Last updated on March 9th, 2023
Written by Ken Zhou
Modern technology and the recent COVID pandemic have changed how people consume information and purchase products. Speed and convenience have been the underlying factors of many decisions. People choose fast and easy ways to satisfy their needs, from Netflix binge-watching to Prime free two-day shipping to mobile banking and digital wallets.
Business is no different. Fast and reliable shipping is driving customers to order from certain stores. Bigger businesses can afford to build infrastructure (like warehouses and fulfillment centers). They can also form partnerships with signature shipping companies and trusted logistics providers.
But what about those who have just started growing their sales? How can they make money on Amazon today? Here are some strategies on how you can strategize on Amazon FBA:
Fulfillment by Amazon or FBA is the e-commerce platform’s way of aiding sellers to scale up their business without breaking the bank. FBA does your warehouse inventory, shipping and handling orders, and even customer returns.
Fulfillment by Merchant or FBM is when sellers pack and ship orders themselves. Unlike Amazon FBA, FBM can be more personal and customized, with sellers able to add unique touches here and there. FBA has stricter packing and handling policies. Detailed Shipment Plans are required and several shipping labels are bought, printed, and properly placed. If you choose to go through with FBA, you should consider hiring FBA Account Managers. They make sure your business is compliant with the FBA policies and guidelines.
Also, many businesses have found success in mixed fulfillment options. Working smart, they choose which products will utilize FBA well versus products that will do better with FBM.
Not all businesses are made equal. Some prefer Business-to-Business (B2B) transactions, while others thrive with Business-to-customers (B2C) strategy. Some prefer working locally while others prefer a global reach. Whatever method of selling you prefer, you can still use FBA to your advantage.
Take a look at the different business models that are currently in use in the Amazon Marketplace:
Private label selling is rebranding or renaming already manufactured goods. For example, Amazon has its private labels called AmazonBasics and Amazon Essentials. It's the most common business model utilized by third-party sellers, especially if you know which items are always on demand. Take stationery and school supplies, for example. They're both consumable and have an annual demand during the back-to-school season. Rebranding pencils, notebooks, and more are easy and affordable.
How does Amazon FBA fit? Well, with FBA having strict rules and guidelines on product handling, not all items are easy to enroll in the program. For example, hazardous materials or items that need special handling must be sent to an Amazon Warehouse equipped to store them. But most private label products breeze through the checklist.
Bear in mind that FBA has different services and each one can cost you a per item fee. However, small, light, and in-demand Private Label products make for an easy return on investment.
Wholesale models are a bit more technical and require negotiating skills. It's similar to retail arbitrage, where you source products and resell them. However, with wholesale, you will purchase in bulk and take advantage of the discounted prices. Moreover, you have to factor in the fact that you won't be the only reseller of a wholesale supplier and may end up in tight competition.
FBA Wholesale Partnership is a great strategy to sell large quantities and not worry about order fulfillment. Although, this means shelling out more in the beginning. Sourcing reliable suppliers is also a factor in wholesale since they need to be able to meet timely deliveries. So, it's ideal for an FBA team to assist you with sourcing brands and negotiating prices.
There are other benefits to FBA wholesale and few manufacturing concerns if you're working with established brands. It's also one of the easiest ways to scale up your business.
Retail arbitrage is reselling items you purchased at discounted rates from physical retail stores. In this strategy, you buy in bulk, inspect your items, and get FBA to fulfill them. This is great when you are already finished with product research and have a viable FBA shipping plan. It’s also a way to reintroduce a store that’s not active in e-commerce and help them grow. So, if you know a local mom-and-pop store that could use some boosting, you can form a partnership and start selling their goods online.
This is similar to retail arbitrage, but the stores or products you’ll be sourcing are ordered from online stores. In this strategy, online stores that offer unavailable items on the Amazon Store are ideal. However, finding suppliers for unique items will be difficult. You can opt for more common items, but the competition for that in the Amazon Store may be a cutthroat.
FBA then becomes an advantage to you. Registering as an FBA business can get you the Prime badge that entices Amazon Prime buyers to choose your store over others. In addition, fast and reliable shipping, thanks to FBA’s workflow, gives you an edge over other sellers who are also using online arbitrage.
Dropshipping is when you sell products directly from manufacturer to customer. The items never go through you and save you shipping costs. The downside is quality control is entirely dependent on your suppliers.
But with Amazon FBA, dropshipping becomes on par with arbitrage and private labeling, quality-wise. With FBA, Amazon personnel will inspect the items sent to them by the manufacturer and properly pack them. They will inform you of the amount of sellable inventory and sidelined items. They guarantee that your customers will not receive any defective or subpar products. You need to notify manufacturers to send your orders to an Amazon Fulfillment Center and keep in mind the per item Amazon FBA fee.
Lastly is the selling of handmade products. This may seem out of the ordinary since FBA is a way to scale up businesses. However, Amazon aims to be the most customer-centric company in the world, and customers have been craving customized and personalized products. FBA Handmade is a great way to keep handcrafted products available for Amazon consumers without sacrificing delivery options.
Take note that there is an application process before becoming an Amazon Handmade Seller. On the plus side, Amazon would not charge you as much as the other business models, considering the time and effort you already gave for your craft.
Being compatible with the different business models on Amazon, it's easy to see why FBA selling is becoming the latest trend. In a fast-paced society where demands and needs are met here and now, having a powerful shipping system and fulfillment workflow can drive a business to success. Despite the costs and fees FBA charges, it drastically saves an Amazon Seller's time.
This 2022, FBA took it one step further by offering the FBA New Selection program to new Amazon account users and those Amazon FBA sellers who would register products with new ASINs. This program provides a limited number of discounts on FBA fees.
Amazon FBA had managed some uniformity in a diverse e-commerce platform, at least in terms of the universal demands for order fulfillment: fast, affordable, and accountable. By taking charge of order fulfillment from third-party sellers, FBA effectively helps scale up businesses, gives handmade items a chance to shine, and delivers satisfactory customer service. Moreover, by making itself available to different business models, how you sell with FBA is as flexible as your budget.
An Amazon seller must still comply with all FBA policies, follow the workflow, and ensure your FBA inventory is up to date. Partner with capable Amazon Account Managers that can monitor all aspects of your FBA account.
Book a free call with Seller Interactive at 1-800-820-3746, or email us at [email protected].
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