The business model of Fulfilment by Amazon (FBA) continues to grow in popularity, and for good reasons. Fundamentally, it is the same as a traditional e-commerce business. But, instead of having to fulfill orders one after the order, Amazon stores the products for you and even collects, packages and ships to customers.
This makes it much easier for you to build your business without having to worry about the logistics of warehouses, packaging materials, couriers, etc. With its private labeling feature, you also have the opportunity to build your own brand and website, which increases the value of your business.
What is Fulfilment by Amazon (FBA)?
The FBA business model allows you to take advantage of Amazon’s strong distribution network and customer base. As stated above, Amazon will store your products, fulfill your orders and even provide customer service so you do not have to be practical in all aspects of the business.
What this means for entrepreneurs is that you can act like a big corporation without the headache of being one. You can emphasis on finding product opportunities while Amazon handles the rest on your behalf.
In a typical e-commerce company, you must find out the logistics to send products to your customers in a timely manner. However, with FBA, Prime members receive the majority of orders sent to their door within two to five days.
Another common challenge with an e-commerce store is that inventory and listing of additional products for sale can increase the complexity of your business. With FBA, all you need to do is send the products to the Amazon store, and the company will take over from there. You can easily increase your product selection without significantly increasing your workload.
CREATE AN AMAZON SELLER ACCOUNT
First things first: to be able to start up your FBA business, you will need to create an Amazon merchant account. Go to the Amazon website, scroll down to the bottom of the page and look for the header marked “Earn money with us.” Then, click on the link that says “Sell on Amazon.”
At this point, you can register as “Individual” or as “Professional”. When you register as an “Individual”, you will not be charged a monthly subscription fee. If you are looking to build a company, in the long term, then you will want to register as a “Professional”. The first month is free, and after that, it is $ 39.99 per month plus the sale rates.
Apart from that, the registration process is relatively simple. Follow the instructions on the screen and complete the configuration.
DISCOVER THE OPPORTUNITIES OF THE PRODUCT AND ESTABLISH YOUR PRIVATE LABEL
There are several different ways to take advantage of the FBA model, but the most popular form is private labeling. The idea is to establish a brand or label, apply it to your product and sell it on Amazon.
First, you will have to do your Amazon product research. This is the most important step for a variety of reasons. If you chose an unpopular category and sell a product for more than your competition is selling, you could lose money with that product. If you take the time to look for a popular product category, do competitive analysis, study product reviews and identify a product that you can improve or sell at a better price, you will have found the optimum point.
Another popular way to sell products through Amazon is with retail arbitration: buy a branded product and flipping it on Amazon for profit. This is a much easier way to make money on Amazon, at least in the short term.
With private labeling, you need capital. Ordering private label products can cost you a lot, but if you are looking to build an asset that can later be sold, then this is the direction you want to go in.
Another key piece of the puzzle is your supplier. You cannot make money if you do not have products in stock, so you should make sure that the delay between placing and delivering the order is as short as possible.
ADVICE FOR GROWTH AND SCALING OF YOUR FBA BUSINESS
Pursue your passion If you enjoy doing it, you will stay with this for longer. Find a product category that interests you and excites you.
Increase your product offerings. You must conduct an adequate investigation of each new product offer you create. Having more products can reduce the risk that your business depends on a single product.
Improve your ranking of a Best Sellers. BSR is an important measure for both your customers and your sales. This is also a key factor when the time comes to sell your business. Buyers will want to see steady growth in their BSR range over time.
Build your brand website. As you continue to expand your private brand product offerings, you’ll want to create a dedicated professional site for your business. This gives you another way to market your products and can also make your business attractive to potential buyers.
Become an Amazon Associate. Increase your income by joining Amazon. Recommend customers to your products from your own site and start earning commissions.
How much do FBA business owners earn? What is the profit potential of an FBA business?
Spencer Haws of Niche Pursuits reports that he was able to earn almost $ 40,000 within 30 days of starting his FBA business. Chris Guthrie of UpFuel earned almost $ 3,000 in 30 days. James Amazio, the founder of Feedbackz, went from zero to $ 50,000 per month in just eight months.
These results are not necessarily typical but show that it is possible to build a business of five, six or even seven figures taking advantage of the FBA model.
Starting an FBA business will involve capital before gain, the effort will not be as intense as it would be with a traditional e-commerce business. Making your business take off is the easy part. Finding ways to grow your FBA business is the hardest part. Take advantage of the resources available to you and systematise your processes on the fly.