[Must-See for Beginners! What is Amazon FBA? Basic Guide to Maximize 'Buy Box Rate' by Optimizing Logistics Resources]

In accelerating sales on Amazon, utilization of "FBA (Fulfillment by Amazon)" is unavoidable. It is often perceived as just a delivery agency service, but its essence lies in improvement of "Buy Box Rate" by optimization of logistics resources and powerful boost to search ranking (SEO). In this article, we thoroughly explain the mechanism of FBA that new managers should grasp and strategic merits for sales maximization.

Table of Contents (Click to Expand)

1. Definition and Basic Mechanism of Amazon FBA
2. Impact of Logistics Quality on "Buy Box Rate"
3. Correlation between A10 Algorithm and Delivery Speed
4. Visualization of Cost Effectiveness: Comparison with Self-Fulfillment

1. Definition and Basic Mechanism of Amazon FBA

FBA (Fulfillment by Amazon) is a service where Amazon collectively acts for product storage, order processing, packing, delivery, and even customer service and return response. Sellers can obtain 24/7/365 operation system just by delivering products to Amazon's Fulfillment Center (FC).

2. Impact of Logistics Quality on "Buy Box Rate"

It is said that acquisition of "Cart Box (Buy Box)" determines more than 80% of sales on Amazon. In the factors determining this acquisition qualification, not only "price" but also "delivery speed" and "inventory health" occupy an extremely important weight.

By using FBA, it automatically becomes an "Amazon Prime" eligible product, improving reliability to customers. This means standardizing "same-day/next-day delivery", which is difficult with own resources, and building overwhelming logistics superiority against competitors.

Figure: Estimated Comparison of Cart Win Rate by Using FBA (Our Research)

3. Correlation between A10 Algorithm and Delivery Speed

Amazon's search algorithm (commonly known as A10) prioritizes customer satisfaction. By using FBA, delivery delay risk is minimized, directly leading to reduction of Order Defect Rate (ODR). Ensuring this high performance contributes to higher display in search results, inviting increase in organic traffic.

4. Visualization of Cost Effectiveness: Comparison with Self-Fulfillment

Many managers feel "FBA fees are high", but when calculating picking labor costs, packing materials, storage space, and man-hours for CS response MECE (Mutually Exclusive and Collectively Exhaustive), FBA is often superior in scalability. Especially, the point that bottleneck of logistics resources can be resolved against surge of orders during sales is the biggest merit to prevent opportunity loss.

FAQ

Q. Will I definitely get the Buy Box if I use FBA?: A. Not necessarily so, but the acquisition rate improves significantly. Price setting and seller performance (evaluation) also affect Buy Box acquisition, but "Prime Mark" grant by FBA becomes a very powerful additional point factor.
Q. I am anxious because the delivery procedure seems complicated.: A. If you follow "FBA Delivery Procedure" in Seller Central, even beginners can proceed step by step. It is also possible to simplify operation by utilizing label pasting agency service etc.