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Small business guide to Fulfilment by Amazon Australia

Benefit from Amazon's shipping and logistics services to get the most of selling with the online retail giant.

Updated

Amazon loves working with small businesses, and to make sure small businesses love working with Amazon it offers a few services to help make selling easier. One service is Fulfilment by Amazon (FBA). Shipping can be difficult and customers are forever demanding faster and smoother delivery. To help small businesses achieve this, Amazon offers FBA which charges small businesses a fee to use its warehouse, shipping and logistics.

This is a guide to how Fulfilment by Amazon works, how much it costs and how to decide if it's worth it for your business.

What is Fulfilment by Amazon (FBA)?

Fulfilment by Amazon (FBA) allows small businesses that are selling on the Amazon Marketplace to pay Amazon to handle their deliveries. Businesses using FBA will be able to benefit from Amazon packing, shipping, delivery and customer service, which should achieve faster order filling.

How much does FBA Australia cost?

FBA pricing has two different components: fulfilment and storage. How much you pay will depend on what you're sending and how much of it you want sent. Here's a breakdown of those fees and what you're paying for, at the time of writing in July 2018. For the most current pricing, check Amazon Australia's website.

  • Fulfilment fees. This is a flat fee per unit that is based on the product type, dimension and weight. Prices range from $1.76 or a small envelope with a packaging weight of 25g and shipping weight of up to 100g, right up to $25.48 for a large oversize package with a shipping weight of up to 30kg.
  • Storage fee. You also need to pay for the storage space you use for your products, with prices varying depending on the time of the year. You will be required to pay $19.40 per cubic metre per month from January to September and $26.40 per cubic metre from October to December. Long-term storage options are also available.

Other FBA fees that may apply:

  • Return fee: If you ask to have your items returned to you, you'll need to pay $0.65 per standard size item or $0.75 per oversize item.
  • Disposal fee. You can also opt to have your items destroyed at any time. The fee for this is $0.15 for standard size items and $0.20 for oversize items.

What are the benefits of FBA to my business?

While there's a cost for using Fulfilment by Amazon, there are a number of potential benefits for your business:

  • Outsourcing a difficult part of selling online. There's no doubt that delivery logistics are difficult, and being able to outsource them to a company that's able to offer delivery in as little as one day is a definite benefit.
  • Free delivery. Your products will be delivered free if your customers order over $49 or if they're signed up for Prime.
  • Meeting customer expectations. Many customers expect speedy delivery and with FBA your business will be able to do just that.
  • Allowing your business to scale. Getting bogged down with packing boxes and shipping can hinder business growth, but leveraging Amazon's FBA can be a way to get around this.

Are there any cons?

With any service there are drawbacks to consider:

  • Costs are prohibitive if you're shipping larger items. As the costs are calculated based on storage space and shipping weight, you will pay more if your products are larger.
  • If you're a seasonal business, you'll have higher costs over Christmas. Costs for storage increase between October and December, so this is something that needs to be factored into cash flow projections, especially for seasonal businesses.

How do I sign up my business for Fulfilment by Amazon?

If you're already signed up to sell on Amazon Australia, simply log into your seller account and select "Get Started". If you haven't signed up to sell on Amazon yet, you'll need the following information on hand to sign up:

  • Your business name as you want it to be displayed on Amazon.com.au
  • Your name or the entity's name that operates the business
  • Your business's physical address
  • Your business credit card number, expiration date and the physical address your statement should be sent to

Find out more in our guide to selling on Amazon Australia.


Picture: Shutterstock

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