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How to Use Amazon FBA

By Edited Feb 20, 2014 4 3

Amazon FBA - The Next Big Thing

If you were looking to make money in the early 2000s by selling items online, eBay was the obvious answer.  And while eBay remains a good place to sell all sorts of stuff on the internet today, it is no longer the dominant king of e-commerce that it once was.  More people shop on Amazon, and that means that there are more opportunities opening up there.

The biggest advantage that Amazon has over other selling platforms is something called "Amazon FBA".  That stands for Amazon: Fulfilled by Amazon.  A bit of a redundant title, but don't let that fool you.  This just might be the biggest game changing program ever introduced to online sellers. 

So What Is It?

FBA is actually a really simple program.  It works like this:

  1. You get a bunch of items that you have for sale and stuff them all in one box.
  2. You create a shipment with a packing slip and send that box of stuff off to an Amazon fulfillment center.
  3. Your items sell (much faster and for more money than if you were doing it yourself) and you get paid.

If you weren't paying close attention you may not be impressed.  After all, that doesn't sound too different than from how eBay or other similar sites work.  So what makes FBA so special?


Let's say that you have 100 DVDs for sale.  It may not take that long to list them all for sale.  But it will take long to send them out.  Every time a DVD sells you have to get a bubble mailer, tape it up with a shipping label, and drive to the post office.  When you factor in time and opportunity costs, your profit is probably very small.

With FBA, you only send out 1 package.  Which means 1 trip to the post office.  Because Amazon handles the rest of the selling operation.  When your stuff sells, they go pull it out of storage in the warehouse.  They package it up and send it in the mail.  They ensure the buyer gets it and is happy.  And then they give you money.  Starting to see why this is so good?

It gets even better.  When you have items that are being sold via FBA, buyers on Amazon are more inclined to purchase stuff from you.  Anyone who has an Amazon Prime membership will get free 2-day shipping on your items, since they are coming from the company warehouse.  Even if shoppers don't have a Prime membership, there are lots of people who will purchase your items over someone else's to get their shopping cart over the $35 Super Saver Shipping limit.  Plus, buyers have the peace of mind knowing they are buying an item that will get to them from Amazon, the billion dollar company, as opposed to Joe Smith, out of a basement.

What's the Best Way to Start Using FBA?

If you are new to selling on Amazon, then you may want to start out with some small items.  Grab some extra books, movies, CDs, or video games that you have around the house.  List them on Amazon as merchant fulfilled.  This is very easy and fast to do.  All you have to do is specify a price and item condition.  No pictures, no uploading, no long descriptions, none of that crap.

After you get all of your for-sale items up, follow Amazon's instructions on their website for creating an FBA shipment.  It may seem intimidating or daunting for new sellers, but it's really just a series of very easy steps put together.

For instance, you will be asked if you want to attach your own UPC labels to items, or have Amazon do it at their processing facility.  Unless you have a special printer that can make sticker labels, it's best to have Amazon do it.  They will charge you $0.20 per item, so no big deal.

Amazon Distribution Center

There are also some things you should check out before you send them your shipment.  First, make sure you actually have all of the items you promised in the box.  Make a list and check off the items just to be sure.  Next, make sure that everything is packaged nice and safe.  The last thing you want is for something to get damaged while in transit.  Finally, make sure you take accurate measurements for the dimensions and weight of the box you are sending.  You have to pay to ship it out to the Amazon processing facility, but you get to use their company discounted UPS rates.  This means that it is dirt cheap to send out really heavy packages.  It's almost like having exclusive privileges!

What Are the Costs of Amazon FBA?

The only difference between selling items individually as an Amazon merchant as opposed to FBA is the extra costs.  All of these selling advantages you receive come at a fee costs.

Obviously you have to pay to ship the items to the Amazon warehouse.  But if you send out a big box with a bunch of items, it will generally come out to $0.25 an item to ship.  Much cheaper than paying $2.50 to send out 1 DVD at the local post office.

You will also pay a higher fee when your item sells.  Amazon wants a bigger cut.  But considering all of the attention and buyers you will attract through using FBA as opposed to traditionally selling, it's well worth an extra buck or two in fees.

Finally, Amazon will charge you a very small amount of money every month for using their warehouse as storage.  But it goes by space, and obviously items like books or video games don't take up much space.  Therefore most items come out to like $0.02 a month.  You can pay your monthly "storage" charge with pocket change.

Considering all of the advantages that you get from using FBA, there's really no argument of the fees being too high.  You also can't put a price on the time that you save in not driving to the post office or sealing up boxes.  Plus, perhaps most glorious of all, you don't have to print out shipping labels for every item, which means less interaction with the worst computer peripheral of all time- the printer.



Feb 19, 2014 3:51am
Thank you for such a thorough explanation of what FBA is - I always wondered but was too afraid to ask. It certainly has huge time and cost saving advantages. Plus buyers tend to trust Amazon over someone selling from their basement (as you pointed out).
Feb 25, 2014 1:17am
Than you Alex, this is very informative. I can certainly take advantage of the FBA since I have a bunch of quality items to sell.
Feb 25, 2014 3:13pm
Thanks for the in depth advice. I am sure that it will help me to make more money going forward
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