Amazon

How to Leverage Prime Eligibility, the Buy Box and Fulfillment By Amazon (FBA)

By Tinuiti Team

Amazon has one of the most advanced fulfillment networks available in the world. Businesses can benefit from Fulfillment by Amazon (FBA) by storing their products in Amazon’s fulfillment centers.

When retailers sell an item, Amazon will pick, pack, ship and provide customer service for the purchased product, including the dreaded returns. Amazon also helps businesses reach more customers than ever before.

In a 2014 survey, 71 percent of FBA respondents reported that their unit sales increased on Amazon.com more than 20 percent since joining FBA.

What is Amazon Fulfillment (FBA)?FBA-logo

Fulfillment by Amazon is a strategic program that helps many third-party Marketplace sellers get ahead of their competitors.

Knowing which segments of inventory to deploy for FBA is a huge advantage in both driving sessions to listings and owning a higher share of detail page conversions.

With FBA, the seller is only required to label and ship units to an Amazon warehouse. This is done through Seller Central, where FBA inventory can be tracked and replenished by the seller.

Once Amazon receives and scans-in the units, those products are immediately available for sale. From there, Amazon handles storage, packaging, shipping, and customer service on behalf of the merchant.

FBA services tack on additional seller fees to the order – on top of the existing Marketplace referral charges.

What are the benefits of FBA?

Perhaps the most obvious beneficiaries of FBA are small business owners, who likely don’t have efficient fulfillment systems in place and don’t want to risk the potential negative effects that a poor customer experience could instigate.

Amazon is a favorable partner for businesses because:

 

 

 

 

Eligibility for Amazon Prime

There’s no debate Amazon Prime members love free two-day shipping, while non-prime members get access to free shipping on orders over $35–which FBA products are all eligible for.

This is a big advantage Amazon sellers can leverage to their benefit. FBA helps improve performance-based metrics, increasing retailer’s chances of winning the Buy Box.

Plus, when retailers register for an Amazon.com seller account, they will be able to access Amazon’s marketplace in Canada, potentially reaching more customers.

pat-petriello“FBA is incredibly powerful because of how it can be wielded as a strategic sales lever just as much as a fulfillment solution for an online retailer’s business,” Pat Petriello, Senior Marketplace Strategist at CPC Strategy said.

“In addition to the benefits of getting in front of Prime customers and knowing your products are going to be shipped and delivered on time, FBA is the most potent lever a seller can deploy to help them win the coveted Buy Box.”

“We’ve seen tremendous lifts in conversion when switching FBM product offerings to FBA and it has enabled merchants to increase their Buy Box share for competitive ASINs,” he said.

Which retailers should use FBA?

Although there is a very strong correlation between FBA utilization and higher sales performance, this isn’t to say that every third-party seller should do this.

A common misconception is that sellers should either be 100 percent Fulfillment by Merchant or 100 percent FBA, yet most professional Amazon sellers are a hybrid of both.

Not every product a seller offers will be a good candidate for FBA for a variety of reasons, mainly size, sales performance, and margin. Knowing which listings it makes sense for is called FBA inventory selection.

Which products should retailers catalog to FBA?pros-cons-FBA

Size and weight are the most obvious factors in determining FBA selection.

This is because the FBA cost structure quickly scales as the product becomes bulkier and heavier.

However, sophisticated Amazon sellers also analyze their catalog from a product-performance perspective. Aside from costs, there is a focused strategy behind FBA selection—a strategy that strongly emphasizes manipulating Buy Box ownership to increase revenue.

This selection process depends heavily on performance metrics—not which products a seller wants to sell but rather which products will have the best chance of performing with FBA.

Click here to learn more about FBA, including fees and frequently asked questions about the program.

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