In the United States, the property management industry is in continuous growth and generates 16% of the country’s GDP. While this is a field that’s ripe with profitable opportunities, it can be difficult for a property manager to fulfill the multiple duties required of them, especially as their list of properties grows.

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That’s where property management systems come in. These software solutions allow landlords, investors, and property managers to stay organized, communicate with their tenants, and generally manage all the properties they have. If you are looking to learn which one works best for your real estate business, you’ve come to the right place.

In this article, you’ll learn about the ten best property management systems available now, what makes them great, and what their drawbacks are. 

10 Top Property Management Systems

From mobile oriented solutions to software that can fit both small- and large-scale property managers, here are the best property management systems available today:

1. Buildium

The Buildium property management software solution is one of the most comprehensive options on the market today. No matter what you need, this software can handle it all.

The software offers a wide range of options for managing rental properties in all their aspects. The interface lets you manage vacancies, maintenance, and accounting, while the accounting package offers automatic rent reminders, a full ledger, and the option to generate reports on demand. Rent can even be paid online through a tenant portal.

Buildium’s basic bundle covers up to 150 units for $50 per month, and there are larger packages available with maximum support for 5,000 units. The best value will be found in the higher tiers, since the unit prices are lower. However, $50 per month for 150 units works out to $0.33 per unit, making it an affordable expense. You can also try Buildium for 15 days for free before purchasing a subscription to see if it is right for your company.

One downside to this software is that the company uses a ticket-based customer service system, and responses can take several hours. It is important to note, however, that the team is highly knowledgeable and can easily guide you through the majority of common issues.

As well as its native functionality, Buildium is compatible with many well-known third-party systems. Among them are Apartment List, Apartments.com, Zillow, HappyCo, Forte, Happy Inspector, MSI, HotPads, Lovely, Nelco, RevSpring, PayNearMe, TransUnion, Tenant Turner, Trulia, and Zumper.

Pros

• Built by property managers.
• Rent is automatically collected via a tenant portal.
• Online ticket help is available during business hours.
• There are numerous training materials available.
• Easy to use.

Cons

• Long response times on customer service tickets
• Not suitable for sole property managers

2. TurboTenant

There are plenty of rental property management software platforms offering free trials, but they are usually limited to a few units or for a short period of time. However, unlike other rental management software, TurboTenant is completely free regardless of how many units you manage. Its easy-to-use interface and straightforward setup make TurboTenant an excellent free option for rental property management software.

TuroTenant provides landlords with a number of features aimed at making tenant administration easier, such as handling applications online, screening tenants, and sending bulk tenant messages. 

Some optional services are available for a one-time fee, such as state-specific lease agreements for $39, unlimited electronic signatures for $9, and 32 landlord forms for $145.

Using rental listing sites like Realtor.com, Apartment List, Rent.com, or even Facebook Marketplace, landlords can market vacant homes across several platforms with a single click. A tenant’s credit report can be checked using TransUnion, any documents can be sent and signed online, and maintenance requests can be made. Payments by ACH are free, but payments by credit card have a fee of 3.49%.

However, Turbotenant is only free for landlords because it passes the costs to the tenants. Tenants must pay an application and screening fee ($55) and a fee for rent payments made with credit cards (3.49%). There’s also renter’s insurance at $8 per month.

Pros

• Fully free property management solution.
• Excellent for DIY landlords.
• Customer service is available 24 hours a day, seven days a week via phone and online.

Cons

• Tenants bear the burden of the software costs.
• Limited features.

3. AppFolio

AppFolio is primarily designed for landlords with a large number of properties, but it can also be used by landlords seeking to expand their business. A variety of units can be accommodated, including single-family homes as well as large apartment complexes, and the services can be customized. Instead of paying an all-in-one fee, you pay a predetermined fee per unit. Manage as many units as you like with no tiered pricing or other restrictions. In addition, you pay separately for advanced features, so you only pay for what you use.

In order to sign up, you must first pay a $400 onboarding fee. In addition, the following unit fees apply on a per-unit basis:

• Residential rentals: $1.40 per month
• Commercial rates: $1.50 per month
• Student accommodation: $1.40 per month
• HOAs: $0.80 per month

There is also a minimum monthly cost of $280 for residential landlords, and to receive the greatest price on residential units, you’ll need at least 200 units.

