you are done with the packaging label the package as multi-pack or ‘only available as a set.

You have to use one scannable label for your multipack product.

12. Can I Sell Overseas With Amazon FBA?

Yes, you can. You can sell overseas by exporting and importing your products. But you have to sell on the corresponding marketplace such as Amazon .co.uk, .de, etc. Moreover, there are many complex calculations and charges are applicable to your products. So, before delivering your Amazon FBA shipping overseas calculate the costs and profit margins carefully.

There are two ways to sell overseas with FBA: Amazon FBA shipping to a warehouse, FBA export.

Here are the steps of shipping to an international Amazon FBA warehouse

• Enlist your products from seller Central on the desired marketplace
• Create your commercial invoice
• Select a customs broker or tell your freight forwarder to help you.
• Ship your items to the seaport or airport.
• Complete the customs procedure to clear your products.
• Ship to the destination port
• Clear from the customs department of the destination port
• Deliver your products to the FBA center

FBA export

With the FBA export Amazon ships your products. Here Amazon takes full responsibility for clearing your product from the customs department. Here are the steps for FBA exports:

• Log in to the Seller Central portal of Amazon
• Go to Settings and click on the Fulfillment by Amazon
• Select Export settings and edit
• Choose FBA Export
• This process requires your signature, upload, and finish.

13. How Can I Start Doing Amazon FBA?

Starting Amazon FBA is very simple. Just follow the steps:

• Sign up for Amazon Seller Account
• After creating the account setup your FBA
• Package your products following the Amazon standard and transport them to the fulfillment center.
• Ensure you follow all the rules and regulations applied by Amazon.

Conclusion

Amazon FBA shipping can be a profitable business if you calculate every aspect properly.

You will need the help of a good freight forwarder who can help you with your Amazon FBA shipments.

Hart Logistics is a leading freight forwarder in China and we have years of expertise in FBA shipments.

Are you planning on taking part in the Amazon FBA? Send us a message and we will take care of your shipment.