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Welcome to part four of the complete guide to online arbitrage for beginners. We’ve already covered the basics, setting up your store, and finding items to sell. This part will focus on storing your products and shipping them to your customers.
What you’ll find in this article:
This part explains two options for storing and shipping the products you want to sell on Amazon: FBA and FBM.
FBA is the simplest option for your arbitrage option, but it does incur some extra costs. We’ve previously written a guide to FBA for new sellers, but here’s a brief roundup of the FBA model.
Arguably, the main benefit of FBA is its simplicity. Once you sign up, you only need to send your products to Amazon warehouses for storage. When a customer orders, they'll handle the packing and shipping.
FBA comes with benefits like eligibility for Amazon Prime, which lets you provide free and fast shipping to Prime members. This service can significantly boost your product visibility, with Amazon saying free shipping can boost sales by as much as 12.4%.
The FBA model also provides customer service and returns. This includes answering customer questions, processing returns, and handling refunds. Offloading these responsibilities to Amazon ensures your customers get professional care.
FBA opens the door for you to reach international customers. You can list your products across Amazon’s global marketplaces.
FBA enables you to scale your business without stressing over the logistics of managing a more extensive inventory. FBA also has your back if you want to scale down. It will flex with your business needs.
With these benefits come fees that you should keep in mind:
There is also the infamous low inventory level fee, but this only becomes an issue if you sell the same item for a long time. For most arbitrage sellers, who snap up a deal once and then look for something else to sell, it isn’t a problem.
To get the best results with FBA, check your costs and set your prices to cover these fees. And keep an eye on your inventory to prevent extra storage fees from having too much unsold stock.
FBM, the alternative to FBA, is a more hands-on approach. Here’s how it differs from FBA:
Unlike FBA, FBM gives you complete control over how you ship your products to customers. That means you can shop around for the best shipping deals.
You have two options:
FBM lets you personalize your packaging with custom branding or thank-you cards. Customization is great for marketing, including user-generated content like unboxing videos. It can also improve the customer experience and inspire people to be loyal to your brand.
Just be careful not to violate Amazon’s policies about product inserts. Watch this Amazon Seller University video in Seller Central to make sure you understand the rules.
Fulfilling your own orders means you don’t have to pay the fees that come with FBA. This can be a good choice if you have few products or low profit margins.
That being said, FBM takes more effort:
If you go with FBM, consider getting shipping software to help you handle orders better and cut down on mistakes. You can also reduce the customer service workload with software like ChannelReply and Onsite Support.
Even if your product is fantastic, bad packaging and shipping can spoil the experience. Here are some essential tips for effective packaging:
Cheap packaging might save money in the short term, but it’ll cost more if it doesn’t protect your item.
Also, consider using sustainable packaging. Customers today expect companies to do what they can to be more environmentally friendly, so highly recyclable or biodegradable alternatives to styrofoam and plastic make a difference in customer relationships.
You have to make sure that your items reach their destination in one piece and that your customers feel confident they haven’t been tampered with along the way. So, always use strong packaging tape and reinforce the seams and edges.
One reason products aren't delivered on time or to the right person is mislabeling. Your shipping labels must be clear and easy to read.
If you're using FBA, follow Amazon's specific labeling requirements. If using FBM, add the correct addresses (destination and return) and special handling instructions. Print the address using a non-cursive font if your penmanship is hard to read.
Also, write or stick labels like "Fragile" or "Handle with Care" for delicate items to alert the carriers.
A packing slip contains information about the package's contents. It verifies that the customer is receiving the right product and makes product returns easier by including all the information you need to process the correct order.
Returns are bound to happen. Mistakes or miscommunications sometimes occur, even if you're the most diligent online arbitrageur. And that's okay. It’s how you handle returns that will impact your business.
A straightforward return policy helps prevent misunderstandings between you and your customers. If you’re only selling on sites like Amazon and eBay, their default return policies usually do the job just fine. Just make sure you understand them.
If you’re selling on your own site or want to create a custom returns policy, outline the conditions, timeframes, and costs. Then, make sure that the policy is visible on your website, storefront, and product listings. Also, make sure that you understand the laws in your area to avoid violating any consumer protection regulations.
Don't let your customers wait. If the return is acceptable, handle it quickly to keep your customers happy.
With FBA, Amazon takes care of returns for you. With FBM, you have to ensure a smooth process for customers yourself. Decide how you will check, restock, and deal with returned items—they could still be valuable inventory if the customer simply changed their mind.
When you receive a returned item, check it immediately for damage or missing parts. Determine if it can be resold. It’s also wise to keep a record of each return to spot patterns or issues with specific items later on.
Looking at why returns happen can give you clues about issues with your products or descriptions. Use this information to make improvements and cut down on future returns.
How you handle returns affects customer loyalty. Give clear return instructions, reply to customer questions quickly, and address any issues professionally.
Whether you choose FBA or FBM, staying on top of shipping and storage is a must. Smooth logistics mean happy customers and a strong reputation. So, once you’ve got the hang of it, you’ll be ready to take your online arbitrage business to the next level.
Bookmark this guide. It's a complete, easy-to-follow resource for learning about online arbitrage. Even if you have zero knowledge about it, we'll walk you through everything.
> [Part 4] Shipping & Storage