The software includes a number of useful property management features, such as the ability to build professional-looking websites for your properties, purchase sales leads, screen tenants, and purchase renters’ and landlord’s insurance. The software also allows you to track maintenance requests, pay invoices, collect debts, and accept online payments. As previously mentioned, some of these services are extra-cost, but you only pay for what you use.

Pros

• Multiple plan options including residential landlord plans, community association plans, and commercial real estate landlord plans
• Supports all unit types
• Mobile app available

Cons

• Monthly minimum fees make it ill-suited for property managers with a small number of units

4. Propertyware

In general, Propertyware is intended for landlords of single-family homes. Although it lacks some features other software suites have, this is a feature, not a defect. Due to the fact that there are no commercial renting capabilities, the user interface is significantly simpler than most comparable applications. Whether you rent out a single property or hundreds, it works equally well regardless of how many units you have.

This software comes in three price tiers: Basic, Plus, and Premium, which cost $1, $1.50, and $2.00 per unit, respectively. A minimum payment is also required for each tier, which is $250 per month for Basic, $350 for Plus, and $450 for Premium.

With the Basic package, you can generate financial reports, market vacant homes, schedule maintenance, collect rent payments, and screen prospective renters. In addition to these features, the Plus plan offers two-way text messaging, digital signatures, and inspection scheduling. In addition to the previously mentioned features, there is a maintenance management portal and a supply vendor portal included in the Premium plan.

One limitation of Propertyware is its lack of third-party support. Other than Mail Merge and DocuSign, third-party support is not available. You won’t need to worry about this if you’re searching for a complete management solution. However, using products or services such as Apartments.com is not possible if you with this software.

Pros

• Great option for large portfolio management
• Mobile app available
• Simple interface

Cons

• Limited features
• Pricing is more suitable for large portfolios
• Intended for single family property management

5. SimplifyEm

SimplifyEm was created by real estate professionals for real estate professionals. Although it can support up to 2,000 units, it is best suited to landlords with fewer units. In the case of fewer than ten units, your monthly payment will be only $20. The price increases by $10 per month for every additional 10 units purchased, so your monthly fee would be $60 if you have 50 units. Billing is then done in 25-unit increments, but the base rate remains at $1 per unit. A 15-day free trial is also available to see how it works before committing.

SimplifyEm’s key selling point is its simplicity, hence the name. This tool is designed to be simple for even first-time landlords to use, and the company offers live phone and email support for that purpose.

Renters can purchase renters’ insurance through the tenant site, and the software tracks income and expenses. Landlords can generate financial reports, log maintenance requests, screen tenants, and perform other critical tasks. Also available are integrations with Zillow, TransUnion, Fidelity, ACH.com, NARPM, and Trulia.

Pros

• One to 2,000 units are supported.
• Real estate professionals created it.
• Has sophisticated features
• Great option for first-time landlords with a small portfolio

Cons

• The platform can limit your growth as it doesn’t support more than 2,000 units

6. MRI Software

Commercial properties such as large apartment buildings typically use MRI software. Many of these properties are held by groups of investors rather than by a single landlord, which means you need a system with features suited for multi-landlord properties. Thus, this program offers a variety of features that are not found in similar products. Aside from basic rental management, it offers a multitude of planning capabilities. Asset management, space management, strategic planning, and compliance with public housing regulations are all made easier with MRI Software. Additionally, it is available as a cloud-based service or as an installed program.

One downside of MRI Software is that the pricing for this service is a bit more ambiguous than for other property management services. MRI Software does not offer a free trial, and the price can only be obtained by contacting them directly. In spite of that, it has received generally positive reviews on various landlord websites, with investors praising its value. For you to know whether they are a good match for you, you will need to receive a quote.

Pros

• Several advanced features are included.
• Reliable business with a long history
• Simple to use

Cons

• Pricing is not available online, and you’ll need to contact the company for a quote.

7. Yardi Breeze

The Yardi Breeze cloud-based property management system is among the earliest of its kind, and it continues to be a top-notch service. The company has been in the industry for a long time, even before the cloud came along. 

