When starting out with Fulfillment by Amazon (FBA) you may encounter a bit of a learning curve. There are many factors to take into account (check out our list of the pros and cons of FBA here).
We will be the first to tell you that FBA is not right for every business, or even every item. However, it does come with plenty of benefits:
- Loyal Prime customers that spend 150% more annually than non-Prime customers
- Customers are willing to pay more for the same product
- Higher sales volume
- It’s a tie breaker in the Buy Box
- Easier to scale your business
All of this sounds great, right? Before you decide to jump into the FBA pool, you must ask yourself these 5 questions before you decide whether or not your item is a good fit.
Question #1: Could My Item Be Considered ‘Hazardous Material’?
Certain items deemed hazardous are strictly prohibited and will not be shipped by Amazon’s fulfillment centers. This includes any flammable liquids, flammable solids, and aerosols. Unfortunately, some beauty products fall under this category.
It is up to Amazon’s discretion to dispose of any items they feel might be hazmat, even if they have not been previously identified as hazmat. Be sure to double check Amazon’s Hazardous Material Identification Guide before sending in any items.
Question #2: What are the Margins?
Make sure your item is still profitable to sell after factoring in fees. Items with lower margins are usually not profitable to sell with FBA. However, some businesses specialize in high volume, low margin items. This one is up to you.
Question #3: What is the Sell-Through Rate?
FBA is best used with faster selling items. Inventory that has a low sell through rate and eventually becomes stale will ultimately eat up profits by incurring storage fees.
In addition, stale inventory represents dollars that can’t be used to invest in new products or other parts of the business.
Question #4: What is the Size and Weight of the Item?
Items that are large or heavy are subjected to higher fees. If you decide it’s still profitable to sell given these fees, continue on!
Questions #5: What is the Price of the Item?
If your item is priced lower than $10, chances are it will not be a good fit for FBA. One option to consider is to make a bundle or multipack so that you are still turning a profit.
Ultimately, you know your business better than anyone else, and the decision to sell with FBA is up to you. Just remember to keep these 5 questions in mind, and you will thrive. Good luck and happy selling!