If you’re running your ecommerce business on Amazon and you haven’t made the leap to using FBA (fulfillment by Amazon) services yet, it’s likely because you haven’t fully been able to understand or research what the actual benefits are.
Sometimes Amazon ecommerce sellers look at the additional fees and shy away from making the leap to FBA if they’re currently doing shipping themselves.
The thing is, Amazon FBA fees don’t necessarily cut too far into your profit margin. There are even tools out there like FBA fee and profit calculators to help you make sure you’re aware of the cost of your listing so you can make the right pricing choice from the beginning. FBA fee and profit calculators help you make sure you aren’t losing money just because of the fee structure.
Using FBA really can increase your profits if you do it the right way. If you’re still unconvinced, keep reading. Here are five ways that using FBA on Amazon can increase your profits on every sale.
1. Use FBA to broaden your potential customer base
The average Amazon customer spends about $700 a year on Amazon, while an Amazon Prime customer spends about $1,300 a year. That means Prime customers are the big Amazon spenders. When you use FBA, you get to offer those customers the chance to use their Prime shipping benefits, which is a huge reason they’re a prime customer to begin with.
Using FBA to broaden your customer base is one of the biggest ways to increase your profits. If you can offer Prime shipping, you’re appealing to an entirely new set of customers—the ones who are spending about double the average.
Increasing traffic gives you a better chance to convert sales which means you’re already increasing products just by making the switch to appeal to a larger set of Amazon customers. This is a pretty low effort way to use FBA to increase your profits.
2. Use Amazon’s trusted name to appeal to customers
When you use FBA, Amazon handles most of your customer service themselves. Customers feel they are dealing directly with Amazon, and that’s a brand they’ve grown to trust. You can use that to your advantage. If customers feel like your listing is going to be handled professionally and in a way they’ve come to expect, they aren’t going to be as hesitant to buy.
Use FBA to cash in on Amazon’s well-established levels of customer service and satisfaction. There may still be a few issues you have to deal with yourself, but for the most part, once you switch to using FBA, Amazon takes over. It’s one less thing on your plate, and that one less thing is likely to increase your profits. It’s a win-win situation.
3. Use FBA to decrease item profit margin guesswork
There’s never a guarantee any item is going to sell, but using FBA and the tools sellers often use with it can help minimize guesswork and increase profits. If you’re an FBA seller, you can use an FBA fee calculator to get a reality check. It’s going to show you what the listing costs are and what you can expect to make per sale with your pricing strategy.
If you can see that you’ll barely scrape by with your current item because of what the FBA fee calculator is telling you, then you don’t have to list that item at all. It’s time saved and money not wasted by listing it “just to see” how it might do. Since losing money on fees is a common concern for Amazon sellers, this is another way switching to FBA can increase your profits.
4. Use FBA to win the elusive buy box
The Amazon algorithm tends to prefer FBA sellers. There could be a lot of reasons that go into this. Amazon is notoriously protective of how that algorithm works, but FBA sellers have a better chance. The “buy box” is the box next to a listing that allows customers to click “add to cart” or “buy it now” instead of having to sift through a list of sellers offering the same thing.
You can use your stats as an FBA seller as a way to edge out the competition and win that buy box. Since customers are often far more likely to click and buy the item listed in the buy box, your profits are going to increase each time you win out the buy box for the listings you have on Amazon—just another benefit of using FBA.
5. Use FBA to increase your product’s search placement
Every time your customer types in your product’s name, it’s going to be populated in a list of other similar products. Just like with Google, customers tend to click on items that show up higher on their search results. They are going to assume those products are more relevant than products on the second or third page of results.
Yes, some of how your product is ranked for search results is about how you use your keywords, but FBA sellers also tend to rank higher as well. If you use FBA and the right keywords, you’ll be beating out sellers who aren’t using FBA and relying only on keywords to help them get noticed.
Using Amazon’s FBA service really can make a huge difference in your growth and profitability on Amazon’s platform. If your sales have become stagnant and you’re wondering what to do next, it might be time to consider going the FBA route.
You can always test out one or two products first to see how things go. Use that time to perfect your FBA approach and then bring in other items as it makes sense for you. It’s extra work upfront, to be sure. But eventually, you’ll be able to deal with less (no more shipping or handling customer service yourself) and bring in more revenue.