The Availability Framework Part 1 - Should I be using Amazon FBA?

Fulfilling Amazon Orders

One of the most often overlooked parts of an Amazon business, for both small and large brands, is managing and predicting inventory needs. This is especially true for brands that use Amazon FBA. The costs of mismanagement of Amazon FBA are high and include:

• Loss of sales
• Loss of keyword rank
• Loss of sales momentum that has already been built up
• Subscribe & Save missed order shipments, and losing hard-earned subscribers
• Wasted ad spend
• Interruption in cash flow
  

This is why we created the Availability Framework. And this is why we introduce the framework as part of the very first step in our 5-Step Amazon Playbook.​
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​Building an Availability Framework will help you answer the following questions in advance of your first, or next, shipment:

• Should I be using Amazon FBA?
  
• What information do I need before creating my listing in Seller Central?
• Should I ship my inventory into FBA using package or pallet shipping?
• Will my product make it to the customer intact? Should I put it in a shipping box prior to sending it to FBA?
• What information do I need to gather before creating my first shipment?
• How do I know how much inventory to send in? How can I prepare for future replenishment needs?
• Should I use a 3PL?

What is Amazon FBA, and should I use it?

This is the first question you should ask yourself when thinking about selling your products on Amazon. Should you use Amazon’s FBA (Fulfillment by Amazon) program? Or should you just ship orders directly to customers yourself?

What is Amazon FBA?

You can’t decide whether you want to use FBA until you know what FBA is.

Amazon FBA, or Fulfillment by Amazon, is a service provided by Amazon that allows online sellers to store their products in Amazon's fulfillment centers and have Amazon pick, pack, and ship these products to customers. FBA sellers can take advantage of Amazon's extensive network of order fulfillment centers to expand their customer base, boost sales, and enhance the overall customer experience.

Most importantly, products that are fulfilled with FBA are eligible for Prime shipping benefits. This means that Prime members can get free 2-day, 1-day, and even Same-day shipping depending on where they live. Prime members anywhere in the US benefit from 2-day at most shipping times.

Most customers on Amazon prefer products with Prime shipping eligibility. Prime eligible products receive more traffic, convert at a higher rate, have lower acquisition costs, and rank better in search results than non-Prime products.

Considering all the benefits above, it is a no-brainer to use FBA to fulfill your products, unless you have no choice.

There are some scenarios where FBA is not an option. This includes:

• Products with a shelf life of less than 6 months, such as some grocery products
• Products that cannot be shipping with FBA, like products categorized as hazardous materials
• Extra-large products like furniture and washing machines which are cheaper to ship directly to the customer than through FBA.
  

​If you can ship your product to customers through FBA, you almost certainly should be.

It’s important to think about how you want to fulfill your inventory to customers, how you want to send inventory into FBA if you choose to use it, and how you want to predict and execute replenishment of inventory when needed.

Your other option is to fulfill orders directly to customers. Amazon calls this FBM or Fulfillment by Merchant. This type of fulfillment could be the same as fulfillment for a Shopify brand store.

Amazon FBA vs FBM (Fulfilled by Merchant)
(Link to Full Size)

Conclusion

By thinking through how you’ll handle your inventory and fulfillment needs well in advance of your first shipment, you’ll avoid the common pitfalls that many new Amazon sellers face. This will allow your product to experience a smooth launch that paves the way for sustainable growth into the future.