Pricing for Yardi Breeze is transparent, which is a plus. The company charges a monthly fee of $1 per property instead of tiers. The cost of the program is very low, and it makes it very competitive in the current market. There is however a $100 minimum charge per month for residential homes and $200 for commercial properties, which means you will have to pay more to maintain properties with fewer than 100 units. A Breeze Plus upgrade package is also available. It costs $2 per unit, with a minimum monthly charge of $400, for both residential and commercial establishments. The first 30 days of training are free, and customer support is available 24/7.

With Yardi Breeze you can manage applications, automate marketing, and collect rent online. However, a feature that’s unique to Yardi Breeze is the ability for tenants to submit repair requests along with smartphone images.

Pros

• Characteristics that are unique, such as the ability for tenants to upload pictures for repair requests
• Customer service and training are provided at no cost.

Cons

• Lack of a mobile app

8. Rent Manager

A versatile property management platform, Rent Manager can handle any number of units. Additionally, it’s convenient to use on the go. Through the cloud, you can access it from any computer, but you can also download an app for your smartphone. Receive payments, enter work orders, schedule maintenance, and enter work orders from your phone’s screen. In addition, you can snap images and save them to the cloud, which is important for maintenance.

On the portal, you can generate financial reports, manage work orders, and rent unoccupied units. You can also create a very professional-looking website for your property with Rent Manager’s website-building tool. Furthermore, maintenance requests can be tracked from beginning to end. 

While pricing is only available as a quote that must be requested by phone, there is a free trial version if you want to give it a try.

Tenants also benefit from using Rent Manager. Online lease signing eliminates the need for mail and postage, and rent can be paid online from any device and payment history can be viewed. As a result, landlords and tenants are on the same page.

Pros

• Simple to set up
• Built-in website builder
• Gets tenants and landlords on the same page with online contract signing and payments.

Cons

• Pricing is only available upon request.

9. Re-Leased

Whether it’s a commercial property, residential property, or an office or industrial space, Re-Leased is designed for all types of properties. The customer service department is available 24/7 and there is no limit to the number of units you can have. You won’t have to worry about switching providers as your company grows.

Various monotonous tasks can be automated with the software. Using it, you can send out automatic rent reminders and automate your property listings. Repair projects are greatly simplified with an integrated communications center that links you, your maintenance workers, and your tenants. Additionally, Google Calendar, Outlook, and Microsoft 365 can be connected to sync all of your calendars.

However, pricing information is not publicly available. To find out how much the software will cost, you’ll need to contact the company and request a quote for your property. 

Pros

• Appropriate for a variety of properties
• Microsoft 365 integration
• Xero support
• Enterprise-level protection

Cons

• You need to contact the company to get a price quote.

10. Avail

Avail is one of the most popular property management programs in the world. Because it’s aimed primarily at small landlords and DIYers, it lacks several capabilities that you’d expect from more robust commercial hardware. However, it does have the advantages of making the software easier to use and understand. As a result, it’s a convenient way to supplement your income by renting out one or two apartments.

It does, however, have a number of beneficial features. You can use it to screen tenants and to create digital leasing contracts that your tenants can sign online. The software generates state-specific leases that comply with local laws and regulations. Online rent payments can be made from any device, but a small fee will apply.

Avail’s biggest advantage is its low cost: it’s totally free. It can be used for an unlimited number of units without cost. However, the paid edition offers additional features such as personalized leases, no-fee rent payments, and next-day payments. The price is not competitive for larger properties, but it’s an excellent value for small landlords.

Pros

• Simpleness of use
• Excellent customer service
• Great pricing for small time landlords

Cons

• Limited tutorials
• The reporting module is not particularly reliable.
• Pricing is not competitive for landlords with larger portfolios

Final Word

The best property management system for your real estate business will largely depend on the size of your portfolio, and the features you need. For instance, options like Avail and SimplifyEm are great for landlords with a small number of units, while Buildium and AppFolio are a better fit for those that manage a large number of properties.

If you are looking for free software, Avail and TurboTenant are completely free, but their features are more limited compared to other options on the list. Before you decide on one option over the other, make sure you take the time to consider your needs and what the companies offer.

For more on property management systems and other property management payment questions, see Property Management Payment Resources.

