Fulfillment by Amazon is one of the most popular services for the small-time bookseller. It seems that it has gotten so much attention both from Amazon’s marketing team as well as from guys like Chris Green at FBAblog, Nathan Holmquist at SellFBA.com and countless other people. I’m included in this list ever since I started writing about my first experiences with FBA way back in October of 2009. My first FBA post got over 36 comments which is huge for this blog.
I’ve raved about the service many times but I’ve never actually written an informative post about the downsides to FBA. You can’t have your cake and eat it too, right? In my opinion, there is little information out there about the downsides to using FBA. For the novice to the service it’s wise to always take the good with the bad before jumping in. To start off with, I found a blog a few months ago that is solely dedicated on telling you how much FBA sucks. Coincidentally it’s called Problems with FBA. It’s not updated that often but there are a few posts that make valid points against Amazon’s service.
Here is a list of my reasons why you may not want to use Amazon’s FBA service. Take them as you will and weigh how important these issues will be to your business. Choose accordingly.
1. Higher fees than listing yourself
FBA includes 3 additional fees than if you were fulfilling orders yourself. These are called the Pick & Pack, Weight Handling and Storage fees. When selling an item via FBA be prepared to tack on an additional flat fee of 50 cents plus 40 cents/lb and 45 cents/month per cubic feet of space your stuff takes up. For comparison let’s say you sell a 1 pound book for a dollar. If you were to fulfill this yourself your Amazon fees would be ($1 * .15) + $1.35 which would leave you with $-1.20. Add on the $3.99 standard shipping credit they’ll give you and you’ve got $2.79. You’ve also got postage (~$2.38) plus shipping supplies (~$0.25) costs and you’ve made 16 cents. However, let’s say this book was FBA and it’s been in their warehouse for 6 months. If this book sells via FBA you’ve got your $1 sale price – Commission ($1 * .15) – VCF ($1.35) – Weight handling ($0.40) - Pick/Pack ($0.50) – Storage (~$0.10) which ends up giving you a net LOSS at a buck ten cents. Now there is the typical add $3.99 to that which makes up for this lost but this is just an example.
2. Considerably less control
I have no problem with this because once the books are off I could care less as long as they sell. However some book sellers want ultimate control over their inventory. Be prepared to relinquish all control to Amazon once they’re out of your hands. Amazon has full reign to give refunds to customers as they please and deal with customers how they please. You’re feedback is also subject to Amazon’s performance. They’re pretty good about sending out your orders in a timely fashion and if you do get a feedback that’s Amazon fault they’re supposed to remove it. However, you are still relinquishing control of your feedback to Amazon.
3. Risk of paying money for books that DON’T sell
The storage fees for your inventory is minimal but it’s still there. If you’re selling books out of your home then you have no risk of listing 10,000 books if they don’t sell. On the contrary if you’ve got 10,000 books in Amazon’s warehouse a monthly storage fee of $300-$40 wouldn’t be out of the question. Only send high demand books to Amazon to prevent them sticking around too long.
4. $3,438 for changing your mind against FBA
I currently have 5,730 books with the FBA service right now. Let’s say I had a situation to where I wanted to close down my business for good and stop paying the monthly storage fee for all my books. Since I have so many books in their warehouses it’s gonna cost me over $3,000 for them to ship them all back to me. This is because Amazon charges you the same cost that it would cost them to pick and pack the book to a customer of another sales channel like eBay. This is called the multi-channel fulfillment rate. Currently, it’s 60 cents per item. As of this writing, Amazon is still waiving the Lose Weight Exercise-handling fee. However, due to the increase in usage of the FBA program Amazon has been known to significantly decrease the price of removal to clear up space. I’ve gotten at least 3 emails so far from them notifying of a decreased price of removal if I decide to do so.
Keep the removal cost in mind once you start sending thousands of books their way because it’s not free ride back.
5. Waiting to see your current inventory
This is one I just came up with while writing this post. I was trying to get my current inventory numbers and was victim to the message “Your data is more than 24 hours old, please wait a minute and refresh again”. Typically, it takes longer than a minute but not too much longer. It’s a very minor annoyance to me because it always does show back up but if you’re in a hurry then be prepared to wait a few minutes to see your FBA inventory.
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