Understanding FBA (Fulfilled by Amazon) vs. Prime: A brief explainer
I happened to come across a tweet by Entrepreneur Magazine touting an article expounding on why 2021 is the best time to buy an FBA business, or start one! I was literally flabbergasted. First, I’m Amazon Retail for Advertisers certified. That covers FBA and Vendor Central. Second, it’s a fundamental misunderstanding of the difference between ‘Fulfilled by Amazon’ and shipped and warehoused by Amazon.
A lot of items are shipped by Amazon – they are paid to do so. A lot of items are owned and fulfilled by Amazon as well. They request your products, from a Procter & Gamble or a Johnson & Johnson. Crest, Colgate, Dawn, Tide, etc. They have you join Vendor Central and they purchase a pre-determined amount from the company/ brand. That’s how they’re able to do Subscribe & Save – they own all those products and can set the price. It’s also how they were able to mobilize and fulfill a government of Canada contract in Spring 2020 when the first lockdown hit due to COVID-19. They were filling in for Canada Post on essential products – they emptied their warehouses of toilet paper, soap, etc. It took them a while to replenish – I didn’t get to add toilet and tissue paper back to my Subscribe & Save until December.
Shipped by is pretty cool too, but it’s not the same at all outside of the packages arrive in an Amazon box vs. your own and you get priority at auction time (I’m also Amazon Advertising Certified along with Google Shopping, etc.). These businesses, if you have a good product to sell operate the same way any warehousing and fulfillment would. You pay a fee for a palette and a fee for packing and shipping, along with a program fee. You pocket the rest. It’s useful for businesses that are doing a large volume and want to compete for the trust factor of a “Prime” label.
So yes, conceivably, it might be a good time to start or purchase one of those.