The restaurant industry can be brutal due to a combination of constant competition and tight profit margins. As such, finding new ways to stand out from the pack while boosting your bottom line becomes a never-ending quest for restaurant owners.

While there are always new tools and complex strategies you can try, you’d be surprised with how much you can help your restaurant business by following simple tips.

Last week, we sat down with local Newark, DE restaurant owner Ryan German of Caffè Gelato to discuss how he has been able to grow such a reputable eatery over the last 20 years while continuously increasing his margins and running a lean business. 

The following information are the most important factors that Ryan has said to have significantly contributed to his success as a restaurateur.

Top 5 Profitability Hacks for Restaurants

From rethinking your approach to expense management, exploring new revenue stream opportunities, and partnering with a provider that can help you bring out the best out of your restaurant, these are the hacks that you need to pay attention to. 

1. Keep a Close Eye on Your Expenses

One sure-fire way to increase your profit margin is properly managing your expenses and finding ways to cut costs without affecting the quality of your services.

One of the best places to start is by reviewing your existing relationship with your merchant service provider. Since your choice of provider dictates your payment processing fees and rates, it has a direct impact on your money-making potential.

Look for providers that offer specialized pricing for restaurants, and make sure that their fee structure is beneficial for your business size. Some merchant service providers are a great fit for smaller businesses, while others make more sense for restaurants with higher volumes or chain locations.

It’s also crucial that you are familiar with your merchant statement, and that you understand every single fee on it. Knowing what you are paying for will help you organize your finances better and look for opportunities to cut costs. Furthermore, frequent reviews of your statement will help you ensure you are not being overcharged and can even let you identify potential fraud from customers in the form of chargebacks.

With proper knowledge and understanding of your statement, you’ll be in a better position to negotiate for lower rates with your provider.

Last but not least, you should pay attention to the third-party delivery services that you integrate and work with. Delivery platforms such as Uber Eats, GrubHub, and DoorDash use different fee structures and processing rates based on where your restaurant is listed on the app or website. Being at the top of the app’s list usually comes with higher fees, but it won’t necessarily mean increased sales volumes. On some apps, you might find that even at the bottom of the page you get the same number of orders as at the top. In some cases, your choice of app could be hurting your margins without really boosting your sales, in which case it might make more sense to switch to a different delivery partner.

2. Develop Better Employee Controls

Another important aspect of restaurants that you need to keep in mind when looking to increase your profits is your employees.

Your employees are the forefront of your restaurant, and as such, they have a direct impact on your sales. It’s important to have a granular understanding of their performance, but it’s more than just productivity.

For instance, you should make sure that everybody is clocking out properly at the end of the day and implement a system that prevents one employee from clocking out from others, such as using secure location logins. This helps reduce situations where you pay an employee more than you are supposed to. Reviewing your payroll details before submitting them is another way to help catch mistakes and anomalies with your employee’s payments.

Your choice of POS system is an excellent way to help you keep track of your employees, both in terms of performance and what you are paying them. For instance, Bonsai POS offers employee time tracking with overtime alerts, letting you know exactly where each of your employees stands in terms of hours, while Clover can allow you to manage employee payroll through third-party apps on their marketplace.

You can also use tools to help you identify servers that have lower average ticket sales, or fewer sales for specific items, and find ways to help them boost their numbers. These are also the type of metrics that you can keep track of through the use of a feature-rich POS, like Bonsai.

Tracking these metrics can also help you identify servers that have exponentially higher performance, or receive significantly higher than the rest, to see if there’s an underlying situation you should be handling. While a server getting more tips isn’t a bad thing on its own, it could potentially indicate they are following practices that you are not in agreement with.

3. Identify Multiple Revenue Streams 

One of the best ways to boost your profits is to expand the ways you make money. You don’t necessarily need to change up your menu or create new products, as finding new ways to sell your existing product is a strong strategy on its own.

