Amazon has grown rather exponentially over the years, especially from 2010. This has mostly been thanks to the reliability, versatility and affordability it offers not just to buyers but to sellers as well. Amazon’s Fulfilment by Amazon (FBA) program has played a major role in boosting this growth.
From warehousing solutions to return options, quick delivery, and of course, the reliability offered by the program, big and small distributors are integrating FBA into their supply chain. The quick delivery times offered by Amazon are what push most business to adopt FBA.
This program guarantees fast, accurate and affordable shipping for customers – but even then, there is more you can do as a supplier to further reduce delivery and storage fees – with the help of smart warehousing solutions.
Fulfilment by Amazon (FBA) – What Is It?
FBA is a program that takes over your shipping needs for a portion of your profits. The more dependent you are on the program, the more share of profits you’re going to have to give up. Basically, you sell it, Amazon ships it.
Having said that, the program offers great potential for you to expand, so the share of profit you’re giving up is worth it at the end of the day. Here is the basic structure of the FBA process.
1.You transfer your inventory to Amazon for storage in fulfilment centres.
2.When customers order your items from Amazon, any other platform, or even your own website, Amazon packs and ships your items. You and the customer get a tracking ID to see the progress.
3. If needed, customer service and item returns are also managed by Amazon
FBA Costs – Can They Be Reduced Further?
FBA is a sure-fire way to enhance your business’s reach, but that doesn’t mean the program is free of costs. This cost is seasonal, starting from 48p per cubic foot all the way to £1.20 per cubic foot in the UK, depending on what you’re storing and where you’re selling it.
At that cost, you also get other services along with storage, such as:
(a) Packing
(b) Shipping and handling
(c) Customer service and returns
The cost of storage can change, depending on the following:
(a) Oversized items
(b) Special handling
(c) Long-term storage
(d) October to December the prices increase overall
(e) Clothing items cost an extra £0.40 per unit
Lowering Costs With On-Demand Warehousing
FBA is perhaps one of the best ways to expand your business, but if you’re a start-up, naturally, every cent counts. Amazon’s storage prices can accumulate to become a rather hefty bill – especially if your inventory stays in their warehouse for longer periods.
There is a rather simple way of reducing or even eliminating this cost; by storing your inventory in smart or on-demand warehouses. These warehouses usually cost less compared to Amazon’s storage solutions. All you have to do is simply store your excess inventory until customers order your product.
When you receive an order, you can send the product to Amazon’s fulfilment centres and they’ll handle the rest. This way, you are basically eliminating the storage cost that Amazon charges for your items and therefore getting a cheaper warehousing solution.
If you’re looking for more information on how you can save more on deliveries while maintaining quick delivery times, LogistCompare warehousing solutions are here to help. Get in touch today to learn more and start expanding today!