Way back on October 30th last year I wrote my very first post on FBA entitled Fulfillment by Amazon: A First Timer's Review.  I've since written a few followup posts related to the service but have been egged on by numerous people to post a follow up to that first post and explain where I am now with the service, what I currently use it for and if it's been beneficial to me.  In this post, I will be totally transparent by sharing actual numbers, different experiences and tips learned along the way.

There has only been a few services that have totally revolutionized my online book-selling business.  The first was when I discovered book scouting tools.  The second was when I started using a repricing service.  The third was when I realized that book buyback sites were not evil even after denouncing them previously and finally, the fourth service was Fulfillment by Amazon.

How I use Fulfillment by Amazon now

I do not typically go out scouting for books anymore.  Through various methods, I've managed to line up sources of books where they get delivered to me by the thousands or tens of thousands.  Don't get all envious because all of these books are not salable.  I would estimate only 20-30% of them are worthwhile and require a huge time investment.  When these books come in, they are sorted in 5 different sections; discards going to recycler, offline sales to sell to bookstores, books that will be sent out to book buyback sites, books that I want to list myself and finally FBA.

Here is my criteria for my FBA section:

1. The book must have a sales rank under 1,000,000.
2. The book must be over a FBA lowest price of $3 depending on the Lose Weight Exercise.
3. The book must be under the lowest locally fulfilled price of $5.

As you can see, I will only send low priced books that are going to move.  I still have not graduated to the point to where I'll send all books to FBA but after some number crunching it may be worthwhile.  I use FBA like this because I don't want to mess with low priced books and I'm also unable to even compete with high-competition books that have 50 sellers competing for that penny price.  FBA allows the small guy to finally compete with penny sellers but FBA is unfortunately getting bombarded with the mega sellers dropping the price again but this has yet to affect me too much.

Now that I've given you a sense of how I handle incoming books and what goes to FBA let me explain something to you that makes FBA in my top 4 "AHA!" moments in my business.

Take a peek at my numbers since I started tracking them via Monsoon.  You'll see that I have steadily increased sales via FBA nearly month after month with August being a great month.  We'll see if September shapes up.  That's all and great but do you realize that pre-FBA I was DONATING these books?!?  Yep.  Nearly 95% of all of these sales came from books that I was previously donating or selling to bookstores for next to nothing.  Why?  Because I just couldn't compete with them.  There was no way I could put a book up for a penny and make anything even with shipping.  That is the #1 reason I'm in love FBA.  It has allowed me to again compete and make money off of the thousands of books that I had previously been discarding.  Keep this in mind when you're hearing my little voice in the back of your head about buying in bulk but you're too scared to chance it.

Lessons Learned with Fulfillment by Amazon

1. Don't assume since you're going to be paying more in commissions that it's automatically a bad idea.  When running reports on my sales FBA looks ugly in terms of commission taken from sales but you have to take into consideration the fact that you may be marking up a penny book by $3.99 and getting tons of sales!  I'd rather pay 40% commission for a book and make a buck vs. a 25 cent tax writeoff from donating.
2. Document your FBA shipping "system" and try to find ways to increase the speed of the process.  The FBA shipment process, especially with the labeling, takes a long time to process a few hundred books.  Don't spend your time uploading them to inventory one at a time, converting them to FBA and then printing labels.  Use the Amazon book loader template with the AMAZON_NA field to upload directly to FBA or consider using a service like FBApower to increase your listing speed.
3. Pay attention to the Lose Weight Exercise of the boxes you ship the books to Amazon in.  Did you know you can pay anywhere from 32 cents/lb to as low as 18 cents/lb if you pack them right.  I went over how to get your optimum Lose Weight Exercise in this post about finding the cheapest UPS rate.  Your mileage may vary depending on how far you are located from a fulfillment center.
4. Don't get lazy. FBA can spoil you into thinking that any book you send will make you money when in fact you can LOSE money on books pretty easily if you set the price too low and the book weighs too much.  The picture below is what you get when you get lazy.

Should You or Should You Not use FBA?

FBA is not for all booksellers.  First, Fulfillment by Amazon is not for rare book dealers.  There are other sites like eBay or Abebooks where those should be sold.  It's also not for people that can't or can't find anyone to lift heavy boxes for them.  I would also venture to say it's not for the brand new, wet behind the ears online bookseller either.  Why?  Maybe I'm old fashioned but I believe everyone should first learn to do everything on their own before they can appreciate what the FBA service does for them.  Until you've pulled, picked and shipped orders yourself you have no idea what it takes.

I'm a huge fan of FBA, if you can't tell, and if you're not using it already I strongly urge you to first run the numbers and find out how much Amazon will be taking from you for the service vs. how much profit you're going to be making vs. how much time it's going to take you to create a shipment.   Once you analyze the service for yourself all the raving in the world from your favorite bookseller blogger won't make a bit of difference until you take action and dive in for yourself.

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Lou82 said:

Great Blog Adam. One important thing I think should be mentioned for the newbies to FBA that they probably do not know is that you can use FBA to ship orders to multiple channels so its just not for amazon orders. So while you're right that its not a great idea to use FBA for rare books or for books with high sales rankings you can still use FBA storage and ship when the items sell on other websites. The small per unit fee per month makes it worth it for those of us who dont have much storage space to work with

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This is very true.  I haven't spent the time to see if I can make a huge business change like this but I plan on  it.