Transcript 02fulfillment_by_amazon_presentation

Selling on Amazon
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Fulfillment By Amazon
Fulfillment By Amazon
With Fulfillment By Amazon (FBA), we’ll show you how to:
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Lower your costs:
Increase your margins by reducing your shipping costs
Position yourself as a premium seller:
Increase your margins (double!) by being able to charge a higher price
Work smarter, not harder:
Work less by outsourcing all storage, picking, packing, shipping, customer service & returns
Keep customers happy:
Get your items delivered to your customers 2-3 times faster
Two Limitations of All Online Sellers
Time
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You can only list, sell, pack, and ship so many
orders in a day. What would you do if you all
of a sudden had 100, 200, even 500 orders in
a day?
Do you have the time to pick, pack, label and
ship all these orders?
Two Limitations of All Online Sellers
Space
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You can only store so much stuff!
Can you store enough product to handle this
many orders?
Do you have enough storage space to store
enough product to ship 100, 200, even 500
orders in a day?
Solution: Fulfillment By Amazon
FBA removes both of these barriers!
Amazon will store your products in secure,
climate controlled warehouses and they have
the capacity to ship all of your orders no matter
how many orders you receive.
Instantly Compete With Anyone!
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A new seller, regardless of size, is now able to
compete with the big, established sellers (and
beat them!)
A new seller has full access to Amazon's worldclass distribution network in a matter of
minutes.
What an amazing age we live in!
What is a Fulfillment Company?
Background: Fulfillment companies and programs
are nothing new, but what makes FBA unique
and powerful is that all FBA items are eligible
for Amazon’s free (or discounted) shipping
programs such as Free Super Saver Shipping
(FSSS) on orders over $25, 4-for-3 promotions,
and free 2-Day Air shipping for Amazon Prime
members. This makes FBA items more
appealing to Amazon’s best customers.
FBA Can Be Described
As a Win-Win-Win
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Win #1. Higher prices, higher margins, higher
payouts
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Win #2. Less work
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Win #3. Happier Customers
Win #1: Higher Prices, Higher
Margins, Higher payouts
Since items sold through FBA are eligible for Free
Super Saver Shipping and Amazon Prime, FBA
sellers actually raise their prices to match their
competitor’s total price (price + shipping). So
even with the addition of FBA fees, the FBA
seller still receives a higher net payout from
their Amazon sales because of the higher sale
prices.
Pricing FBA Items
For example, a seller who ships their own orders who
sells an item for $10 with $3.99 shipping will show
the same as an FBA seller selling the exact same item
for $13.99. Actually, the FBA seller will show first
because FBA is the tie breaker. The easy example is
with penny books. A merchant fulfilled penny book
lists for $0.01 + $3.99 shipping. An FBA seller who
wants to price match the lowest price will list for
$4.00. Amazon sorts the offers page by total price
(price + shipping).
Pricing FBA Items
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On the next slide, you'll see an example of an
item where two sellers have the same price,
but the FBA seller gets the better placement.
Amazon even includes the ability to sort the
offers page to only show Free Super Saver
Shipping offers only (Amazon and FBA sellers)
Win #2: Less Work
FBA sellers sell items 24 hours a day, 7 days a
week. Items ship all hours of the day or night
including weekends. They ship whether the
seller is at home or on vacation. Once an FBA
seller prepares their items for the FBA
warehouse and sends them to Amazon, they
don’t have to do anything else.
Win #2: Less Work
They can monitor inventory levels and adjust
prices as needed from anywhere with an
Internet connection. They don’t have to stock
boxes, envelopes, packing materials, or print
shipping labels anymore. They also don’t wait
around for their UPS driver or go to the post
office every day. The time you used to spend
fulfilling orders can now be used to source
products or on other aspects of your business.
Win #3: Happier Customers
It is estimated that 40-50% of Amazon buyers
have never bought from a third-party
merchant. You can effectively double your
customer base by offering your items through
FBA. Amazon customers want to buy from FBA
sellers. They trust Amazon and they know that
their items will ship quickly and if there is ever
a problem, Amazon will help (including an
extended return policy).
Win #3: Happier Customers
When your items are offered for sale through FBA, they
will attract these types of Amazon buyers who are
willing to pay more to get their items shipped by
Amazon. This is an important point to grasp: Amazon
customers are willing to pay more for the exact same
item if it comes from Amazon or an FBA seller. They
do this because they know they will get their items
fast and that customer service will be top notch. This
is how you leverage FBA status; you use FBA to
market your items to these sellers and increase your
margins and profits.
How Do I Get My Items To FBA?