Some alternate revenue ideas you can try include:

• Offering Catering: One classic revenue stream opportunity is offering catering for events like weddings, parties, and the like. You could even create special menus for a personalized catering experience.
• Restaurant Wholesale: If your recipes are very popular in the city, consider selling them at supermarkets or grocery stores.
• Online business: If you are not offering online ordering these days, you are usually leaving money on the table.
• Ghost Kitchens: An interesting take on an online business. Ghost kitchens allow you to act as a restaurant without needing to have an actual physical location for patrons to dine in. You could have a second restaurant using your existing kitchen as a ghost kitchen.
• Opening Sister/Cafe Locations: If you’ve created a popular restaurant that is always packed, consider expanding to a new location.
• Sell subscription Boxes: Subscription boxes have gained a lot of popularity in recent years. Create personalized kits for your customers so they can recreate your recipes from the comfort of their homes.
• Create special events: You could turn your restaurant into a unique thematic experience with “cook your own meal” events or offering cooking classes.

But improving profit isn’t all about expanding your revenue streams. Sometimes it can be the opposite. You should constantly review your current sales options and channels to make sure that they are achieving your desired results. While it can take time for some revenue streams to take off and be adopted by the public, there comes a point when you know that something is not working out. If one of your ideas to grow your revenue is causing you to bleed money instead, you should consider cutting your losses, continue to do what is working, and try a new idea. 

4. Get Started with SMS Marketing 

The dining world is turning to personalized messages as a way to reach the mobile-focused audience of today, and SMS has quickly changed from a decent marketing channel to a must-have.

According to Gartner.com, the click-through rates for SMS are staggeringly high, shifting between 45-95%. Compare those numbers to the much more conservative 6-20% CTR of emails, and the reason for the increased use of text messaging by marketers becomes obvious.

All this to say, your restaurant needs to start embracing SMS marketing right away.

Not only does SMS marketing significantly increase the reach of your marketing efforts, but it also helps create a stronger relationship with your clients, build loyalty, and even reduce no-shows for reservations.

For instance, you can run flash specials and use SMS to drive customer traffic during off-peak times. Thanks to the ability to save client profiles and new comprehensive analytic systems, you can now get detailed reports which can break down which of your customers are coming through the door the most often, and the least. This allows you to customize your outreach to re-engage patrons who haven’t come to your location in a while. 

If your restaurant uses a loyalty program, you can significantly increase its effectiveness by implementing SMS marketing in the process. You can use segmented client lists and personalized messages to inform your loyal customers of new deals, menu items, or promotions that you know they’ll love. To that end, you should use a POS system that includes SMS marketing from the get-go, such as Bonsai POS and ValorPaytech. Both of these systems have customer engagement and marketing platforms that include SMS. 

A system such as Bonsai POS, which uses SMS technology creatively, will allow restaurant owners to see what customers like and to manage their marketing and promotions efforts based on those preferences, and not based on pricing.

5. Partner with the Right Merchant Service Provider

There’s only so much you can do in terms of increasing your profit potential with a limited tool set, which makes finding the right merchant service provider incredibly important for any restaurant.

Your choice of merchant service provider doesn’t only dictate the kind of payment processing fees you’ll see. It often extends to the type of POS and hardware you can use, which in turn affects the features you get access to and the way you provide your services.

While pricing is at the forefront of the choice equation, it’s not the only thing you should look for. You want an MSP that has great pricing on both hardware and software, but also provides top-notch support and enables your business to grow. 

Finding an MSP that can suit all your needs can drastically help you save on the costs restaurants incur, like using a catering service such as ezCater. Custom online ordering or catering software can drastically help you capitalize on existing clients, keep customers over the long run and prevent them from going somewhere else. 

You need to look for reasonable and straightforward pricing for hardware and software, as well as the best pricing possible for processing fees, as these will have a direct impact on your bottom line. You also need to try to identify merchant service providers who are trying to hide extra fees, additional percentage points, or other elements that could increase your processing costs. Industry margins are typically slim for restaurants, and every dollar counts.

At the end of the day, you want to work with an MSP that will help you expand as your company grows. The right MSP will not only help you save costs on additional hardware and software, but also take the stress off of your expansion process when your processing volume starts to increase.

Final Word

There’s a lot that you can do to help increase your profit margin that’s not specifically tied to your services or expanding your menu. Taking a look at your current expenses and the performance of your employees can help you identify areas where you can, or need to make changes that can reduce costs or just improve your bottom line. Your choice of a merchant service provider will also have a direct impact on your profit margins, so you should take the time to explore the market before choosing your provider or review your current relationship to see if it fits your needs.

