Analysis No.1, What is FBA, FBM, overseas warehouse?
Both FBA and FBM are the logistics delivery methods on Amazon platform.
FBA: Fulfillment by Amazon, refers to Amazon Warehouse delivery, Amazon Sellers need to ship their goods to Amazon warehouse in advance, once there are orders, Amazon is responsible for packing and shipping from its warehouse to the buyers.
FBM: Fulfillment by merchant: refers to delivery provided by the Amazon sellers, Amazon only as a sales platform, requires the sellers ship their goods to the buyers from China.
Overseas warehouse: It is overseas one-stop storage service and management that is independently or jointly provided by E-commerce platforms and logistics suppliers. Overseas warehouse will make a quick respond once there are demands from buyers, timely proceed goods sorting, packaging and delivery.
Advantages of FBA
1, Using FBA service can improve the shop ranking, and help sellers to become featured merchants and to snatch shopping cart. And improve customer confidence, thereby increasing the sales.
2, FBA has abundant logistics and warehouse storage experiences, warehouses spread all over the world, intelligent management( Amazon acquired the robot manufacturing company—-Kiva Systems in 2012).
3, Fast delivery time( most of it’s warehouses are near airports).
4, 24h*7 Amazon professional customers service.
5, Remove the negative reviews cost by logistics.
6, For goods that the price more than 300 USD, are exempted from all FBA logistics fees.
Disadvantages of FBA
1, In general, FBA shipping fee is slightly higher than domestic shipping fee( especially 3rd party fulfillment).
2, Lack of flexibility and humanization.
3, If goods label can not be scanned, it will affect the storage.
4, Only American address is available for returning address.
5, Storage requires reservation number, cannot directly arrive the warehouse by the first fight shipping line.
Overseas warehouse
The advantages of using overseas warehouse is almost the same as using FBA warehouse, the only difference is that if negative reviews were generated by logistics issues, Amazon will not remove them. Besides, using overseas warehouse you can enjoy more humanization service. For example: providing pick-up service for returning parcels, SKU label sticking service and so on.
As the world’s biggest online retailer, Amazon provides the multiple products, low price and free delivery service, which almost no one can match. For sellers doing business on Amazon, FBA services is the choice without no room. Though its price is much higher than any other epibolic overseas warehouse in United States, it still be accepted by the sellers. As there is a provision of Amazon, FBA sellers can delete all the negative reviews which refer to logistics. For example, “Delivery delay”, “The packaging is damages”, such logistics negative reviews like these will be deleted immediately, as Amazon FBA invests hundreds millions on FBA. While if sellers ship their goods by other logistics companies, or own their warehouse for storage and delivering, they need to shoulder the negative reviews refer to logistics. However, some of the force majeure factors about the logistics delays are not the things sellers can control, such as flight delay due to bad weather, customs clearance delay.
Analysis No.2, Amazon market analysis
Annual income of Amazon sellers includes small merchant and medium-large enterprise.
50% of Amazon sellers are small size merchants or individual businessmen, whose annual income is below 100 thousands USD. As building up a e-commerce website dose not need to spend much management fee, and dose not have to be full time dedicated but just needs part time management. Some of the sellers’ annual income can reach 500 thousands, and there is a small part of them even can reach 10 millions. Though the proportion is small, it is enough to give the fact that Amazon market has huge potential.
eBay is still the second choice for e-commerce sellers, Amazon sellers are not “Single-mindedness”
Four-thirds of Amazon sellers are selling their products on eBay. Though eBay has been growing slower compared with Amazon, it has been firming foundation through sporting small size merchant as well. In addition, eBay is profitable for sellers, but the amount of sellers who sell products on eBay and Amazon at the same time is extremely large. As we know, the products sold on eBay must be pure handmade, or the sellers must be handcraft suppliers. In general, the sales rules on eBay is really strict, so that we are surprised at so many Amazon sellers have sales qualification on eBay. It is obvious that there is a high demand of handicraft at today’s market.
Analysis No.3, 30% of the sellers use FBA, while 20% of them don’t use FBA at all, and the remaining 50% use both of FBA and 3rd party overseas warehouse.
In current, more and more sellers choose FBA or overseas warehouse. Various advantages of using FBA attract small merchant especially those just stat their business. In the fact that, it shows that using FBA fulfillment closely related to increasing sales.
Analysis No.4, sellers using FBA and overseas warehouse can gain more 27% margin compared with those using FBM, and using FBA can gain more margin than using FBM.
FBM sellers’ profit evenly distributed in 10%-25%, while FBA sellers’ profit in 25%-50%. Overall, FBA sellers gain more 27% profit than FBM sellers on average, thus more sellers are tend to choose FBA services.
