From A to Z: All about Amazon FBA

Amazon is among one of the largest sales channels in the world and has officially been operating in the Netherlands since 2020. The benefits of Fulfillment by Amazon (FBA) have thus come to the Netherlands as well.

Fulfillment by Amazon allows sellers to outsource their inventory management so they can easily scale and engage in business growth.

Chances are you have heard of it as a vendor, nevertheless it is relatively new & not yet clear to everyone what benefits FBA has to offer. We are happy to explain everything about it to you in detail.

What is Fulfillment by Amazon?

Fulfillment by Amazon, FBA for short, is a service from Amazon that allows sellers to outsource storage, packaging and shipping of products. Local customer service is also taken out of your hands with FBA.

Outsourcing the complete order fulfillment of products allows salespeople to get down to business that really matters. Consider managing staff, marketing and making arrangements with (new) suppliers.

How does FBA work in the Netherlands?

The Amazon Fulfillment service works quite simply. As a seller, you ship your products to an Amazon fulfillment center, where the products are stored in a warehouse.

Once an order is placed, Amazon will take care of the entire order fulfillment process. From order picking to packing and shipping. Even customer service, handling returns and refunds to customers is taken out of your hands.

All sales proceeds, from products you have sold through Amazon FBA, are transferred directly to your bank account every two weeks. So you don’t have to request payouts or wait long for your money.

If you want to use FBA as a Dutch seller, you ship your inventory to an Amazon fulfillment center in Germany. After shipment of inventory, management is handled from Amazon and you don’t have to worry about shipping your goods to customers yourself.

Can any seller use Fulfillment by Amazon?

All sellers registered with Amazon may use the “Fulfillment by Amazon” service.

Sellers need not have a minimum number of sales to outsource their entire fulfillment to Amazon. It is only a requirement that you meet the regulations that are set.

When you start selling through FBA, you indicate that your webshop meets the wishes and requirements of both Amazon and the laws and regulations of the countries in which your products are stored and/or sold.

If you fail to comply after acceptance, Amazon may freeze your account or impose penalties.

Preparing to get started with Amazon FBA?

Before you start selling through Amazon FBA, there are a few things to consider. For example, there is no Amazon Fulfillment Center in the Netherlands yet. That is, you house the stock in another country, in this case Germany.

Different rules apply in Germany than in the Netherlands, which means you need a few things in the Netherlands to actually start selling through Fulfillment by Amazon. Consider:

• Sales account on Amazon;
• German VAT number;
• Stock of products complying with European legislation;
• List of corresponding EAN codes by product.

It is not possible to start Fulfillment by Amazon without a German VAT number because of current laws and regulations in Germany. Therefore, selling on Amazon as an individual is not possible.

Getting Started with Fulfillment by Amazon

Now that you already know a little more about the things to consider regarding Fulfillment by Amazon, we can start looking at the process of actually getting started with FBA.

The application process for the program is quite simple. To do so, follow the steps below and find out how easy it is to use Amazon’s service.

1. Register as a seller on Amazon

If you already have a sales account on Amazon, you can proceed directly to step 2. However, if you don’t already have an account, sign up as a seller on Amazon first. Go through the steps and fill in the required information to open your account.

2. Sign up for FBA

Once you have created an Amazon sales account, sign in to Seller Central after which you can set up FBA.

3. Add products

In your account, you can add all your products with appropriate product descriptions, EAN codes, prices, etc. Once you set up the catalog, you specify the FBA stock you want to outsource.

4. Preparing products for shipment

Pack your products with all requirements and prepare them for shipment to an Amazon fulfillment center. Always read Amazon’s packaging guidelines and shipping requirements carefully.

5. Shipping products to an Amazon fulfillment center

Create a shipping plan and send your inventory to an Amazon fulfillment center. Once the products arrive at the fulfillment center, the products become available for sale to customers.

What are the advantages and disadvantages?

Fulfillment by Amazon offers tremendous benefits to sellers who sell their products through Amazon. However, every advantage also offers its disadvantage.

We’re going to discuss all the pros and cons of FBA below, so you know what are the lesser and better sides of Amazon’s service.

Benefits of FBA

Registered sellers can take advantage of all the benefits Amazon has to offer when they sign up for the FBA program.

• No more packing and shipping products yourself: with Fulfillment by Amazon, you outsource the entire process of storing, packing and shipping products to Amazon. As a result, as a business owner, you no longer have to prepare orders yourself or hire staff for this.
• Customer service is taken out of your hands: in addition to eliminating the process of packaging and shipping, you no longer have to concern yourself with customer service. When you start with FBA, customer service is also taken over by Amazon, so customers are always quickly answered if they have questions or are unclear.
• Start selling internationally right away: due to the fact that Amazon’s Seller Central takes place at the European level, as a seller you can start selling your products internationally right away. Consider selling in countries such as Britain, Germany, Spain, Italy, France and more. Read more about selling internationally on Amazon here.
• Lower costs for international shipping: since Amazon has good relationships with many large, European courier companies, your products can be shipped abroad at a competitive price. This allows you to more quickly choose to offer free shipping so that you stay ahead of your competitors on price.
• Shipping quality from Amazon: products from sellers using FBA can count on the same shipping quality that Amazon uses for its own products. In fact, FBA products are stored, packaged and shipped in the same way.
• Link Amazon to your products: if you are going to use Fulfillment by Amazon, you have the option of linking the name ‘Amazon’ to your products. This links Amazon’s quality seal to your own products. Customers will greatly appreciate this because of the quality of shipping and customer service involved.
• Buy Box position is strengthened: because the speed and quality of shipping your products is enhanced by FBA, customers will receive their products faster. This affects the Buy Box position in which products are recommended. The position of products in the Buy Box have a strong influence on the number of sales.
• Access to Amazon Prime shipments: if you offer your products through Fulfillment by Amazon, you are eligible for Amazon Prime shipments. Customers with Amazon Prime are entitled to faster shipping and better service. Your listing will be shown with an Amazon Prime logo thanks to FBA, which can increase the conversion of your products.