As far as expanding your business, you can cause significant growth through implementing new revenue streams. Offering catering, subscription boxes, and adopting SMS marketing strategies are just a few of the ways to do this. There is no one size fits all, and no “plug-and-play” formula. Mix and match some of the tips that Ryan shared to increase the profitability of your restaurant!

For more on restaurant profitability and other restaurant payment questions, see Restaurant Payment Resources.

All online retailers should consider Amazon FBA. The level of Amazon’s infrastructure to fulfill orders is unmatched in the industry and over the past couple of years, the pandemic has accelerated the growth of eCommerce and online marketplaces. eCommerce is expected to be a $1 trillion market in 2022. One of the beneficiaries of this growth is Amazon and anyone selling on the platform. Amazon is now estimated to conduct more than 40% of all eCommerce sales in the US. 

One of the strongest differentiators of Amazon is the supply chain infrastructure the company has developed over the last three decades. In every aspect of fulfillment – logistical planning, shipping infrastructure, warehousing network, operational efficiency – Amazon is an absolute behemoth. 

In 2015, Amazon decided to start its own shipping and logistics unit and began delivering packages for its own clients, as well as for third-party sellers on Amazon.com. Within five years of that decision, the company became the third largest shipper in the US, behind only the US Postal Service and UPS. Amazon’s shares of US package delivery are greater than that of FedEx. All that investment and expertise has helped not only Amazon but also sellers on the company’s platform. The company has turned its internal fulfilment operations into a service for other sellers, known as Amazon FBA. Today the company delivers over three-quarters of the goods sold on Amazon via its own delivery fleet.

Amazon FBA is not the first time the company has decided to start offering an internal operation as a service. In 2002, Amazon launch Amazon Web Services (AWS) for clients, which was formulated as an overhaul of the company’s IT operations so IT staff could focus on differentiated client-facing innovation rather than routine and repetitive tasks. 

Given the growth in online sales, especially as more entrepreneurs turn to eCommerce, we believe it is a great time to understand how leveraging Amazon FBA can benefit your online sales and business as a whole. We explain what Amazon FBA is, how Amazon FBA works, and all the various costs associated with the service offering. 

Amazon FBA – What is it?

Fulfilment by Amazon, also known as Amazon FBA, is the back-end fulfilment processing service that Amazon offers to merchants that sell on Amazon.com. There are many steps involved in being an online seller of goods. 

The merchant starts with a product that has been manufactured, most likely somewhere outside of the US. Those goods need to go from the factory to the port to be ready for shipment to the US. Then the shipment must clear US customs and then get delivered to warehouses, where they are stored awaiting dispatch to a consumer. There must be an online store or marketplace on which orders can be placed for those goods. Once those orders come in the goods are then packaged and dispatched to the customer. On route to delivery, there needs to be shipment tracking and possibly delivery scheduling. Post-delivery, customers may have some questions about how to use the product or other service-related inquiries. Sometimes, they may be dissatisfied with the product and may wish to return it.

When an online seller enrolls into Amazon FBA, Amazon handles all these tasks for the seller.

How does Amazon FBA Works?

The process of Amazon FBA is very straightforward, and merchants can quickly and easily sign up for the program.  The seller would continue to operate as a business as usual with their existing Amazon account and with the click of a few buttons, they can easily add their products that will be a part of the Amazon FBA program. Below are the steps merchants need to follow to enroll in the program.

• Identify the products the seller wishes to sell via the Amazon FBA program.
• Send those products to the designated Amazon warehouse. 
• The seller’s products are stored in Amazon warehouses until an order needs to be fulfilled for them.
• Customers place an order for the seller’s products from Amazon’s marketplace.
• Amazon handles all information from payment processing to inventory updates and reconciliation.
• Amazon’s fulfillment centers pack and ship out the seller’s product to the customer.
• Any subsequent customer support inquiries relating to delivery, quality, service level agreement, returns, or instructions regarding use are all managed by Amazon.
• Amazon deposits all sales proceeds, less their own fees, into the seller’s bank account on a bi-weekly basis.

Effectively, Amazon FBA is an extension of the sellers’ business, with warehouses, packers, bookkeepers and support staff at their disposal to help them run their business. 

