Top 8 Tips for Starting FBA on Amazon Handmade
I've said it before, and I'll say it again - if you haven't tried FBA (fulfillment by Amazon) for your handmade items yet, you really need to. Just try it! The only regret of most sellers that have done it is not jumping into FBA sooner and figuring out how it can work for them.
Here are my top 8 tips for getting started with FBA on Amazon Handmade.
But first, let’s recap what exactly FBA is, for those of you who are new to Amazon Handmade:
Amazon's Fulfillment by Amazon service means that you pack your items and ship them into an Amazon warehouse. The items then have the Amazon Prime badge, and Amazon handles shipping the item to the customer when an order is placed.
1. Make It Work For You
I’ve talked before about how you can even try FBA if your items are mostly personalized. There are other ways that you can make it work for you! I’ve heard many reasons why people aren’t wanting to give FBA a try, and there is ALWAYS a way to make it work and test it out.
If you only make one of a kind items, it can be more difficult, yes. But, you could make a selection of one of a kind items that are solely for Amazon and send them into the warehouse to test out. At most, it will only cost you 50 cents per unit to have it shipped back to you if it doesn’t sell.
Another reason I hear a lot is that it won't work because your items are lower priced. If that's the case, you might want to consider raising your prices. If your pricing is in-line with the market and you are making a decent profit, but it's still a lower-priced item, consider bundling them into sets and send them into FBA that way.
2. Decide On Your Packaging
The FBA fees are determined by the weight and size of your items, so keep that in mind when you are figuring out the best method for packaging for FBA.
Another consideration you should have is if your current packaging is secure enough. You need to be able to do a drop test with your items. As you can imagine, your items aren't handled too carefully when being moved or packed at the warehouses.
What if Amazon packs your item in a box with a heavy cast-iron skillet? Will your item’s packaging protect it? Those are the kinds of things you need to think about when it comes to packaging.
Depending on your category, Amazon might have additional requirements for packaging, too.
3. Understand The Extra Costs Involved
Ah, those FBA fees!
Yes, it costs more. Your fees cover Amazon picking the item from the warehouse to fulfill an order, handle customer service and returns, and ship the order to the customer. When you think about all that’s included, it’s not too bad.
Here is a link to Amazon’s FBA calculator to estimate the cost. Just do a search for an item that is similar to yours in size/weight to do the initial calculation estimate.
4. Adjust Your Mindset a Little Bit
As handmade small business owners, it can take a bit of a mindset adjustment to do FBA because we need to give up some control to Amazon over the ordering process. This isn’t easy for most of us to do initially!
We need to trust that Amazon is fulfilling the orders correctly, taking care of our items, and handling customer issues. Just remember - this is what you pay them for!
Learn to sit back a little bit and let Amazon handle more of the customer fulfillment process. You will get used to letting go of some control, and the increase in sales will definitely make it a little easier to do so.
5. Don’t Worry Too Much About Returns
Another mindset challenge!
When you do FBA, your returns rate will generally increase. Mostly this is because your sales have increased, as well, but it might feel like returns are happening more than you would like. This is normal, and it’s one of the reasons why customers choose to shop on Amazon so much.
They make the return process for FBA items so easy for the customers that more returns are just part of the game.
If you look at your Business Reports and calculate the percentage of your overall returns, I promise it won’t be as bad as it seems at first.
6. Keep Your Items in Stock
As your sales begin increasing, items will inevitably start selling out.
One of my best tips and pieces of advice with FBA is to keep an eye on your inventory and sales rank and keep those items in stock. You can always switch a listing back to FBM in the meantime, so you don't start losing your sales rank, but ideally, you'll want to keep things stocked at the warehouse as much as possible.
7. Keep an Eye on Your IPI Score
Within the last year or so, your IPI score (inventory performance index) has become more important. As long as you keep it above 400, you're good. If it drops below 400 during that quarter, you might have limits on the amount of inventory you can send for the next quarter, or until your IPI score is improved.
How can you improve your score? Keep items in stock but don’t have an excess amount of inventory at the warehouse.
8. Plan Ahead As You Grow
Once you get into the FBA side of things more and more, you'll need to start planning ahead a lot more, or you'll be unprepared for holidays and increased sale periods. Depending on the amount you sell, you might need to start planning your supplies and creating time 6 months ahead of events (like Mother's Day, Prime Day, Black Friday, etc.)
It’s always better to have more inventory that doesn’t sell versus selling out quickly. The worst-case scenario for the first point is pulling overstocked inventory out at 50 cents per unit and having it shipped back to you. That’s much easier and profitable than missing out on hundreds or thousands of dollars worth of sales because you didn’t prepare and have enough at the warehouses in time.
Do you do FBA? Why or why not? Share in the comments, and let's discuss!