Disadvantages of FBA

Unfortunately, every advantage also has its disadvantage and this is no different with Fulfillment by Amazon.

• Strict product guidelines apply: Amazon sets strict guidelines for delivering products to fulfillment centers. This is to ensure that the products arrive in optimal condition. If you want to do this for your products as well, it can add up considerably in price.
• Receive more returns: returning products through Amazon is very easy for customers. As a result, you generally receive more returns, which also puts the extra cost for more returned packages on your plate.
• Problems with identical products: Amazon works with an inventory system that aggregates the same products from one manufacturer. If there is a vendor selling the exact same products, your inventory may be confused with that of the other vendor.
• Product processing does not always run smoothly: wherever people are employed, mistakes can be made. Think, for example, of a product being damaged or lost. Despite the fact that this error often lies with Amazon and is also fixed by them, there are times when an error goes unnoticed. As a result, customers may lose their money or inventory may be damaged.
• Long-term cost: the cost of Fulfillment by Amazon is generally very lucrative for sellers. Yet the long-term costs can add up quickly. This is mainly the case when products do not sell quickly and, at worst, do not sell at all. The cost of having inventory removed from Amazon is very high.
• Have to deal with regulations abroad: since there is no Amazon fulfillment center in the Netherlands, you have to store your inventory abroad (Germany). As a result, as a seller, you will have to deal with laws and regulations abroad, which is not always easy without the help of a professional.

Cost of Fulfillment by Amazon (FBA).

For those who send their products to Amazon for FBA, the cost per unit will depend on preparation. Amazon will inform you of the type of preparation required for your specific goods.

You do not need to prepare the goods if the product does not fit into any of the categories displayed in the drop-down menu in Amazon Seller Central.

With FBA, you pay Amazon to prepare your products for you if you don’t have the right tools or appropriate equipment yourself.

Depending on the type of preparation your product needs, the price per unit ranges from €1.00 to €2.30. Labeling is something else to think about. You can pay $0.55 per unit to have Amazon label your products if you don’t want to do it yourself.

You have the option of selecting “Inventory Placement Service,” which allows quantities from one vendor SKU to be assigned to one execution location.

Please note that there is a unit price associated with using this option. Amazon charges $0.30 per unit for goods weighing less than a pound and $0.40 per unit for goods weighing more than a pound.

In this final stage, you decide on the shipping method and packaging of your purchases. You can ship after entering the weight and dimensions of your package on Amazon, after which you will receive a price.

Furthermore, with respect to the costs of Fulfillment by Amazon, we can distinguish between “normal costs” and “incidental costs. Below is an explanation of what costs fall under what.

Normal cost

By normal costs, we mean the costs incurred in outsourcing inventory to Amazon.

• Inventory storage fees: these fees are charged for each product stored at an Amazon fulfillment center. Costs are calculated based on the daily average inventory volume measured in cubic meters.
• Order fulfillment costs: order fulfillment costs are charged per unit for order picking, packing and shipping. It also includes standard customer service and return charges.

Incidental costs

When we talk about incidental costs, we mean those charged for events that were not planned in advance.

• Long-term inventory storage charges: products in storage for more than 331 days are subject to additional charges. Fees are charged monthly for all products that are in long-term stock.
• Stock removal fees: if products end up not selling, you can pay extra for long-term storage each time, but you can also choose to have stock returned or removed. Additional fees will be charged for this.
• Return processing fees: for products offered with free returns, there is still a return processing fee.
• Costs for unplanned services: when products arrive at a fulfillment center from the vendor without proper preparation, additional services are required to prepare the products for storage and shipping. The cost of these additional services will be charged to the seller.

How do returns and refunds work on Amazon in the Netherlands?

Sellers must comply with Amazon’s return policy or move on. It is recommended that we respond to return requests within 24 hours and process refunds for customers within 48 hours.

Sellers must either provide a return address in the relevant country or bear the cost of return shipping. Buyers do not have to return the goods to receive a full refund; nevertheless, this is an option that some sellers may offer.

When suppliers don’t want to bother customers or handle returns, they often solve customer problems this way.

The return and refund process is less complicated for suppliers who have chosen Fulfilment by Amazon. Customers can often request a return within 30 days of delivery.

Even if it was the customer’s fault, sellers have little to no control over whether or not to accept returns. Amazon usually gives customers a one-time refund and only conducts the investigation later.

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Keep in mind the VAT requirements

Are you choosing to expand with your business and start selling products internationally through Amazon? If so, always consider the VAT requirements that apply in the countries where you will be selling and/or storing stock.

To put your European business on the right foot, you need to apply for a VAT number in accordance with local laws. Depending on your fulfillment model and the location of your inventory, these obligations will vary.

Don’t worry, however, because with a little research and preparation, you can easily understand and comply with VAT obligations. If necessary, you can also hire a professional to do this.

Alternatives to Fulfillment by Amazon

E-commerce is growing every day, and more and more companies are having to make the move to outsource order fulfillment. In this way, they can scale up and grow faster.

Fulfillment by Amazon is one option for outsourcing your company’s order fulfillment, but there are other options as well.

In addition to Amazon, there are several e-fulfillment services that support businesses in packaging and shipping products. However, it is not always easy to find the right party that perfectly suits your company’s needs….

Therefore, request a quote directly from e-tailize and receive a competitive offer within 24 hours. Specify exactly what you are looking for in a fulfillment service so we can find the best service for you.