There are still some tasks that the seller will still be responsible for. They include:

• The seller must identify the products that are a part of the Amazon FBA program that need to be sent to Amazon’s warehouse.
• The inventory of goods sent to Amazon should be up to date and replenished on a regular basis, based on coordination with the company.
• The products listed on Amazon FBA and their marketing is still the responsibility of the seller. At this stage, where much of the fulfillment work is handled by Amazon, the merchant is given sufficient time to manage all other tasks of the business, such as marketing, product development, etc. 

Furthermore, the seller must package their products in a certain manner to prepare for Amazon FBA.

• All products must be prepared as ready for sale by individually packing them and labeling them separately.
• All products sold as a single unit must be packed together in a clear or opaque plastic, or in cardboard.
• All products must have either an EAN, FNSKU, ISBN or UPC barcode (depending on the barcode standard/ sticker size the seller picks when setting up the Amazon FBA account) that can be easily scanned.

The Costs of Amazon FBA?

There are various costs associated with Amazon FBA. One of the largest costs that sellers incur in the Amazon FBA program is storage costs. Amazon does not levy those charges based on the cost of the product but the space those products take up in its warehouses for how long, i.e. the products’ weight, size, and time. So large, low-value items may cost more in storage fees of Amazon warehouses than the profits earned on those products. 

Furthermore, storage costs increase from the base rate for inventory that does not move for 180 days or more. There is also something known as stranded inventory which Amazon helps sellers track. This is inventory that’s stored in Amazon warehouses but not listed in seller product lists. Stranded inventory is also levied fees by Amazon.

There is a breakdown of expenses that all sellers on the Amazon FBA program can seamlessly track via the FBA Dashboard. The dashboard gives a transparent view of all expenses that sellers incur from the program which can help them determine which products to include more of in Amazon FBA and the profitability of them each.

The Benefits of Amazon FBA

Amazon today is the largest eCommerce retailer in the US. There are tremendous benefits online sellers can derive just by the name brand. Customers have come to associate the company with good prices, great variety, and reliability of delivery and service. However, there are specific benefits of being a seller that uses Amazon FBA, beyond the reputational boost. Below are some benefits of Amazon FBA that all online sellers should think about. 

Access to Amazon Prime members

According to RBC Capital, 74% of members say they use the service more today than they did when they first signed up. Also, Prime members tend to spend more. On average, a Prime member spends more twice as much on Amazon as a non-member. All these trends benefit not just the company but all sellers on the platform. It is exactly for these reasons that fitness equipment-company, Peloton, recently decided to start selling its exercise bikes and accessories on the eCommerce site. 

It is important to remember that this is a decision made by one of the most popular companies independently selling one of the hottest products all throughout the pandemic. But as people started to return to the gym and sales began to struggle, the company chose to partner with Amazon to reverse the decline.

Free Delivery

More than 70% of US households are Amazon Prime members. All these members received free 2-day shipping on all purchases, and 1-day and same-day shipping on select purchases. This is one of the biggest reasons why its members opt for the service. Since Prime members buy more, online sellers using Amazon FBA are likely to see that trend impact their bottom line. 

Cost savings from Amazon’s expertise on operational efficiency

Another benefit of Amazon FBA is that online sellers get to utilize the expertise of Amazon to cut various costs associated with fulfilment. Amazon has invested in its fulfillment capabilities, especially during the pandemic. It has focused on automating operations and expanding its umber fleet of airplanes as well as fulfillment centers. In 2018, the company acquired Kiva Systems, the maker of autonomous network of coordinated fulfillment robots, for $775 million. 

Another testament to Amazon’s fanatical approach to efficiency is how Amazon started its own deliveries. In 2013, the company received a higher than usual rate of complaints for missed delivery deadlines around the holiday shopping season. Within two years the company had started its own delivery service. At the time, FedEx, UPS, and US Postal Service were delivering about 97% of all the company’s shipments. By mid-2020, Amazon was handling 67% of its deliveries via its own fleet. That statistic was projected to be 85% by now.

Amazon bought 12 airplanes during 2020, just as the pandemic was peaking. The company expand its package facilities by 220 that year. This was all done just as demand for cargo planes and real estate had plunged.