Items sent to FBA require special FBA labels. These
labels have a barcode identifying the items to
Amazon. They need to cover any existing barcodes on
your items. You create shipments and process them
through your Amazon account. You can send one box,
10 boxes, even a full truckload of boxes! Bonus: you
get to use Amazon’s UPS rates for inbound shipping.
Once your shipment is received at Amazon’s FBA
warehouse, they are received and offered for sale on
Amazon.com.
Downsides of FBA
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Lose Control Over Your Order Processing
You are trusting Amazon to store and package your items
properly
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Hand Over Customer Service To Amazon
Amazon has a generous return policy
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Possibility Of Loss Or Damage To Your Products
Amazon will reimburse sellers for lost or damaged items
Proper item pricing compensates for these risks
FBA Fees (Sold on Amazon)
A. Order Handling Fee
B. Pick & Pack Fee
C. Weight Handling Fee
Additional Fees:
Amazon Commission
(6%-15% [includes payment processing])
Inbound Shipping Fee
$0.12 - $0.25 per pound
I ship 50 lb. boxes to Whitestown, Indiana for $13
I ship 50 lb. boxes to Irving, TX for $6
Monthly Storage Fee
Jan-Sept: $0.45/ft³
Oct-Dec: $0.60/ft³
First 60 days free
Notes on FBA Storage Fees
Monthly Storage Fee Breakdown
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Jan-Sept: $0.45/ft³
Oct-Dec: $0.60/ft³
First 60 days free
Amazon calculates the volume of your items
to the 1/100 of a cubic foot.
FBA Storage Fees Example
Box 1 – 6”x4”x3”
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Calculated at 0.10 cubic feet (by Amazon)
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Jan - Sept storage fee: $0.45 x 0.10 = $0.05/month
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Oct – Dec storage fee: $0.60 x 0.10 = $0.06/month
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Yearly storage fees: $0.63
Box 2 – 8”x8”x4”
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Calculated at 0.18 cubic feet (by Amazon)
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Jan - Sept storage fee: $0.45 x 0.18 = $0.08/month
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Oct – Dec storage fee: $0.60 x 0.18 = $0.11/month
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Yearly storage fees: $1.05
Box 3 - 11”x8”x4”
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Calculated at 0.27 cubic feet (by Amazon)
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Jan - Sept storage fee: $0.45 x 0.27 = $0.12/month
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Oct – Dec storage fee: $0.60 x 0.27 = $0.16/month
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Yearly storage fees: $1.56
Manage Your FBA Storage Fees
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You don’t have to send all of your inventory to
FBA at one time.
Manage your FBA storage fees by replenishing
your FBA inventory as your products sell.
Maintain a 60-day supply and you won’t pay
any FBA storage fees.
How to Leverage FBA
OTHER SALES CHANNELS
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With FBA, we can ship 2-Day Air for less than
the cost of UPS Ground.
We can ship to Hawaii & Alaska for the same
low rates
We can spend our time sourcing products,
playing with our kids, or going on vacation!
Multi-Channel Fulfillment
FBA is not just for Amazon sales. You can use
FBA to outsource the storage of your items as
well the entire order process (picking, packing,
labeling, & shipping) all for less than what you
are paying now.
It’s called Amazon
Multi-Channel Fulfillment
Amazon Multi-Channel Fulfillment
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One way to describe Amazon Multi-Channel
Fulfillment is to compare it to dropshipping;
but make no mistake, it is not dropshipping.
Multi-Channel Fulfillment is using Amazon’s
FBA service to fulfill your own orders with
your own inventory for sales from other online
channels (example: eBay)
Amazon Multi-Channel Fulfillment
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With dropshipping, the products are not yours
until you make a sale and submit the order.
With FBA, the products that you are shipping
are YOUR PRODUCTS. You control them and
you set the price.
FBA Fees (Multi-Channel Fulfillment)
D. Pick & Pack Fee
E. Shipping Method Fee
F. Shipping Weight Fee
Additional Fees:
No Commission!
Inbound Shipping Fee
$0.12 - $0.25 per pound
I ship 50 lb. boxes to Whitestown, Indiana for $13
I ship 50 lb. boxes to Irving, TX for $6
Monthly Storage Fee
Jan-Sept: $0.45/ft³
Oct-Dec: $0.60/ft³
First 60 days free
Here's Where the Magic Happens
Imagine your UPS account rep came to your place
of business and said, “Good news, we can now
offer you the same shipping rates as Amazon
even though you only ship two packages a day.”
That three pound box that cost you $10 to ship
coast to coast by UPS Ground now costs you
$10 to send 2-Day Air.
You can use this to your advantage two ways.
