Selling on Amazon Click to edit Master subtitle style Fulfillment By Amazon Fulfillment By Amazon With Fulfillment By Amazon (FBA), we’ll show you how to: 1. 2. 3. 4. Lower your costs: Increase your margins by reducing your shipping costs Position yourself as a premium seller: Increase your margins (double!) by being able to charge a higher price Work smarter, not harder: Work less by outsourcing all storage, picking, packing, shipping, customer service & returns Keep customers happy: Get your items delivered to your customers 2-3 times faster Two Limitations of All Online Sellers Time • • You can only list, sell, pack, and ship so many orders in a day. What would you do if you all of a sudden had 100, 200, even 500 orders in a day? Do you have the time to pick, pack, label and ship all these orders? Two Limitations of All Online Sellers Space • • • You can only store so much stuff! Can you store enough product to handle this many orders? Do you have enough storage space to store enough product to ship 100, 200, even 500 orders in a day? Solution: Fulfillment By Amazon FBA removes both of these barriers! Amazon will store your products in secure, climate controlled warehouses and they have the capacity to ship all of your orders no matter how many orders you receive. Instantly Compete With Anyone! A new seller, regardless of size, is now able to compete with the big, established sellers (and beat them!) A new seller has full access to Amazon's worldclass distribution network in a matter of minutes. What an amazing age we live in! What is a Fulfillment Company? Background: Fulfillment companies and programs are nothing new, but what makes FBA unique and powerful is that all FBA items are eligible for Amazon’s free (or discounted) shipping programs such as Free Super Saver Shipping (FSSS) on orders over $25, 4-for-3 promotions, and free 2-Day Air shipping for Amazon Prime members. This makes FBA items more appealing to Amazon’s best customers. FBA Can Be Described As a Win-Win-Win Win #1. Higher prices, higher margins, higher payouts Win #2. Less work Win #3. Happier Customers Win #1: Higher Prices, Higher Margins, Higher payouts Since items sold through FBA are eligible for Free Super Saver Shipping and Amazon Prime, FBA sellers actually raise their prices to match their competitor’s total price (price + shipping). So even with the addition of FBA fees, the FBA seller still receives a higher net payout from their Amazon sales because of the higher sale prices. Pricing FBA Items For example, a seller who ships their own orders who sells an item for $10 with $3.99 shipping will show the same as an FBA seller selling the exact same item for $13.99. Actually, the FBA seller will show first because FBA is the tie breaker. The easy example is with penny books. A merchant fulfilled penny book lists for $0.01 + $3.99 shipping. An FBA seller who wants to price match the lowest price will list for $4.00. Amazon sorts the offers page by total price (price + shipping). Pricing FBA Items On the next slide, you'll see an example of an item where two sellers have the same price, but the FBA seller gets the better placement. Amazon even includes the ability to sort the offers page to only show Free Super Saver Shipping offers only (Amazon and FBA sellers) Win #2: Less Work FBA sellers sell items 24 hours a day, 7 days a week. Items ship all hours of the day or night including weekends. They ship whether the seller is at home or on vacation. Once an FBA seller prepares their items for the FBA warehouse and sends them to Amazon, they don’t have to do anything else. Win #2: Less Work They can monitor inventory levels and adjust prices as needed from anywhere with an Internet connection. They don’t have to stock boxes, envelopes, packing materials, or print shipping labels anymore. They also don’t wait around for their UPS driver or go to the post office every day. The time you used to spend fulfilling orders can now be used to source products or on other aspects of your business. Win #3: Happier Customers It is estimated that 40-50% of Amazon buyers have never bought from a third-party merchant. You can effectively double your customer base by offering your items through FBA. Amazon customers want to buy from FBA sellers. They trust Amazon and they know that their items will ship quickly and if there is ever a problem, Amazon will help (including an extended return policy). Win #3: Happier Customers When your items are offered for sale through FBA, they will attract these types of Amazon buyers who are willing to pay more to get their items shipped by Amazon. This is an