From the ordering to the deliver, to managing the data of an eCommerce store, Amazon’s expertise is to manage the entire fulfillment process end-to-end. In using Amazon FBA, merchants don’t need to incur oversee warehouse operations or overhead expenses. Furthermore, along with Amazon’s patented one-click ordering, merchants and consumers alike benefit from Amazon’s expediency in many parts of fulfillment, including quicker processing times to dispatch. 

Amazon FBA gives you a leg up on the competition

Sellers using Amazon FBA rank higher when consumers search for a product. This is not because Amazon discriminates against non-Amazon FBA sellers, the ranking is driven by algorithms that factor product pricing in their rankings. Given that shipping is effectively free for Prime customers, thereby not applicable on Amazon FBA sellers, it is not included in the price of the product. Since that benefit does not exist for non-Amazon FBA sellers, the price of their product has shipping fees added onto the purchase price, which ends up costing more and thus ranks lower.

The Disadvantages of Amazon FBA

The benefits of Amazon FBA are tremendous, almost hard to believe. But there are disadvantages of Amazon FBA as well that warrant careful deliberation. 

Amazon FBA is not free 

This makes sense, Amazon is a very successful business and Amazon FBA is a major driver of that. As a result, the does assess storage charges and fees for fulfillment to sellers using Amazon FBA. The storage fees can add up if the goods you sell aren’t fast-moving. Whether certain products are still profitable is an important factor for online sellers to weigh. The company offers merchants an FBA fee calculator to show what kind of costs they are likely to incur by using Amazon FBA.

Amazon gets all the branding benefits

Although the are many benefits of emphasizing the Amazon name brand when selling to customers, it may be hard to discern between fulfilled by Amazon and sold by Amazon by the end consumer. Since the company handles all order taking, packing dispatching and fulfillment, followed up by any customer support needs for sellers using Amazon FBA, it’s hard to see if there is any other involved other than Amazon. 

In such a scenario, it becomes difficult for online sellers to work on their own brand management and reputation. This could a hurdle for online sellers looking to establish their own brand.

An increase in returns

According to behavioral finance, returns and subscription cancelations have some friction intentionally built into the process. This is referred to as ‘nudges,’ which are designed by default to be either accommodative to encourage a certain behavior or prohibitive to discourage certain behavior. Amazon has made a name for itself by the ease of which customer can transact on its website, including the “easy returns process.” This may increase the number product returns for online sellers using Amazon FBA. 

There is some degree of control online sellers have – improve the quality of their products so that returns are less likely. However, there are limitation to that as well since consumers may sometimes order multiple sizes of a apparel and keep the one that fits and return the rest, a phenomenon specifically identified by research.  

What if I want to become an Amazon FBA seller?

There are both benefits and disadvantages of using Amazon FBA. Millions of businesses worldwide use the service giving Amazon an even bigger sway in global retail and supply chains.  In six out ten countries surveyed, more than half the sellers on Amazon utilize the company’s Amazon FBA service. If an online seller decides that Amazon FBA is right for them, and they’d like to join the program, below are the steps to take.

• Set up a seller account with Amazon Seller Central.
• Set up a list of products that the seller would like to sell on the Amazon marketplace and which of those will be a part of Amazon FBA.
• The seller must prepare the products in accordance with Amazon FBA packing guidelines
• Send the products part of Amazon FBA to the designed Amazon warehouse.

Conclusion

As online retail and eCommerce grows, more and more entrepreneurs turn to the industry to utilize their creativity and become online sellers. The one company that these entrepreneurs often look at to help them set up their operations is Amazon, making use of the company’s fulfillment offering known as Fulfillment by Amazon (FBA).

Amazon FBA is an easy-to-use service that online sellers can use to quickly start up and expand their operations. The service allows businesses to leverage the company’s warehouses worldwide, logistics and supply chain expertise, operational efficiency, and a transportation and shipping infrastructure that has quickly become the third largest in the US. The entire end-to-end customer journey at third-part sellers is handled by Amazon as part of the Amazon FBA service.

Given the seamless integration of online seller operations into Amazon’s global ecosystem, it is prudent for online seller businesses to carefully consider Amazon FBA, what it is, how it works, and the costs associated with Amazon FBA, to gauge if the service is right for them.