Fullfilment by Amazon – Our experience

 

The aim of this blog post is to chart our experience of selling through Amazon by using their “Fulfilment by Amazon” programme.

Rather than representing a profitable, business venture, it was one long saga involving DELAYED DELIVERY, LOST STOCK, HIGH COMMISSIONS and DAMAGED GOODS. Below I will recount our experiences and provide advice and information about selling through Amazon.

SETTING UP AN ACCOUNT
The first step was to set up an account. You can either choose between a business (Professional Merchant) account or a personal (Individual) account. As we wanted to sell olive oil in the food/groceries category, it was necessary to set up a business account. The conditions were a 3-month free trial period followed by a monthly fee of £25 plus Amazon charges per item sent.

As this was an entirely new venture, we decided to take our olive oil with us to England and ship it to the Amazon Fulfilment Centre in Fife.

CREATING YOUR INVENTORY
The second step is to create your inventory. For this, you need photos of the products and it is important to consider Amazon specifications for your photos (no borders, no text, jpg/tif format, well lit, occupying 80% of image area, etc.). You then need to measure and weigh each individual item and each of the boxes to be shipped to Amazon.

For the inventory, you will also need a UPC/EAN barcode number for each product that can be used on Amazon. There are many websites which sell these. You then associate each product with its EAN number.

LABELLING YOUR PRODUCTS
Each product must be labelled before shipment with the correct barcode for tracking purposes within the Amazon fulfilment centre.

The Amazon dashboard is fairly self-explanatory and you can contact their support line at any time. They generally responded quickly either by phone or email.

SHIPPING YOUR PRODUCTS
Using the dashboard, you next need to create a shipping plan, specifying the number of boxes that you want to send. You can either to arrange collection by courier yourself or through Amazon. I arranged it through Amazon so they provide the labels to print for each box. The total price of the shipment for 7 boxes was £25 which was a lot lower than the quotes provided by the same company on their page. The only disadvantage is that Amazon is the shipper and so if something goes wrong they will only act if the parcel is lost or damaged. In my case, the shipment was due to arrive after 24 hours but in fact arrived 42 hours later. According to UPS terms, I should have been eligible for a refund but since Amazon wasn’t willing to fight my corner I wasn’t given one.

LOST STOCK
The next problem was that when the shipment finally did arrive Amazon lost one of the boxes which meant that 9 litres of extra virgin olive oil had gone missing. They apologised and said they would refund the money BUT it would mean that we would have to wait 60 days for them to do so. Taking into account that the trial period last 90 days, this was a substantial part of it. After 60 days, we received a reply from Amazon about the refund: they still hadn’t found the merchandise and would be refunding the total price per unit minus the Amazon fees. This would be acceptable if we were selling the goods on Amazon, but since we would eventually be removing them from the Amazon fulfilment centre, this meant that they had effectively devalued the lost items from £10 to £5.45

FEES
The dashboard provides an estimation of expected fees BUT I was surprised to see that when purchases were made the fees deducted were higher. There was no way of knowing beforehand how much you would be charged per sale as this was calculated according to weight, dimension, etc. In actual fact, what this meant was that Amazon took 45% of the total sale price.

CUSTOMER SERVICE:
Customer service is good and I would normally receive a reply within a couple of hours either by phone or email.

REMOVING UNSOLD MERCHANDISE:
At the end of the trial period, we decided to ship any unsold merchandise to an address in the UK. It is important to be aware that Amazon require 10-15 days for this. If your trial period began on 6th November, then you will start to be charged on the 6th of the month three months later. First create your removal order from a drop-down tab in the inventory section. Then the day before your trial period is due to end, change your account to a personal one. That way, you will still have access to your account and inventory but will not be charged.

REFUND FOR DAMAGED GOODS:
When the goods were returned, each of the 38 metals cans was severely damaged and dented.

