Ask HN: Is Fulfillment by Amazon worth it just to target Prime members?

https://news.ycombinator.com/item?id=4407453

by p_k • 14 years ago

10 11 14 years ago

news.ycombinator.com

My company already works with a fulfillment company and we're already a seller on Amazon.

I'm considering of using Fulfillment by Amazon just to target Prime members for our Amazon listings. Not surprisingly, Prime members spend more.

Was anyone in the same boat?

Was there any significant improvements in your profits over selling as a regular seller on Amazon?

robdoherty22• 14 years ago

I used to work for an Amazon merchant doing roughly $2 million /year in sales-- not big, but big enough that this was not a side business.

In our case, FBA (Fulfillment by Amazon) was useful for a few things, but increased profit was not one of them.

On the contrary, we used FBA to sell 'hot' items quickly, which in turn led to boosts of higher customer feedback for our merchant account.

Ultimately though, the increased traffic you might get with your FBA items is seriously offset by the increased competition you will get from other merchants and even Amazon itself. And After Amazon takes the cut for doing the fulfillment, you are left with pennies per sale in profit if you are lucky enough to get the volume sales.

Another unexpected negative aspect of using FBA is that occasionally Amazon fulfillment centers claim that there is "something wrong" with your goods or they are "damaged in shipment" and they refuse to store them or ship them. You have to eat the cost in these cases.

I think FBA can be useful if you are a merchant with a specific product line that won't experience direct competition, or if you are a small merchant trying to build some traction.

On a side note, I think FBA is a brilliant win-win strategy for Amazon: they get paid for storing stuff whether it sells or not, and they get merchants to test out product lines at ZERO cost to themselves.

27182818284• 14 years ago

I was shocked, after signing up for Prime's trial, how it instantly affected my buying. Nowadays, I rarely do items that don't have the Prime logo next to them. My friends are the same way. There is a big psychological component to it that sometimes overrides price outright. I can't explain it well. It is like in addition to knowing shipping will be free and quick, the Prime logo comforts a little bit. Like you trust the order more than if it is sold by FlyByNight LLC, regardless of whether or not it really is that company in the end.

timjahn• 14 years ago

I've noticed this happening to myself, too. There's something about the Amazon brand that has built up trust for me.

100% of the time, I'd rather buy a product sold and fulfilled by Amazon (BIG bonus if it's prime) then some random third party seller who will charge $40 for shipping via the USPS in 10-20 days.

signifiers• 14 years ago

Part of the mindset is that any Prime returns are dramatically easier than independent merchants, particularly new/relatively new sellers. If it's a trivial purchase, fine, but if I'm spending $100+, for me, it's usually worth a couple extra bucks knowing there will be zero friction if something's not right. Also, in my experience w/ electronics and physical books, the vast majority of independents take a day or two longer to ship than Amazon (both "regular" or as a fulfiller).

robdoherty22• 14 years ago

I'll add to this by saying that 99/100 purchases I make on Amazon must be Amazon Prime available-- simply because I've been burned by 3rd party merchants.

Amazon Prime is certainly best for consumers-- but for merchants it is very difficult to turn a profit.

eshvk• 14 years ago

I pay a few dollars more just to get my stuff by prime. Sometimes, the third party seller is selling the same thing for lesser (with n >> 3 day) ground shipping and still Amazon's consistency of service makes it an easy decision to make.

livestyle• 14 years ago

If your a MFG ..go for it...if not be very careful, I am aware of more than one occassion when the big A will cut out the middle man if they have a hot seller.

p_k• 14 years ago

We are the original manufacturer of a unique product. Based on the answers here, I think we'll go ahead with FbA.

Thanks guys!

whichdan• 14 years ago

Just adding my 2c, even before Prime, I would gladly pay a few dollars more for FbA because I knew the shipping dates would be reliable and it would count toward the $25 free shipping minimum.

Lasher• 14 years ago

Strongly recommend fulfillment by Amazon if you can make the numbers work. As a long time Prime member the only time I will ever consider non-prime is when there are no 'Prime' options available, or there is a massive cost differences which is rare other than on very hard to find product.

srdev• 14 years ago

In my case, items fulfilled by Amazon get my first look and a small price premium, due to convenience in shipping. Just another data point from the customer side.

Ask HN: Is Fulfillment by Amazon worth it just to target Prime members?

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