important point to grasp: Amazon customers are willing to pay more for the exact same item if it comes from Amazon or an FBA seller. They do this because they know they will get their items fast and that customer service will be top notch. This is how you leverage FBA status; you use FBA to market your items to these sellers and increase your margins and profits. How Do I Get My Items To FBA? Items sent to FBA require special FBA labels. These labels have a barcode identifying the items to Amazon. They need to cover any existing barcodes on your items. You create shipments and process them through your Amazon account. You can send one box, 10 boxes, even a full truckload of boxes! Bonus: you get to use Amazon’s UPS rates for inbound shipping. Once your shipment is received at Amazon’s FBA warehouse, they are received and offered for sale on Amazon.com. Downsides of FBA Lose Control Over Your Order Processing You are trusting Amazon to store and package your items properly Hand Over Customer Service To Amazon Amazon has a generous return policy Possibility Of Loss Or Damage To Your Products Amazon will reimburse sellers for lost or damaged items Proper item pricing compensates for these risks FBA Fees (Sold on Amazon) A. Order Handling Fee B. Pick & Pack Fee C. Weight Handling Fee Additional Fees: Amazon Commission (6%-15% [includes payment processing]) Inbound Shipping Fee $0.12 - $0.25 per pound I ship 50 lb. boxes to Whitestown, Indiana for $13 I ship 50 lb. boxes to Irving, TX for $6 Monthly Storage Fee Jan-Sept: $0.45/ft³ Oct-Dec: $0.60/ft³ First 60 days free Notes on FBA Storage Fees Monthly Storage Fee Breakdown • • • • Jan-Sept: $0.45/ft³ Oct-Dec: $0.60/ft³ First 60 days free Amazon calculates the volume of your items to the 1/100 of a cubic foot. FBA Storage Fees Example Box 1 – 6”x4”x3” • Calculated at 0.10 cubic feet (by Amazon) • Jan - Sept storage fee: $0.45 x 0.10 = $0.05/month • Oct – Dec storage fee: $0.60 x 0.10 = $0.06/month • Yearly storage fees: $0.63 Box 2 – 8”x8”x4” • Calculated at 0.18 cubic feet (by Amazon) • Jan - Sept storage fee: $0.45 x 0.18 = $0.08/month • Oct – Dec storage fee: $0.60 x 0.18 = $0.11/month • Yearly storage fees: $1.05 Box 3 - 11”x8”x4” • Calculated at 0.27 cubic feet (by Amazon) • Jan - Sept storage fee: $0.45 x 0.27 = $0.12/month • Oct – Dec storage fee: $0.60 x 0.27 = $0.16/month • Yearly storage fees: $1.56 Manage Your FBA Storage Fees • • • You don’t have to send all of your inventory to FBA at one time. Manage your FBA storage fees by replenishing your FBA inventory as your products sell. Maintain a 60-day supply and you won’t pay any FBA storage fees. How to Leverage FBA OTHER SALES CHANNELS • • • With FBA, we can ship 2-Day Air for less than the cost of UPS Ground. We can ship to Hawaii & Alaska for the same low rates We can spend our time sourcing products, playing with our kids, or going on vacation! Multi-Channel Fulfillment FBA is not just for Amazon sales. You can use FBA to outsource the storage of your items as well the entire order process (picking, packing, labeling, & shipping) all for less than what you are paying now. It’s called Amazon Multi-Channel Fulfillment Amazon Multi-Channel Fulfillment • • One way to describe Amazon Multi-Channel Fulfillment is to compare it to dropshipping; but make no mistake, it is not dropshipping. Multi-Channel Fulfillment is using Amazon’s FBA service to fulfill your own orders with your own inventory for sales from other online channels (example: eBay) Amazon Multi-Channel Fulfillment • • With dropshipping, the products are not yours until you make a sale and submit the order. With FBA, the products that you are shipping are YOUR PRODUCTS. You control them and you set the price. FBA Fees (Multi-Channel Fulfillment) D. Pick & Pack Fee E. Shipping Method Fee F. Shipping Weight Fee Additional Fees: No Commission! Inbound Shipping Fee $0.12 - $0.25 per pound I ship 50 lb. boxes to Whitestown, Indiana for $13 I ship 50 lb. boxes to Irving, TX for $6 Monthly Storage Fee Jan-Sept: $0.45/ft³ Oct-Dec: $0.60/ft³ First 60 days free Here's Where the Magic Happens Imagine your UPS account rep came to your place of business and said, “Good news, we can now offer you the same shipping rates as Amazon even though you only ship two packages a day.” That three pound box that cost you $10 to ship coast to coast by UPS Ground now costs you $10 to send 2-Day Air. You can use this to your advantage two ways. • If you can ship UPS 2-Day Air for the same price as your competition pays for UPS Ground, you can offer your customers more than your competition for the same price. – $100 