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Why Amazon FBA Can be a Good Business Model

Why Amazon FBA Can be a Good Business Model

The simple tagline for Amazon FBA (Fulfillment by Amazon) on the website is “You sell it, we ship it.” They will do all of the packaging and shipping, and do the customer service, and all you need to do is send your products to Amazon in bulk ahead of time. It sounds so simple, right? So let’s take a look at some of the advantages to using Amazon FBA.

Grow Faster with FBA

Rather than trying to explode on to the Amazon scene in your first month, it is much better to build up over time. One way to grow your Amazon business is to simply more different types of products. That’s where Amazon FBA comes in, as it allows you to skip much of the busywork involved with sales which in turn allows you to scale up your business with the same amount of staff.

This steady growth will also be a combination of things such as brand recognition, number of customer reviews, growth of your external marketing sources such as social media accounts, and so on. All of this will make your business much more stable, and less prone to losing it all after a bad month of sales or other chaos.

Now that you have a lot of products to cover, you will need some tools to keep it all under control and make sure you still have some free time to do other things. You should consider trying an Amazon PPC service for this, and they’re not that expensive either. These tools provide a lot of automation such as bid management and the blacklisting of keywords which are deemed unprofitable.

Save Time and Remove Clutter

Some of the time saving aspects were already mentioned above in the growth section, but there is a lot more to it. For example, when you use Amazon FBA you will not have to worry about product returns – Amazon will do all of the communication with the buyer and then send them a replacement if applicable. Less customer service time is a huge bonus for most sellers.

With FBA you can also forget everything you know about customs regulations and all kinds of shipping laws and guidelines. All you need to do is ship your products in bulk to Amazon, and then they will handle everything involved with sending the products along to individual buyers.

So, now that all of your products are sitting in Amazon warehouses, they are not sitting around in boxes at your house. This may not be a big deal to some sellers, particularly if they have a lot of space, but for some this could mean clearing out a whole room or two of clutter.

Shipping Discounts and Prime

You are most likely selling products for less than what customers would have to pay in a retail store, but if your shipping costs eat up the money they would save then they’ll probably just go and pick it up at the store. In an attempt to combat this problem without eating some of the costs yourself, you can take advantage of all of Amazon’s shipping options when using FBA. In the very competitive world of selling on Amazon, even a small saving for the customer on shipping costs could be what earns you that sale instead of someone else.

Being part of the FBA program also means that you are automatically eligible for Amazon Prime and the associated benefits this provides to your customers. As with the shipping costs mentioned above, Prime could be another big factor in whether you make the sale or someone else does.

Disadvantages of FBA

It’s not all sunshine and roses when it comes to using FBA, and it may not work out for everyone and mistakes can be made, so be sure to check out these bullet points and then do your own research before registering.

  • Learning curve – In the beginning you may find it hard to manage, and you may even lose money, but if you are patient you will see success.
  • Loss of control – Amazon will be taking over many of your responsibilities, and they operate how they want to operate.
  • Fees – Another factor associated with having Amazon store and ship all of your products is that they’ll be charging you for it. This is particularly true if you sell a lot of very cheap products, or if you have large and / or heavy products.
  • Inventory – You may find it more difficult to know how many products to send to Amazon to keep yourself stocked up, but you should learn over time just as you did with your regular inventory.

Hopefully this has been a quick and useful guide to get you started on Amazon FBA, or at least help make up your mind one way or another. FBA may not be for everyone, for a variety of reasons, but it can’t be overlooked entirely without doing your research first.

Hopefully this has been a quick and useful guide to get you started on Amazon FBA.

The post Why Amazon FBA Can be a Good Business Model appeared first on Home Business Magazine.

Source: Business


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