The FBA fees are interesting. I briefly talked to someone who runs a store on Amazon. Yes you’re paying Amazon a fee for storage and other logistics, but as a seller get the added benefit of your product just being delivered to the customer with strong delivery guarantees (even fedex and ups give Amazon packages a higher priority over your regular packages). All you have to worry about is get your product to them and they will distribute it over a chain of warehouses by doing their own forecasting of demand to get the optimal delivery experience. Sellers actually don’t mind paying this part because you’d have to do this out of pocket anyway and letting Amazon do it has its perks, including Amazon guaranteeing a certain sell volume.
The downside of this though is that sometimes Amazon demands a certain volume from you for your product, and you have to do it even if you don’t think it makes sense because they think the demand would go in a certain direction. When it doesn’t happen, Amazon asks you to get it off their hands and figure out how you want to offload it. You eat the FBA costs and the costs to get it back, on top of any other costs you may incur while getting rid of this inventory.
This system works for some sellers, but not for others who can eat up these losses.
The downside of this though is that sometimes Amazon demands a certain volume from you for your product, and you have to do it even if you don’t think it makes sense because they think the demand would go in a certain direction. When it doesn’t happen, Amazon asks you to get it off their hands and figure out how you want to offload it. You eat the FBA costs and the costs to get it back, on top of any other costs you may incur while getting rid of this inventory.
This system works for some sellers, but not for others who can eat up these losses.