5 Things Every Beginner Should Know When Starting an Amazon FBA

Many people are choosing to delve into the Amazon platform, and there is a huge reason to do so. Since its launch in 1995, its revenue has continued to grow year on year, enticing entrepreneurs worldwide to start selling online. Amazon undoubtedly revolutionized eCommerce.

The greatest thing about selling on Amazon, aside from its large customer base and it's being the biggest eCommerce website on the planet by revenue, is its Fulfillment by Amazon (FBA) service. This service lets sellers deliver their products to Fulfillment Centers. When a customer orders a product in the marketplace, Amazon will take care of the logistics - from picking, packing, and shipping to your customers.

But of course, this does not come for no price. Instead, Amazon charges the seller several fees, which many beginners are not prepared for. After all, it needs to pay its employees and maintain the overall operations to keep the FBA system running. 

So what's all the fuss about Amazon's FBA service? According to Sellerapp, approximately 73% of third-party sellers use FBA for their operations. That's almost 3 quarters of the total Amazon seller population that Amazon caters to. But as soon as a seller opens an Amazon FBA account, they have to meet certain fees, regulations, and requirements in accordance with Amazon's online rulings.

Hence, many FBA sellers are left with so many questions. Unfortunately, the task of Amazon FBA how to start is not so easy. 

So here are the five things you should know about when starting an Amazon FBA business:

1. Amazon is a customer-centric eCommerce platform

Amazon is the king of eCommerce platforms because of its dedication to giving its customers a superb online shopping experience. No other shopping sites of today can come close to its reach. With close to 400 million net revenue, it stands strong in servicing its shoppers in providing almost all products that one can think of.

What really drives shoppers to go to Amazon when they think about buying something is its fast and free shipping under Prime membership. Statista says that there are currently over 200 million Prime customers. These statistics alone mean that Amazon has a solid customer base that third-party sellers can take advantage of.

So what does all this data mean to you as a budding FBA seller? To simply put, Amazon has a huge responsibility of manning all the issues that may arise from both the shoppers and sellers. But since shoppers are the ones that give value to the company, they are at the pedestal of Amazon's priority. Therefore, all the measures they put in the marketplace are adjusted according to their favor.

So expect that Amazon will give out policies and changes that may or may not be entirely beneficial to you as an FBA seller in the future. Those are made to protect the shoppers further and give them the best shopping experience, just as how they deserve to get.

2. There are four ways you can sell products on Amazon FBA

Yes, an Amazon seller can use four ways to sell products: retail arbitrage, wholesale, private label, and passion product. All of these options have their advantages and disadvantages.

Retail arbitrage is buying products from retail stores for a low price and selling them on Amazon at a higher price. Amazon FBA wholesale, on the other hand, refers to buying products in bulk and discounted and selling them on the marketplace at retail prices or higher. The private label refers to the tactic of putting a brand on products you commissioned to your manufacturer and selling them afterward. And lastly, unique products are simply items that have not been made before and are new to the market.

Let's look at a deeper level with these strategies. First, retail arbitrage's profitability is solely based on the price in retail stores. Meanwhile, many other sellers may be buying the same products you're selling from your manufacturer, thus competing with the Buy Box. Private labels have the same problem with wholesale strategy as other sellers may get in touch with the same manufacturer you've been working with. Finally, while selling unique items may have little competition compared to others, it can be a little hard to advertise your products when there is only a minority that may be interested in them.

So when picking your niche before joining FBA, check out these strategies on how to source your products to sell. This decision can make or break your profit margins. So please choose wisely!

3. There are fees (and lots of it!)

Many newbies in FBA selling have not been prepared with the insurmountable fees that come with it. With Amazon trying to charge the sellers as often and as big as possible, there is no doubt that convenience comes with a price.

Here is an example of fees that you may have to pay:

• FBA fulfillment fees
• Monthly inventory storage fees
• Removal and disposal order fees
• Special handling fees
• Returns processing fees

And these fees have to be paid on top of fees in your chosen selling plan and referral fees. Many sellers then succumb to underestimating the costs to start an FBA. The good thing is that many crowdfunding platforms are being made that help beginners in FBA to raise funds. Examples of these are Indiegogo and Kickstarter. So if you think people are going to love your product, then take this opportunity to raise funds for your business!

4. Replenish your inventory as early as possible

Across the internet, you can find forums on how to send your inventory to Amazon Fulfillment Centers. Some sellers think they can just walk into the nearest Fulfillment Centers and register their inventory, but no, never like that. 

Did you know that you can send your inventory directly to Amazon from your manufacturer? That's an option, but typically sellers get their inventory delivered to them first for quality assurance. In this step, the Amazon seller will check any faults or alterations, and proper labels are made before sending them to Fulfillment Centers.

Sending your inventory to the Fulfillment Center requires you several steps to accomplish in your Seller Central account. These steps are established to systematize how your inventory moves from you or your manufacturer to Amazon. 

To send/replenish your inventory, click Manage Inventory > select each product of interest > click Action on selected > select Send/replenish inventory > create a new Shipping plan. Next, you need to fill up your products' technical details in the shipping plan, which Amazon explains on the Seller Central website. 

5. You will be able to scale your Amazon store better with FBA

FBA is a great tool for sellers to scale. Why? Because as stores and sales grow, sellers need not worry about the looming logistics responsibilities as long as the profit margins are well taken care of. If you sell products that do not belong to hazardous or perishables, you will most likely not have limits on your inventory storage. 

And that is exactly why FBA sellers are able to make their Amazon selling a side hustle. They can do whatever they want, be wherever they want to be without having to do the hands-on task of logistics. As a result, FBA sellers have more freedom, more time with their loved ones, and more energy to pursue other things.

Conclusion

FBA is a wonderful option for Amazon sellers to earn money. Providing convenience for shoppers during this COVID-19 pandemic has been profitable thanks to Amazon's high-end logistics technology. Anyone can start their FBA business, and with enough preparation and information, you will avoid losing money by unnecessary fees.

Are you interested in knowing more about starting your own Amazon FBA journey? Then, come partner with us, and we will take your worries away with our fleet of Amazon professionals! So give us a call at +1 800-820-3746 today!