Why Amazon FBA May Not Be the Wisest Choice

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.

If you liked this post "Like" it via Facebook with the button above. Also, I love getting comments and discussing these issues with readers. Feel free to leave a comment below.

  • Reg B.

    I still confused I read where you can make money on selling a book for 1 penny… With what you are saying that is not true… I would have a big lose unless am selling 1000′s of books a month. You also didn’t mention they monthly fee of $39.95 Amazon charges… I am so confused this business is almost a tough as running a brick and mortar business…
    But thanks for your in put…
    Reg B.

  • Reg B.

    I still confused I read where you can make money on selling a book for 1 penny… With what you are saying that is not true… I would have a big lose unless am selling 1000′s of books a month. You also didn’t mention they monthly fee of $39.95 Amazon charges… I am so confused this business is almost a tough as running a brick and mortar business…
    But thanks for your in put…
    Reg B.

  • Reg B.

    I still confused I read where you can make money on selling a book for 1 penny… With what you are saying that is not true… I would have a big lose unless am selling 1000′s of books a month. You also didn’t mention they monthly fee of $39.95 Amazon charges… I am so confused this business is almost a tough as running a brick and mortar business…
    But thanks for your in put…
    Reg B.

  • Brandon

    One other disadvantage that I have found to using FBA is that you can’t put additional marketing materials into the shipped package. FBA regulations prevent you from adding anything extra to the book. However, if you were self-fulfilling the item, you could easily add additional marketing materials, etc.

    Also, I don’t know why the fees thing keeps getting rehashed. In almost every case (except for really heavy books), I always calculate a higher profit using FBA. The main difference is that postage using self-fulfillment is significantly more expensive than the pick/pack fee + the weight based fee. Using your same 1 pound book being sold for $1.00, I get a $1.35 profit using FBA, and only a $0.36 profit with self-fulfillmente

    One Pound book for a dollar

    Amazon Fulfillment
    – Amazon Variable Fee $1.35
    – Amazon Commission (15% of $5) $0.75 (Note that this is $0.60 more than self fulfillment)
    – FBA Pick/Pack $0.50
    – FBA Weight: $0.40
    – Inbound Shipping $0.29
    – Storage $0.10
    – Listing/Handling Labor $0.25
    Total Income $4.99 (Price includes Shipping)
    Total Expenses $3.64
    Profit $1.35

    Self Fulfillment
    – Amazon Variable Fee $1.35
    – Amazon Commission (15% of $1) $0.15
    – Postage $2.38
    – Packaging Supplies $0.25
    – Listing/Handling Labor $0.25
    – Packing/Shipping Labor $0.25
    Total Income $4.99 ($1 + $3.99)
    Total Expenses $4.63
    Profit $0.36

  • Brandon

    One other disadvantage that I have found to using FBA is that you can’t put additional marketing materials into the shipped package. FBA regulations prevent you from adding anything extra to the book. However, if you were self-fulfilling the item, you could easily add additional marketing materials, etc.

    Also, I don’t know why the fees thing keeps getting rehashed. In almost every case (except for really heavy books), I always calculate a higher profit using FBA. The main difference is that postage using self-fulfillment is significantly more expensive than the pick/pack fee + the weight based fee. Using your same 1 pound book being sold for $1.00, I get a $1.35 profit using FBA, and only a $0.36 profit with self-fulfillmente

    One Pound book for a dollar

    Amazon Fulfillment
    – Amazon Variable Fee $1.35
    – Amazon Commission (15% of $5) $0.75 (Note that this is $0.60 more than self fulfillment)
    – FBA Pick/Pack $0.50
    – FBA Weight: $0.40
    – Inbound Shipping $0.29
    – Storage $0.10
    – Listing/Handling Labor $0.25
    Total Income $4.99 (Price includes Shipping)
    Total Expenses $3.64
    Profit $1.35

    Self Fulfillment
    – Amazon Variable Fee $1.35
    – Amazon Commission (15% of $1) $0.15
    – Postage $2.38
    – Packaging Supplies $0.25
    – Listing/Handling Labor $0.25
    – Packing/Shipping Labor $0.25
    Total Income $4.99 ($1 + $3.99)
    Total Expenses $4.63
    Profit $0.36

  • Brandon

    One other disadvantage that I have found to using FBA is that you can’t put additional marketing materials into the shipped package. FBA regulations prevent you from adding anything extra to the book. However, if you were self-fulfilling the item, you could easily add additional marketing materials, etc.

