Most of you might have purchased something or the other from Amazon.com. Many of you would have noticed product pages like the one excerpt shown below -
Screenshot courtesy: Amazon.com. Prices cited only as an example as part of the screenshot, actual prices may vary.
Note the words - Sold by PC Parts Depot and Fulfilled by Amazon. If you didn't know, PC Parts Deport is a third-party seller and Amazon fulfills the order for them - meaning, Amazon will store the Asus Routers for PC Parts Depot in their large warehouses and also pack and ship them to customers who order the routers. Amazon also processes the payments from customers and sends the payments to PC Parts Depot, after taking their cut for the fulfillment services. Haven't noticed the Fulfilled by Amazon (FBA) clause yet ? Check the fine print the next time you order something from Amazon.
As seen from pros above, in most cases, you will not see any difference at all when buying from an FBA seller. You expect to get the same brand-new product, sometimes at a lower price than Amazon. How are FBA sellers able to undercut Amazon's price ?
I researched a bit on this and came across this website that talks about how to succeed as a Fulfilled By Amazon (FBA) seller.
http://www.fbastepbystep.com/biglots/
Or, it's archive: http://web.archive.org/web/20121024204815/http://www.fbastepbystep.com/biglots/
It all made sense now. Some FBA sellers were buying closeout merchandise from stores like Big Lots, or clearance items from any stores and selling them on Amazon for a decent profit.
Note the words - Sold by PC Parts Depot and Fulfilled by Amazon. If you didn't know, PC Parts Deport is a third-party seller and Amazon fulfills the order for them - meaning, Amazon will store the Asus Routers for PC Parts Depot in their large warehouses and also pack and ship them to customers who order the routers. Amazon also processes the payments from customers and sends the payments to PC Parts Depot, after taking their cut for the fulfillment services. Haven't noticed the Fulfilled by Amazon (FBA) clause yet ? Check the fine print the next time you order something from Amazon.
The pros of buying from a Fulfilled by Amazon (FBA) seller :
- Sometimes the price of an FBA seller is much less than Amazon's own price for that product.
- You get the same fast shipping if you are an Amazon Prime member.
- You can return the product directly to Amazon through the Return Center on Amazon.com. No need to return to the seller. This is because Amazon holds the inventory for the FBA seller, so the returned product also goes directly to Amazon. The return process is bound by Amazon's policies, which is most cases is quite liberal. I returned a weighing scale purchased from a third party seller and was able to return it for full refund, even though I was two days over the 30-day window. I wrote to Amazon that I was on vacation for couple of weeks, which was true, hence couldn't return in time.
- You may find one-of-a-kind products only from FBA sellers.
- Some common products are also carried only by FBA sellers, and not sold directly by Amazon. This maybe because the margin on those products maybe too low for Amazon to make any money out of it. Or, the demand maybe too low.
Any cons?
As seen from pros above, in most cases, you will not see any difference at all when buying from an FBA seller. You expect to get the same brand-new product, sometimes at a lower price than Amazon. How are FBA sellers able to undercut Amazon's price ?
This is because they are able to procure the product at lower prices. In the example above, they are able to sell the Asus router around $10 lower than the retail price. Amazon may not be able to offer that big a discount on this low margin home networking product. In this case, the FBA seller might have obtained the routers from a large electronics retailer like Fry's Electronics when they have their sales, which sometimes discount the routers by 50%. The FBA seller buys 15 routers from Fry's at $100 each and sends it over to an Amazon warehouse nearby, and then list them to sell on Amazon at $190. The seller makes $90 profit per router, so $1350 profit for 15 routers. Shipping costs and commissions to Amazon would reduce the profit, but the seller stands to make a decent margin on each sale. If they are unable to sell at $190, they can choose to discount it further to $175 or even $150, and still make good profits while clearing their inventory.
Should I say you get a good deal too, $10 cheaper than retail.
Brand-new product? Maybe
Then, one day, I ordered several LED lamps through an FBA seller. Only a couple of them were new. Others looked like obvious returned merchandise. Some of them even had clearance stickers of some brick and mortar stores. The stickers bore a price that was 70% of what I paid for the lamp. There was dust all over some lamps. I couldn't believe my eyes. I wrote to Amazon and they agreed for an exchange of the lamps that were not in brand-new condition. They apologized and said this will not happen again. The replacement set of lamps were overnighted to me by Amazon. However, those were no better, so I ended up returning those too. See picture below. I have circled the locations of stickers, which appear to be from some brick-and-mortar store.
Why would I get products in such condition from Amazon ?
I researched a bit on this and came across this website that talks about how to succeed as a Fulfilled By Amazon (FBA) seller.
http://www.fbastepbystep.com/biglots/
Or, it's archive: http://web.archive.org/web/20121024204815/http://www.fbastepbystep.com/biglots/
It all made sense now. Some FBA sellers were buying closeout merchandise from stores like Big Lots, or clearance items from any stores and selling them on Amazon for a decent profit.
Note that I don't have anything against Fulfilled By Amazon sellers. I don't have anything against the website mentioned above too, I just cited that as an example for FBA. If some folks are making decent income by selling on Amazon, good for them. However, due to my bad experience with one of the FBA sellers of LED lamps, I will be a bit cautious when buying through them again. As an example, I recently purchased some button cells from Amazon as the 10-pack was selling for cheap. However, I didn't buy from an FBA seller, instead I chose to buy from Amazon directly - you know - the option where they say - Ships from and sold by Amazon. It was a few bucks more expensive than FBA, but I wanted brand new batteries, not some clearance cells that were near their expiry date. Another reason for me choosing to buy directly from Amazon is that I read several reviews about the same button cells on Amazon where customers complained that the batteries were either dead out of the box or lasted much less than if they bought from a store. I'm willing to bet those customers purchased from an FBA seller.
Conclusion
Fulfilled By Amazon is a great program that enables customers to purchase one of a kind or hard to find products. FBA sellers are seen to offer common products at great price too, because they are able to procure those products at prices much less than what Amazon would procure for. But, it's buyer beware when you purchase from FBA sellers. Once again, I reiterate that I don't have anything against the FBA program or sellers. I would buy from those sellers too, but as a Cautionista.
