As the world's largest e-commerce site, with an incredible amount of traffic and sales rates, there’s no doubt that for many merchants, Amazon is a significant source of revenue.
That being said, there are also quite a few unavoidable downsides you need to be aware of when you decide to sell on the platform using Amazon FBA.
Fulfillment by Amazon (FBA) is a service provided by Amazon for third-party sellers to automate their order fulfilment and shipping processes. Essentially, you send your products to Amazon's fulfilment centres, and they take care of the rest. This means they’ll package your items individually, deliver them to your customers in very short time frames, and even manage customer inquiries and returns.
This is incredibly convenient since it frees you up to focus on other core aspects of your business. Still, there are some drawbacks that come with it, which you (especially if you’re a beginner) need to weigh before deciding if FBA is the best choice for your business.
Here are five reasons you may find it hard to succeed on Amazon if you’re using Amazon FBA:
As a business owner, it's natural to want control over every aspect of your brand. But with Amazon FBA, you have to let go of some of that control. When customers receive their orders, they come in standard Amazon-branded boxes. Absolutely everything has an Amazon logo on it.
You don’t get to choose your own packaging or add personalised notes from your business. This makes it hard to build strong relationships with your customers through the Amazon FBA platform.
FBA allows customers to return items directly to Amazon without needing your approval, and Amazon's 30-day return window makes it easy for customers to initiate returns.
While this may be convenient for customers, as a seller, you’ll have to deal with return expenses and higher rates of damaged or lost inventory. If you’re using FBA, you must also adhere to Amazon's return policies and cannot customise your own.
The true measure of any seller is how they manage issues when things don't go as planned. Based on discussions in Amazon seller forums, Amazon FBA doesn’t fare well in this regard and the situation doesn't seem to be improving.
Sellers have complained about delivery issues, incompetence in seller support, and overall dissatisfaction with the customer service experience.
If you use Amazon FBA, your products qualify for free Amazon Prime shipping automatically. This can, of course, attract more Prime customers, but you still have to cover the shipping costs, and you can't choose which items get free shipping.
So, before you commit to Amazon FBA, make sure to factor in both the service fees and the extra cost of free shipping, which can affect your bottom line.
Amazon's fulfilment services might appear ideal for smaller sellers who lack the infrastructure to store and ship orders quickly, but FBA is becoming more and more geared toward larger businesses.
Amazon even suggests that if you have limited inventory or slow turnover, you should consider the Fulfillment by Merchant (FBM) option instead of FBA.
Ultimately, the decision on whether Amazon FBA aligns with your goals rests solely with you. However, based on our expertise at re:TRADE in providing comprehensive, tailored solutions for market growth and expansion, if you value greater autonomy over shipping, branding, and customer relationships, utilising a Logistics and compliance partner could be highly advantageous. This shift can safeguard your business from numerous logistical hurdles, ensuring smooth operations and sustained growth.