    Also, I don’t know why the fees thing keeps getting rehashed. In almost every case (except for really heavy books), I always calculate a higher profit using FBA. The main difference is that postage using self-fulfillment is significantly more expensive than the pick/pack fee + the weight based fee. Using your same 1 pound book being sold for $1.00, I get a $1.35 profit using FBA, and only a $0.36 profit with self-fulfillmente

    One Pound book for a dollar

    Amazon Fulfillment
    – Amazon Variable Fee $1.35
    – Amazon Commission (15% of $5) $0.75 (Note that this is $0.60 more than self fulfillment)
    – FBA Pick/Pack $0.50
    – FBA Weight: $0.40
    – Inbound Shipping $0.29
    – Storage $0.10
    – Listing/Handling Labor $0.25
    Total Income $4.99 (Price includes Shipping)
    Total Expenses $3.64
    Profit $1.35

    Self Fulfillment
    – Amazon Variable Fee $1.35
    – Amazon Commission (15% of $1) $0.15
    – Postage $2.38
    – Packaging Supplies $0.25
    – Listing/Handling Labor $0.25
    – Packing/Shipping Labor $0.25
    Total Income $4.99 ($1 + $3.99)
    Total Expenses $4.63
    Profit $0.36

  • Anonymous

    I agree if you add the customary $3.99 to the sale price it typically does end up being a higher profit.

  • Anonymous

    I agree if you add the customary $3.99 to the sale price it typically does end up being a higher profit.

  • Anonymous

    I agree if you add the customary $3.99 to the sale price it typically does end up being a higher profit.

  • Anonymous

    You can still sell books that others are selling for a penny. This is because of the $3.99 you can add to the sale price and still maintain a top position. I was just referring to straight sale price for sale price. I guess I mistakenly assumed you were a Pro-Merchant. If you’re selling over 40 books/month it’s a no brainer.

  • Anonymous

    You can still sell books that others are selling for a penny. This is because of the $3.99 you can add to the sale price and still maintain a top position. I was just referring to straight sale price for sale price. I guess I mistakenly assumed you were a Pro-Merchant. If you’re selling over 40 books/month it’s a no brainer.

  • Anonymous

    You can still sell books that others are selling for a penny. This is because of the $3.99 you can add to the sale price and still maintain a top position. I was just referring to straight sale price for sale price. I guess I mistakenly assumed you were a Pro-Merchant. If you’re selling over 40 books/month it’s a no brainer.

  • Ldemarc1

    The higher fees disadvantage is not really applicable because you wouldnt (or at least you shouldnt) price a FBA book the same as a non FBA book. That $1 non-FBA book should be sold for no less than $4.99 as an FBA book, I’ve priced some of my books at $4.99 over the lowest used NON FBA price and still got sales in many situations.

    None of the other disadvantages adam noted worry me, #4 though is something you really have to pay attention to. To me the biggest worry I have with FBA is once you send your invenory out to amazon you have no idea in which condition they will arrive at amazon’s warehouse, they can get damaged in transit (especilly knowing the way UPS handles packges) or damaged in amazon’s warehouse and you have no idea. Then damaged stuff gets shipped off the customers who can leave you bad feed back. A FBA VHS tape I sold the other day arrived to the customer damaged with the top lid completely off, he is pissed and my leave me feedback now. Thankfully its the only incident I have had so far in my 1 year of doing FBA. But it does make me uneasy.

  • Anonymous

    Thanks for the comment. I’m sure readers would love to hear other opinions about FBA.

  • Debi

    My husband and I are aiming for a niche market with personalized customer service, so FBA is probably not right for us. We’ll probably remain a “mom and pop” operation against the behemoth that is Amazon, but losing touch with the customers is something that isn’t an option.

    Thank you for presenting the cons of FBA; it turns out that it isn’t for everyone.

  • friend

    What about the crappy packaging from Amazon? I’ve ordered numerous NEW items directly from Amazon. About 1/4 of the time they arrive damaged. Guess what? If your FBA items are returned because of Amazon’s poor packaging you’ll eat the loss not Amazon. They don’t take responsibility for anything.

  • pratishtha chhetri

    Why do you think all the book stores had a run for their money when Amazon.com was launched? check out our blog on reason behind the success of online book sellers( Why do you think has everyone gone crazy about a website named www.flipkart.com?)http://creativaindia.co.in/blog/reasons-success-online-book-sellers/

  • kotraaliasguest

    So, is it possible to cancel the service? I signed up in the process of trying to get all my books listed, and they keep sending me emails prompting me to send the first shipment of stuff to them – I’m not going to because I want to ship the books myself IF they do sell. Help?? I really want to cancel this completely, none of the products I’m selling are listed under the FBA within the inventory and I don’t intend to ever use this service.

  • adbertram

    You don’t necessarily cancel the service. You just don’t use it anymore. If you want them to quit sending you email, you can go into your seller account and go to Manage FBA inventory and delete the incomplete shipment.

  • Thomas Wilson

    I’ve been strongly considering starting to use FBA. The 4 things listed here I am not bothered by. However, as the author of this article states “some” of the things on the blog ‘Problems with FBA” which this author linked to are legitimate. I like to for this author to point out which things written about on ‘Problems with FBA’ are not legit. I read the entire ‘Problems with FBA’ blog and the things mentioned their have me concerned more than what Adam the other of the post above speaks of. I’d really like to read Adam’s response and those of others.