FBA stands for “Fulfillment By Amazon.” It’s an order fulfillment service offered by Amazon.com that allows 3rd party sellers to procure inventory and send it to Amazon for storage in one of their warehouses. The seller then advertises the merchandise for sale and when it sells, Amazon fulfills the order and deposits the profits into the sellers’ bank account.
Before you say, “So What?” just think about what FBA means to Internet booksellers and Independent retail bookstore owners alike.
The Problem Booksellers Face
One of the biggest problems facing small booksellers is the lack of adequate storage space to warehouse a large quantity of books. This is especially true if you’re operating on a shoestring budget.
Most small retail bookstores open to the public can barely carry 25,000 to 50,000 titles before maxing out their space. And bookstore owners tell me all the time that they turn down books left and right because they have no room to store or even display them.
How do you grow your business by offering more book titles for sale without going broke in the process? For some, FBA may be the answer they’re looking for.
Imagine being able to accept two, three, four, even ten times more books than you currently do now and making them available for sale around the world. I’ve personally had more than 100,000 titles in Amazon distribution centers at a time. That’s exactly what you can do as a member of Amazon’s FBA program.
Here’s How It Works
Amazon will store your books and fulfill your orders for a fee regardless of the sales channel you choose. Of course, the easiest sales channel of all is Amazon’s own website because orders are automatically filled from your stock within two business days.
If you choose to sell through other channels such as eBay, Half.com, Alibris, or AbeBooks, you’ll need to notify Amazon of the sale and provide them shipping instructions before they can fulfill the order.
You’ll pay a monthly storage fee to warehouse your books in Amazon’s distribution center that amounts to about 1c per book, per month for most mass market paperbacks. And you’ll pay as much as 2.5c per book, per month for your average hardcover and trade paperback books. Despite the storage fees, that’s cheap warehouse space by any reasonable measurement.
In addition to monthly storage fees, you’ll pay fulfillment fees that are deducted from your sale price. For example, Amazon charges a picking fee of 60c per item as well as a weight based fee of 40c per pound that helps defray shipping costs. There’s also a $1.35 closing fee on top of their normal 15% commission that’s applied to the sales price.
Whew! That sounds like a lot of fees doesn’t it? In reality, it will typically cost you less to sell a book from your store online through Amazon’s FBA program than it does to fulfill that same order yourself. That’s because Amazon heavily subsidizes the fulfillment process from start to finish. Tiny sellers like you and me can’t hope to compete with their economies of scale. But we can certainly benefit from them.
How Much Can You Profit?
There are a number of fees, commissions, and charges that go into every FBA sale. Your profit will depend upon a variety of factors. For example, the selling price of your book, its weight, the dimensions, and what promotional discounts Amazon applies to the sale.
In the next installment of my Amazon FBA series, we’ll look at the various costs associated with FBA. You’ll see exactly how those fees affect potential profits. And finally, we’ll explore a few selling strategies that can help the small bookseller leverage the power of FBA to his or her greatest possible advantage.
Joe Waynick is author of “Internet Bookselling Made Easy! How to Earn a Living Selling Used Books Online” (ISBN 978-0983129608). You can reach him at: Internet Bookselling Mentor.