One of the major challenges for Amazon sellers is using Fulfillment by Amazon (FBA) successfuly. Amazon continues to change the rules, introduce extra fees and overall make it more challenging to manage it effectively. Thus we looked at just how important using FBA is for top Amazon sellers.

There are different ways to look at this data: how many total sellers are using FBA, what percentage of sellers are using FBA, etc. But when we were exploring this we found that looking at all sellers with products in stock is hidding the true impact of FBA. There are close a million sellers with products “in stock” on Amazon.com alone, but most of them have a few products listed without any chance to ever sell them. This is very apparent when considering that only 200,000 sellers had sales in the last month.

What we found to be interesting, is estimating how many sellers use FBA in the TOP 10,000 of each marketplace. This is interesting because it showcases the FBA use in the majority of sales by marketplace sellers. Or if you are a marketplace seller yourself - how important is using FBA to become a top seller.

When we looked at this data in May 2016, Amazon USA was at 50% - so in 7 months it grew 15%. Keep in mind, this is only the top sellers, there is a lot more growth futher down the list. Amazon recently confirmed that sellers worldwide using the FBA service grew more than 70% in a year.

The number is so high in the US because of how many sellers selling on Amazon.com are not based in the US. FBA has become a life-safer for foreign retailers to compete with domestic sellers by offering the same last-mile shipping guarantess. This is not as big of a factor in European marketplaces, but as US sellers expand internationaly it will continue to grow. Another reason why FBA usage is higher in the US is the challenges in offer fast shipping for customers even thousands of miles away.

While it is obvious that to be successful in the US sellers should probably start with FBA, unless they have experience doing their own fulfillment, the issue is how to do it successfully. Amazon charges steep fees for any products left in the warehouse for more than 6 months (known as Long Term Storage fees), which used to be 12 months, and will likely continue to get stricter. This puts the challenge of managing supply and demand estimating to the seller, probiting offloading inventory to Amazon to deal with. For new sellers this can be quite a challenge, and result in unexpected fees.

However at the top River Colony Trading is using FBA, while Pharmapacks does not. There are opportunities for both fulfillment models, but we foresee that there is going to be a lot of growth in mixed fulfillment. Sellers using FBA for their best sellers, products they know how to estimate demand for, and doing their own fulfillment for everything else.