Amazon has a little-know service called Fulfillment-by-Amazon. It does what it says. They hold your inventory in their warehouses and fulfill it for you. I have been a longtime seller on Amazon, and I thought I would try this service out. I sent them four SKUs that I was selling – some moderately expensive Nikon lenses worth about $2500. They lost them!
Signing up for the FBA service was relatively easy. They advertise it on their seller account pages, and also give you the option to enroll in the service when you list new items for sale.
Preparing a shipment for FBA entails a 12-step or so process in which you add items to a shipment, print out bar codes to place on the boxes, package everything up, and print out a packing slip and shipping labels. The process and UX was a bit kludgy, but overall it was straightforward. A nice bonus was that the shipping cost was incredibly inexpensive. It was only $5.20 for an 8 pound shipment! This show the depth of discounting that Amazon receives from UPS.
Amazon received my shipment on September 22 at 8:45 am (per UPS, and notified me that they had received the package about 5 hours later. Almost 3 weeks later, the products in the shipment are still shown as “Inbound” on my Seller account.
I contacted Amazon on October 5th to inquire about the status of my inbound shipment. Mark T., a seller support agent, replied that they would check on the status and get back to me. On Oct. 7th I contacted them again, asking for an update. Mark T. replied writing that they inventory had “yet to be found”, and that he would request that a credit for the lost inventory be issued to me. As of today, I have yet to receive a credit, or any update from Amazon.
This shipment was 1 of 2 that I sent to Amazon. The second shipment was received and processed with no errors. And the product, a used Nikon flash, sold in less than 48 hours at a selling price of only $5 less than Amazon’s new price.
So Amazon has a 50% success rate with their FBA service. Will I continue to use it? It depends on how they deal with crediting me for my lost inventory. Their language around refunds for lost or damaged inventory states:
Under circumstances where Amazon takes responsibility for paying you the Replacement Value of an item as set forth in the FBA Service Terms, we will reimburse you based on our estimate of fair market value less FBA and Selling on Amazon fees that are applicable to the item. We will consider several factors in our estimate of the fair market value of the item, including your sales history, list price and other sellers’ list prices of the item on Amazon.com. If we determine that there is insufficient information available to estimate the fair market value of the item, then the Replacement Value will be determined based on the applicable Default Replacement Value from the table below. In no event will the Replacement Value for an individual item exceed $2,000 (USD). For items with values greater than $2,000 (USD), we recommend considering third-party insurance.
I set the sale prices of my items on the higher end (but still within the normal range) of the used products on Amazon. One of the really cool things about FBA is that Amazon Prime customers get free 2-day shipping on your inventory. I believe this enables FBA sellers to get higher prices. In addition to the added value of free shipping, customer have the assurance that the product will be delivered quickly (a common customer complaint with 3rd party sellers on Amazon is that shipping takes much longer than it does with Amazon proper). This was confirmed with the sale of my flash. Will Amazon accept the prices I set, or will they lowball me? The ball is in their cour.