E-commerce is the fastest growing means for promoting products and services for existing businesses as well as for new entrepreneurs. It is the most reliable and cost saving method as it eliminates risk and lowers start up costs for businesses. However, this method for conducting business is revived through “Fulfillment by Amazon”.
Amazon is an ecommerce website that was launched in 1995. Up till now, the website reports over one billion dollars of revenue and continues to grow as the largest online store ever. In addition to the website publishing of items, users can also sell their used and new stuff by simply creating an account. The best thing about this website is that users can sell anything they want. Moreover, the shipping charges are either minimal or there are no shipping charges at all. However, Amazon does have a ‘final value fee’ which covers a portion of the sold item. Selling on Amazon.com is quite cheaper than most of the other online stores on the web because of the low shipping cost. This, in turn, reduces the sale price of the product and as a result, customers are attracted more towards this site.
Amazon.com has recently launched FBA (Fulfillment By Amazon) which is the website’s newest program to conduct business. The background behind making this program is to reduce the workload, shipping costs, and increase the storage capacity of business organizations who want to sell their products to the world. In addition to it, the program also offers a customized shipping carrier. Users can choose Amazon’s shipping carrier or any other carrier that they like. Through Amazon’s FBA program, business organizations or entrepreneurs can sell their products by listing them over the website and sending the products to their ware houses as a single item or a complete batch using Amazon’s economical shipping charges (i.e. a twenty pound box can shipped for less than $20). As soon as the items reach Amazon’s ware house, the employees scan the items for any signs of damage and then put them up for sale. Amazon charges fifteen cents for a one square inch storage space but the rates are usually higher during Christmas days. As soon as the products are ordered by customers, the company packs them (charges included under the shipping cost) and ships them to the customers and you earn the revenue. However, if the customer returns the item, then Amazon will take the money from your account and back to the customer. No fee is charged for shipping the products to the customer or for the returns.
FBA is definitely worth using, for many reasons. One being that we don’t need to store the items, Amazon will take care of it. Secondly, the cost of sending the stuff to Amazon is very menial as compare to sending the items to individuals (the method of shipping is highly cost effective). Through Fulfillment by Amazon program, organizations and individuals can actually earn more revenue than other websites by listing the items at a higher sales price which gives them a high profit margin. Nevertheless, FBA is the most cost effective methods of selling products when it comes to using ecommerce as a source of generating revenue.