Is it wise to launch an Amazon FBA wholesale business during this unprecedented time? The ongoing coronavirus crisis may have dramatically shaken the retail sector and completely rewired how businesses operate. Based on Statista, 47% of US consumers have lessened their daily in-store spending due to the fear of contracting the virus in public spaces.
Consequently, the Wall Street Journal reports that some mall landlords seek bankruptcy protection or closure. Many consumer-facing businesses are hastily switching from physical to digital retail because consumers now favor online shopping. This situation may continue in a post-COVID world.
According to a global study by Salesforce, Inc. published in the last quarter of 2020, 58% of the respondents will continue shopping online after the pandemic. Moreover, e-retail revenues are expected to increase by up to $6.54 trillion in 2022, Statista projects. This projection is almost a 200% growth compared to the $3.53 trillion in eCommerce sales in 2019.
If these trends and numbers continue, it may be safe to assume that shopping will never be the same. Hence, here's how to dive into Amazon FBA wholesale under the new normal:
Let us define wholesale first: As explained by ASD Online Market, wholesale sourcing is when you purchase products of existing brands in bulk and sell these units online for profit. Private labeling, on the other hand, involves creating a product from scratch that you can then label and tie with your brand. With wholesale sourcing, you are buying branded products in large quantities from a manufacturer and reselling them on Amazon at the standard retail price. Here are the perks of having a wholesale sourcing-based business:
When does Amazon enter the picture—when you join the Amazon FBA program and let Amazon's high-end fulfillment centers perform the picking, packing, and shipping for you. They can also handle customer service and returns.
Combine the two, and you've got an Amazon FBA wholesale business where you can receive hands-on support from both parties.
While it is true that it is more fitting for a startup to be an Individual Seller first, a Professional Seller account can reap more benefits, such as:
Plus, if we do the math, you will be saving more with a Professional Seller plan. The Individual plan has a fixed $.99 per item fee, while the Professional plan has a fixed monthly fee of $39.99. Let's say you've sold 50 items in a month. For an Individual plan, that will be:
50 orders x $0.99 = $49.50
Besides the per-item fee, you need to pay for referral fees and FBA fees. So, it is more practical to register on a Professional Seller account.
What products are selling during the pandemic? Given the economic situation, more consumers are buying what they need rather than what they want. The prolonged lockdowns have also forced everyone to study or work from home. People even buy things to keep themselves entertained at home.
Once we enter the so-called new normal, this buying trend may continue since almost everyone has found both convenience and safety assurance in online shopping. Now that you have profitable items to choose from, how can you determine which brand sells the most? Find a brand with the following criteria:
There is another factor you may want to take into account that may help your product stand out. It is the newest program of Amazon called Climate Pledge Friendly that allows customers to find and buy sustainable products in the marketplace. All they need to do is check if the product has a Climate Pledge Friendly badge.
But the important question is...
Is the Climate Pledge Friendly badge worth it?
Although it is not a requirement, you may consider acquiring this badge and use it as leverage to attract future consumers, comprising Gen Z and Millennials. These target markets are more likely to support and purchase sustainable brands and products. Around 60% of Gen Zs in the US and Canada prefer buying eco-friendly and sustainable products in 2019, based on Statista.
Despite the rise of single-use packaging and plastics due to intensified concern about biosafety (no thanks to COVID-19), the journey towards sustainable retail is still on track. You may use the following materials for a more Earth-friendly product packaging:
In a survey from Packaging News, the respondents favored paper (30%), cardboard (27%), and corrugated (18%) materials.
If using plastics is unavoidable, you can still be a sustainable Amazon FBA wholesale business by reducing the packaging materials. It is all right because consumers are no longer concerned about the packaging's appearance if it is stylish or attractive. Their focus is on hygiene, how protected or resistant it is from viruses and germs.
You've got a profitable product in mind. Next is one of the crucial steps in starting an eCommerce business—searching for the right supplier. The Balance Small Business has offered simplified criteria on how to accomplish this task:
Besides, choose a supplier with similar values as you when it comes to sustainability. Ask them if they are willing to make some adjustments to the packaging to make it eco-friendly and sustainable. That is when you are aiming for a Climate Pledge Friendly badge.
Unfortunately, not all of us have superb negotiation skills, which is the key to searching for the right supplier. To save yourself a headache and time, you may hire Amazon FBA consultants who have a network of dependable suppliers and manufacturers.
Do you need a business license or permit to sell on Amazon? The online retail giant doesn't require it, but the state where you operate your business does. Non-compliance with federal or state rules can lead to severe penalties and costly fines, or worse, forced closure of your budding business.
Take note that the requirements are based on the nature of your business and the area of service. It would be better to seek help from accountants, tax advisors, or Amazon FBA consultants for guidance. So if you don't want to get into trouble with the law, you must obtain a state sales tax license, reseller's permit, and business EIN (Employer Identification Number).
Besides taking advantage of Amazon's sophisticated fulfillment centers, you can also enjoy the following benefits when you have an Amazon FBA account:
Here's how you can get started with FBA:
This program is open to all Amazon sellers for free. Your product must be certified by at least one of the 18 sustainability certifications recognized by Amazon or their very own Compact by Design certification. As of now, more than 25,000 products are labeled with a Climate Pledge Friendly badge on their listings. Amazon has a dedicated section for these products here.
After ensuring your products have a Climate Pledge Friendly badge, FBA-eligible, and your inventory is at fulfillment centers, you can now launch and promote it.
Since you are new in the marketplace, your main goal should be improving your product listing's ranking than making sales. In other words, be prepared to spend on the following to boost your rankings:
Only those that are adaptable to change and willing to take risks can survive this pandemic. The lucky ones might even see their business thriving in the new normal. Besides following the steps mentioned above on starting an Amazon FBA wholesale business, you must apply a go-getter attitude to withstand changes within and outside the platform. Of course, it’s also crucial to abide by Amazon's rules to avoid being penalized or suspended.
Are you planning to start an Amazon FBA wholesale business during this pandemic? Seller Interactive comprises seasoned Amazon FBA consultants willing to get you to the top. Interested readers may email us at [email protected] or [email protected] and get started right away!
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