It took a lot of fighting with Amazon to get them to reimburse me for the damaged goods. At first they wanted to refund me a paltry £4.50 per can which was what they reckoned the goods were worth based on market prices, etc. but after much arguing, they agreed to give me £5.45 per can which was what they had given me for the items they had lost at their fulfilment centre. Although this was better than their first offer, I was far from happy with the result as this meant that I had still had to pay them their commission of £4.55 per can for each of the damaged items. To add insult to injury, I had then had to fight to get the shipping fees refunded. I reminded them that when the shipment had been delayed, they had said they would only refund costs if the goods had been damaged, something that was clearly the case now. Eventually, they agreed to the refund. 

CONCLUSIONS
Selling on Amazon has not been a success for the following reasons:

1. Amazon charge excessive commissions on each item: by taking up 45% of the retail price to cover storage, postage, labelling, etc., profit margins are small.

2. Excessively long period of time to resolve the issue of lost items: in my opinion 60 days is too long

3. Unfair estimation of replacement value for items lost: when issuing refunds for lost items, Amazon subtracts their commission from the retail price as though the item had been sold on Amazon (even though no expenses such as storage, postage or labelling had been incurred)

4. Goods in the removal order were poorly and inadequately packaged: items were so severely damaged in transit that they were completely unsellable

5. Unfair estimation of replacement value for damaged items: again, when issuing refunds for damaged items, Amazon subtracts their commission from the retail price as though the item had been sold on Amazon

4 thoughts on “Fullfilment by Amazon – Our experience

  1. Question. You chose just 1 item to test? You tested your cans of olive oil? Did you package them or just slap a label on them and send them in? Didn’t protect them in any way? And how much did each canister weigh? How many canisters were in each carton? How did you protect the shipment? Are you complaining about the small UPC label you had to print? Are you complaining a few simple photos you had to take? Seems like a bad item to test if you ask me. And you don’t test just one item. You test like 10 items. I’m sorry but your opinion is worth nothing.

    • Hi Julie, Thanks for taking the time to read the post and for your comments. I’ll try to answer your questions as best I can.
      This is our own olive oil that we were selling. We grow the olives and take them to an olive mill where the olive oil is professionally canned and labelled. It’s not a case of testing 10 products – there is only one – olive oil and very good it is too. That said, we were selling it in two different formats: a 1-litre can and a 500ml plastic bottle.
      Each can weighs 1035g. Each box contains 9 cans and has been tailor-made for those 9 cans. The total weight of 1 box is 9.315kg. The cans all arrived at the Amazon Fulfillment Centre in perfect condition. What I was describing in the blog was the damage the cans had suffered during the removal order. This is the process by which unsold stock is removed from the fulfillment centre and sent to an address of your choice. As the cans are no longer in their original cases, they are repacked in boxes by Amazon. Unfortunately, the boxes were too large and the cans were packed in boxes with too much space. As a result, during transit the boxes were manhandled. The removal order arrived but each of the four boxes had been severely torn: they were no longer able to protect the cans.
      All the best, Sarah.

  2. I have spoken to some people involved in FBA. One person had done a course in the USA which had cost $5000. Their main advice seems to be to give away the product to friends and family in order to make it look as if the product is popular. This means that the product will get a higher rank on the amazon site and thus increase real sales. Is that really true? Maybe it is possible to make a lot of money on Amazon but my big doubt is this. If the supplier of a product can see that the product is selling well on Amazon why wouldn’t they cut out the middle person and sell it themselves on Amazon? Is Amazon FBA a sort of unrealistic too good to be true waste of time which attracts delusional fantasists or is it a good way of making money?

  3. I have had very similar experiences using Amazon’s FBA services. They advertise higher sales and more product exposure but they fail to advertise that a customer can return a product for virtually any reason and it ultimately becomes the sellers responsibility.

    Amazon FBA is ridiculously expensive when you consider the fact that their return policy is overly lax and actually encourages customers to return products for trivial reasons.

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