What is a typical Amazon FBA Business all about?
Quick Overview of Pros and Cons of Amazon FBA Seller Businesses
Selling on Amazon using the FBA fulfillment method is a relatively easy way to test your hand at e-commerce. Best of all selling on Amazon is a low-risk concept with high potential upside.
However, there are unique challenges in dealing with Amazon, which often surprise new FBA sellers. Amazon policy changes can often seem arbitrary and capricious, but all problems have a solution.
Amazon’s FBA program allows sellers of all sizes to provide fulfillment services to their customers, with Amazon taking care of the storage, packing, and shipping of products. Sellers sign up with Amazon, and then authorize them to ship their products to customers on their behalf.
Sellers foot the FBA bill for all products sold, and when customers make purchases. Amazon takes care of storing, packing, and shipping them.
Amazon takes care of all the order management, and sellers only have to worry about shipping in their products and keeping track of inventory.
Amazon FBA businesses are all about selling products through Amazon’s Fulfillment by Amazon (FBA) program.
If you are a manufacturer or private label seller, Amazon’s FBA program allows you to rent Amazon’s infrastructure and ship your products to Amazon’s warehouses where they will ship them to buyers for you.
The first part of running an Amazon FBA business is making your products. Finding products to sell on Amazon is the hard part. Many sellers struggle with this aspect of running a private label brand and others gravitate towards drop shipping major brand names that are already well known and selling well. The down side of drop shipping can be lower margins, harder to get product distribution rights, and fighting over the buy box.
The new seller has two things to learn: One is how to sell. The other is how to work with Amazon.
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Summary
The FBA selling model is a fairly simple concept. Amazon sells your products for you. FBA ships them or you can opt to fulfill them yourself (FBM).
Amazon FBA handles fulfillment, returns, and customer service for a variable fee per order. You advertise your products on Amazon, Amazon handles payment processing, returns, and reshipping if there is a problem.
The FBA selling model has a number of advantages over traditional e-commerce. For starters, you don’t have to do any of the traditional customer acquisition or fulfillment yourself. You also don’t have to worry about shipping, returns, or customer service. Amazon FBA charges for these services, but they are often lower prices than running your own warehouse AND they remain variable expenses which is critical during an e-commerce startup.
It is, therefore, a relatively easy way to test your hand at e-commerce. Best of all, selling on Amazon is a low-risk concept with high potential upside.
There is no reason you can’t sell a million-dollar product on Amazon. In fact, some people already are.
