Many Amazon sellers use FBA because of all of the positive things that it allows them to do. If you are planning to send some or all of your inventory to an FBA, there are some things that you should consider first. There are some downsides of using FBA that you should know about.
The Return Policy
When you use FBA, Amazon will handle the customer service for returns. Amazon is very serious about keeping their customers happy, therefore, they allow customers to return their items for any reason. While this does keep customers happy, it also allows abuse. It is not uncommon for customers to take advantage of the return policy, even though it can wreak havoc with your inventory.
If your target margins are being affected because you are receiving a higher rate of returns on your items, you would have to determine whether or not the items is compatible with FBA. If you decide that the item is not compatible, you can request that Amazon returns the products to you. If the items are still compatible, do have options. You can raise the price of your item to compensate for the returns. You can also try to sell your items on other channels, and you can ship the items in FBA using Basic Fulfillment.
International Policy
Amazon’s current shipping policy allows you to ship certain items internationally, such as books and media items The customer would pay the extra charge. If you are selling items in other categories, they would not be eligible for international shipping, either through Basic Fulfillment or Amazon direct sales. Fortunately, however, Amazon may offer this international service at some point in the future.
Amazon Could Be a Competitor
When you are selling an item on Amazon through FBA, you could be the only seller for the item. This is a great situation, however, it does not always last. Eventually other sellers can list their FBA inventory, and could be selling the same items. In order to make more money, they can drive the prices of the items down. This can be a problem. You could start selling an item on Amazon that nobody else is selling. This gives you exclusivity. If Amazon starts to sell the same product directly, they can start to sell them at lower margins. If this is the case, you can start to sell your items through other channels, and use Basic Fulfillment until your inventory runs out. You can also request to have your item removed completely. This will allow you to look at the item again, and reconsider your profit margin goals and your costs.
Unfulfillable Inventory
If a customer returns one of your items, Amazon will look at the item and decide whether or not the item can be resold. If it can be, it would just be added to your FBA inventory. If it can not be resold, it would be marked ‘unfulfillable’. When this happens, you would need to determine whether you want the item to be returned to you or if you want it destroyed. It is best to go through your unfulfillable items from your inventory at least once a month. When you do, you may find items that can still be sold. All you would need to do is reprocess them into your FBA account, as long as they are still in good enough condition to resell.
Missing/Damaged/Lost Inventory
There are occasions that some of your inventory will turn up missing. In some cases, the items are truly lost. In others, it just takes longer for the customer to receive their items. If something is lost or damaged by Amazon, they would compensate you for these items.
