Amazon FBA in Estonia: meaning, pros and cons

If you already have an online store or are considering starting to sell online. In that case, a good option is to join the Fulfillment by Amazon (FBA) program, which allows you to sell products to customers worldwide without having to store or send them since Amazon takes care of this.

This article will show what this program is about, its advantages, and the solution that helps you manage it, saving time and money.

What Is Amazon FBA

With the FBA (Fulfillment by Amazon) program Amazon manages the storage of your stock, the shipment of your orders, returns, and customer service.

And what are the main advantages of this program?

• As Amazon stores and manages your products, you are delegating these functions, which saves you time to focus on other tasks more critical for the growth of your business.
• Those products will have the Prime label, so customers will trust that they will receive them in a short time.

Differences With Dropshipping

Although the operation is similar to a dropshipping business, there are significant differences.

The main difference is that you own the inventory or stock, even if Amazon manages it. However, in dropshipping, the owner is the supplier, and you are an intermediary between the product and the end customer.

You can also run a dropshipping business and sell through Amazon, but you have to understand the differences and that the advantages and rules are different.

Let’s see them.

FBA

Advantages

• Time Efficiency: Amazon handles numerous business operations, including product storage, shipping, 24/7 customer service, and handling returns. This delegation allows you to concentrate on other important areas of your business.
• Reduced Shipping Costs: Despite incurring a fee for Amazon’s services, the overall cost is often less than if you were to manage shipping independently.
• Quick Delivery Times: Products under Amazon’s management are eligible for Amazon Prime, ensuring faster delivery.
• Ample Storage Space: Utilize Amazon’s extensive warehouse facilities for your storage needs.
• Multi-Platform Selling: With Amazon’s Multi-Channel Fulfillment (MCF) service, you can sell your products on various platforms (e.g., BigCommerce, eBay) while Amazon handles the logistics.

Disadvantages

• Commission Fees: Selling on Amazon involves paying a commission on each sale, which can affect your profit margins. There are also storage fees to consider.
• Limited Control: Relying on Amazon for multiple business operations means less direct control over these aspects of your business.
• Higher Return Rates: Amazon Prime users tend to return products more frequently.
• Increased Competition: The Amazon marketplace is crowded with numerous businesses, making it challenging to stand out.

DROPSHIPPING

Advantages

• Low Initial Investment: There’s no need to purchase products before starting to sell.
• Easily Scalable: A significant initial investment is not required.
• Easier to Start: You save time as you don’t need to acquire and store products. Your main task is to find suppliers.

Disadvantages

• High Competition: Since this business model is easy to start and doesn’t require a significant initial investment, there’s a lot of competition.
• Risk of Slow Delivery Times: Delivery times can be slow depending on the supplier or manufacturer you’re working with.
• Challenges in Quality Control: Since the products you’re selling are shipped directly from the manufacturer or supplier, controlling their quality is harder. Therefore, it’s advisable to request samples.

Common Advantages

The good thing about having a dropshipping business or an online store that adheres to Amazon’s FBA program is that the supplier, not your company, stores and ships your products in both cases.

Not having a physical warehouse means starting your business in Estonia with the e-Residency program can be a good solution. Find out what e-Residency is and how it can help your online business grow here.

How to Save Time and Money Managing Your Online Store

If you’re operating or considering setting up an online store in Estonia, it’s natural to have questions about registering your business and managing your invoices, accounting, and taxes.

At Companio, we’re here to streamline and simplify these processes for you. Here’s how we achieve this:

• Business Registration Assistance: We guide you through registering your company and enrolling you in the OSS (One-Stop Scheme), ensuring seamless VAT declarations across all European Union countries.
• Efficient Invoice Management: Our Premium plan offers a unique feature where you can effortlessly transform your CSV files into invoices, saving valuable time in generating each invoice and minimizing the likelihood of errors.
• Customized Subscription Plans: We provide flexible and adaptable plans designed to cater to the evolving needs of your business. For more details and to explore our services, click here.