I have been selling on reg Amazon for years and Amazon Handmade since it opened. The first 3 years FBA was awesome. I loved it. Then it all quickly went wrong. I started noticing that the counts were not adding up. Inventory was disappearing. I asked for reconciliations. Amazon would always answer that I miss counted what I sent. I knew I didn't as hubby and I would count a box at least 3 times before we sent it. At first it was just a few so I continued on. Then it started being large amounts.
At the same time I noticed Amazon was refunding orders for no reason. And giving buyers a "bonus" refund. When I complained I got a couple of the bonus refunds back. But not all of them. Some of them were just customers asking questions so Amazon would just refund them and tell them to keep it. This is mostly due to the language barrier of Amazon customer service. Most of them don't have a clue what the item is and have a hard time with English. So they just refund it.
To make a very long story short I finally ended up with about 1000.00 of missing inventory. I fought, I filed claims etc. All to no avail. Amazon just kept telling me I was wrong. I had all of my FBA inventory that was left sent back and stopped doing FBA. I was so angry but what could I do? Nothing.
Lo and behold almost 9 months later I start getting extra Amazon payments for "found inventory" Apparently they finally did an audit and found most of my missing inventory. I got 3 payments over the next month as they found it. But remember I only got what Amazon deemed the value. Not retail value. But I counted myself as lucky to get anything back.
Then I noticed that someone was selling against me on my own listing. How odd. Then I read it was "Amazon warehouse deals" Yep they were selling my found inventory against me at a low price. Not nice. Thankfully they sold out quickly,
While a 1000.00 loss really hurt me; I was able to continue on. Many small handmade shops would not be able to wait out a 1000.00 loss.
I never had issues until Amazon started opening so many new warehouses. When I first started I always shipped to the same 2 warehouses (for years) Then suddenly I was shipping to 4 warehouses and that is when the trouble started. I just think Amazon is growing way too fast and they really don't know exactly where FBA inventory is for the first few weeks after you ship it.
I also think many handmade shops don't take time to do the math and see the real cost of FBA. I have seen some do FBA that I know cannot be making a profit unless they get their supplies for free. Yes you will probably sell more; but if you aren't making a profit it doesn't matter. FBA fees quickly add up. Especially if you start getting charged storage fees.
The beauty of Amazon Handmade is you don't have people selling against you like you do on regular Amazon. So the benefit of doing FBA is not nearly as great as it is on regular Amazon. If you have something people want; they will buy it regardless of if its on FBA or not. I sell Pink Pussy hats on Amazon Handmade. I have sold almost 60 in the last 12 days. And all without FBA. Quality products sell
FBA might be a good fit for some handmade shops; but for the majority it doesn't make sense. Really run the numbers and know that at any time your inventory can disappear. And it may take months to get paid back.