Analysis No.5, First flight shipping lines of FBA are multiple( take United State, Europe for example).
First flight shipping lines service refer to shipping from China to Amazon warehouse in overseas China, because Amazon is not responsible for destination customs clearance and not responsible for first flight service from China to FBA, Amazon sellers need to settle all the issues about customs declaration, customs clearance and tariffs settlement and so on. However, these issues are the most difficult to solve. Currently the main first flight services on the market are as bellow:
| category | FBA Air Delivery | FBA International Express | FBA Sea Freight | Notes |
| Delivery Time Comparison | 7-15/Days | 5-7/Days | 30-45/Days | International Express is the fastest |
| Price Comparison | 26/kg | 35/kg | 1500/m³ | Sea Freight is the cheapest |
1, (USA) FBA Sea Freight: Refers to gathering goods by sea transportation shipping them to destination country, after that, transport them to FBA warehouse by trailer. This method is suitable for replenishment of large amount or large heavy cargo, it can save shipping cost. However it doesn’t save time, using this way needs 30-40 days. Pros: low shipping fee; Cons: The slow delivery is not suitable for small-medium sellers.
2, (USA) International Express first flight: Normally refers to DHL, UPS, FedEx, TNT. The price is reasonable for goods over 21kg, with fast delivery time, and won’t generate tariffs if goods’ declaration under 800 USD, this way is suitable for urgent replenishment of small-medium sellers. Pros: stable delivery time, safe, suitable for small-medium sellers; Cons: price is relatively higher.
3, (USA) Air delivery: This means sellers consign goods to 3rd party logistics companies, then the companies deliver their goods by air to the destination, after goods arriving destination, the goods are delivered by local courier such as TNT, FedEx, UPS, DHL to FBA warehouse, its delivery time is 7-15 days. Pros: price is lower than express, double-customs clearance includes tariffs, moderate delivery time, is suitable for small-medium sellers. Cons: unstable delivery time, unconcerned facts in customs clearance.
4, (EU) European Union shipping is more complicated than USA, in addition of tariffs, there is another issue—-VAT. That is Value Added Tax/ AD VALOREM tax. There is a tax system in Europe, when people shop they need to pay extra tax, which is charged according to goods price, typically up to 20% of the value of the goods. No matter shipping goods via sea fright of express to any FBA warehouse in Europe, they must be charged VAT. Besides, VAT accounts only for the registered entity company to get, naturally avoiding tax is the common demand of each FBA customers. According to shipping methods we mentioned above, air delivery is more suitable for EU FBA customer, advantages are mainly reflect on the double-customs clearance includes tariffs. Due to policy reasons of Netherlands, many goods are transit to Netherlands first so that to avoid tax. On the market the most common air delivery mode is: air delivery from China to Netherlands- Netherlands customs clearance-deliver by UPS from Netherlands to destination FBA warehouse. Cons: unstable delivery time, unconcerned facts of customs clearance.
Analysis No.6, what kinds of products are suitable for FBA services
According to comparing delivery modes of FBA and FBM, we can see that while sellers selling a same products, the profit is higher when sellers using FBA. But for FBA goods, you should ensure you can gain profit after all extra costs. Amazon will charge a certain storage fee for the goods kept in the FBA warehouse without selling out within 30 days. If exceed 180 days, the charge could be higher. In other words, if your sales speed is slow, Amazon will devour your profit. And that for the large or heavy products, there will be specific handling fee. FBA storage fee is counted by per cubic meter. Therefore, those hot sale products with smaller size and lighter weight have a better prospective using FBA.
Conclusion
As the increasing competition on Amazon, the seller is bound to further reduce the logistics cost, in order to improve the competitiveness of the price of their products, so the requirement of sea freight, air delivery, express delivery from China to the FBA warehouse will be more and more higher. TaobaoGuides optimize those complicated different logistics resources into simple shipping ways for our customers, that the reason they choose our service. We have our unique advantages, we have our warehouse exceed 1500 m³ space for FBA goods. What’s more, we have our own IT team developing storage systems in accordance with the needs of FBA customers, and we also provide other customized services. All the efforts is for FBA customers achieving remote operation but not need them to come to our warehouse. One-stop value added service as bellow:
1, Transit goods from China to FBA warehouse or 3rd party warehouse in USA.
2, According to Amazon FBA barcode content requirements, print the suitable label for each product.
3, In accordance with the requirements for the Amazon FBA storage type and amount provisions, sort and pack the goods under a right way.
4, Stick SKU labels on each product in accordance with the warehousing provision of FBA.
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