from him but slow shipping. – $100 from you but fast shipping. • You can take the lion's share of sales from your competitors. How Incredibly Powerful! Or you raise your price since you are marketing yourself to customers who want fast shipping at a fair price. Your shipping costs are still the same, you have just now increased your price and therefore your margins. Snowball Effect - Since your margins are higher, you can add more products to your catalog. Items that were previously not profitable, are now money makers! Comparison Time • • Let’s compare the transaction on an identical item sold on eBay. One seller stores all his products at home including boxes, tape, packing materials, and labels. They cannot ship orders unless they are home and they have to go to the post office or UPS every time they get an order. The other seller uses FBA Multi-Channel Fulfillment. My Competition eBay listing fees: $0.50 (7 Day Listing, No Subtitle) eBay Final Value Fees: $8.78. Paypal Fee (~3%): $2.93 Shipping materials: $0.50 - $1.50 UPS Shipping: Orlando to Seattle (residential): $9.52 (Daily Pickup) - $13.59 (Published Rates) Ships on Monday April 26 – Delivered Tuesday May 4. (8 days in transit) My Listing eBay listing fees: $2.00 (30 Day Listing, Subtitle) eBay Final Value Fees: $10.90. Paypal Fee (~3%): $3.60 Shipped by FBA Basic Fulfillment: Total cost: $10.15 Ships on Monday April 26 – Delivered Wednesday April 28. (2 days in transit) Customer receives 2-Day Shipping with a value of $25.41 - $32.37 This is why you can charge a higher price; because you are offering a premium service Added Value to Our Customers • • • Free 2-Day Air shipping is a huge added value that customers can understand This allows you to charge a higher price than your competitors You can use eBay’s Get It Fast option eBay Order Page Multi-Channel Fulfillment Fees How To Process a Multi-Channel Fulfillment Order Here are the steps to create a Multi-Channel Fulfillment order Prices shown for Standard (Ground), 2-Day Air, and Overnight shipping options Select the Item For Fulfillment Enter Address Information Standard Shipping for $6.85 2-Day Air Shipping for $10.15 Overnight Shipping for $20.00 Multi-Channel Fulfillment Fees; eBay Order Not an Equal Comparison • • • • We making $17.30 - $22.60 more on each transaction. 35.1% - 45.2% higher margins. Business is a game of margins, not volume. Remember to count the cost of your time and efforts. Multi-Channel Fulfillment is Powerful! • • Not only do we make more money and earn higher margins on each transaction, but we do less work and our customers get their products 2-3 times faster. We can ship this way to Hawaii & Alaska! FBA Orders Ship Same Day • • • We can place FBA orders as late as 4:30 PM (maybe even later) and they will ship the same day. Can your customers order at 4:30 PM and get their item delivered THE NEXT DAY (even Saturday) anywhere in the US for $20? Can you do this from Starbucks? This Isn't Just for eBay Sales! You can sell on any channel that you want to! With Multi-Channel Fulfillment, you can ship orders from your own website, Amazon, eBay, half.com, even Craigslist! You get the same competitive shipping rates and world class fulfillment experience. Outsource Your Warehouse! Do you really need a warehouse? Do you really need employees to pick, pack, and ship orders for you everyday? Outsource the whole thing. Run an empire from home (or on vacation.) FBA in Practice • • • • Imagine the possibilities of never having to put your online business on hold. You can go out of town or on vacation anytime and you never have to stop selling. You can place FBA orders on the beach or from Europe! Less work, higher margins, happier customers. Advanced FBA The possibilities are fairly endless with FBA. Here are some other things that you can do with Fulfillment By Amazon. Direct FBA Shipping Get your vendors and manufacturers to send your items directly to your FBA account. Just find items that can be sold on Amazon. (Some items don't even need FBA labels) FBA labels can be emailed, even shipped to vendors for labeling prior to shipping. Change your ship-from address and still use Amazon's UPS rates. Email UPS labels to your suppliers. International FBA FBA is available in the US, UK, Germany, France, and Japan and you can send inventory to each of them. You can open seller accounts in each country and send your inventory to it's best market. Ship yourself, or have your suppliers ship. What Else Can You Do? The possibilities are endless. FBA is still in its infancy. How will you be using FBA this year? Next year? Phew! Questions?