• If you can ship UPS 2-Day Air for the same price
as your competition pays for UPS Ground, you
can offer your customers more than your
competition for the same price.
– $100 from him but slow shipping.
– $100 from you but fast shipping.
• You can take the lion's share of sales from your
competitors.
How Incredibly Powerful!
Or you raise your price since you are marketing
yourself to customers who want fast shipping
at a fair price. Your shipping costs are still the
same, you have just now increased your price
and therefore your margins.
Snowball Effect - Since your margins are higher,
you can add more products to your catalog.
Items that were previously not profitable, are
now money makers!
Comparison Time
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Let’s compare the transaction
on an identical item sold on eBay.
One seller stores all his products at home
including boxes, tape, packing materials, and
labels. They cannot ship orders unless they are
home and they have to go to the post office or
UPS every time they get an order.
The other seller uses FBA Multi-Channel
Fulfillment.
My Competition
eBay listing fees: $0.50 (7 Day Listing, No Subtitle)
eBay Final Value Fees: $8.78. Paypal Fee (~3%): $2.93
Shipping materials: $0.50 - $1.50
UPS Shipping: Orlando to Seattle (residential): $9.52 (Daily Pickup) - $13.59 (Published Rates)
Ships on Monday April 26 – Delivered Tuesday May 4. (8 days in transit)
My Listing
eBay listing fees: $2.00 (30 Day Listing, Subtitle)
eBay Final Value Fees: $10.90. Paypal Fee (~3%): $3.60
Shipped by FBA Basic Fulfillment: Total cost: $10.15
Ships on Monday April 26 – Delivered Wednesday April 28. (2 days in transit)
Customer receives 2-Day Shipping with a value of $25.41 - $32.37
This is why you can charge a higher price; because you are offering a premium service
Added Value to Our Customers
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Free 2-Day Air shipping is a huge added value
that customers can understand
This allows you to charge a higher price than
your competitors
You can use eBay’s Get It Fast option
eBay Order Page
Multi-Channel Fulfillment Fees
How To Process a Multi-Channel Fulfillment Order
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Here are the steps to create a Multi-Channel
Fulfillment order
Prices shown for Standard (Ground), 2-Day Air,
and Overnight shipping options
Select the Item For Fulfillment
Enter Address Information
Standard Shipping for $6.85
2-Day Air Shipping for $10.15
Overnight Shipping for $20.00
Multi-Channel Fulfillment Fees;
eBay Order
Not an Equal Comparison
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We making $17.30 - $22.60 more on each
transaction.
35.1% - 45.2% higher margins.
Business is a game of margins, not volume.
Remember to count the cost of your time and
efforts.
Multi-Channel Fulfillment is Powerful!
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Not only do we make more money and earn
higher margins on each transaction, but we do
less work and our customers get their
products 2-3 times faster.
We can ship this way to Hawaii & Alaska!
FBA Orders Ship Same Day
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We can place FBA orders as late as 4:30 PM
(maybe even later) and they will ship the same
day.
Can your customers order at 4:30 PM and get
their item delivered THE NEXT DAY (even
Saturday) anywhere in the US for $20?
Can you do this from Starbucks?
This Isn't Just for eBay Sales!
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You can sell on any channel that you want to!
With Multi-Channel Fulfillment, you can ship
orders from your own website, Amazon, eBay,
half.com, even Craigslist!
You get the same competitive shipping rates
and world class fulfillment experience.
Outsource Your Warehouse!
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Do you really need a warehouse?
Do you really need employees to pick, pack,
and ship orders for you everyday?
Outsource the whole thing. Run an empire
from home (or on vacation.)
FBA in Practice
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Imagine the possibilities of never having to
put your online business on hold.
You can go out of town or on vacation anytime
and you never have to stop selling.
You can place FBA orders on the beach or
from Europe!
Less work, higher margins, happier customers.
Advanced FBA
The possibilities are fairly endless with FBA.
Here are some other things that you can do with
Fulfillment By Amazon.
Direct FBA Shipping
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Get your vendors and manufacturers to send
your items directly to your FBA account.
Just find items that can be sold on Amazon.
(Some items don't even need FBA labels)
FBA labels can be emailed, even shipped to
vendors for labeling prior to shipping.
Change your ship-from address and still use
Amazon's UPS rates. Email UPS labels to your
suppliers.
International FBA
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FBA is available in the US, UK, Germany,
France, and Japan and you can send inventory
to each of them.
You can open seller accounts in each country
and send your inventory to it's best market.
Ship yourself, or have your suppliers ship.
What Else Can You Do?
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The possibilities are endless.
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FBA is still in its infancy.
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How will you be using FBA this year?
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Next year?
Phew! Questions?