So what is Fulfillment By Amazon?
Hang on a minute shall we first take a look at what Amazon is?
Do you know what Amazon is?
Yeah – good, you know you can trust the name.
If you don’t know what Amazon is, it’s a company started out of a garage by Jeff Bezos in 1994. He created a website selling books. He found that this took off quickly and expanded into CD’s DVD’s household items and other goods. Now you have large retailers, like Toys R Us, Next and Calvin Klein signing up with Amazon to sell their goods through the website. With over thirty product categories and more than thirty-six million products, there is an amazing opportunity to reach their buyers. So how can you use the power of Amazon to increase your business?
Have you been selling through ebay?
Yes – well you know how the system works.
You find the item that you want to sell. You list the item you want to sell. You wait for someone to buy it . Someone buys it, you have a promise of payment . The item is packaged up. You post it. You wait for feedback and payment.
Wow! what a lot of work, what a lot of time.
What if I told you there is an easier way, would you be interested?
Yeah! – This is where Fulfillment By Amazon (FBA) comes in.
What is it? – Well I’m glad you asked.
Simply Fulfillment By Amazon is where you find a product you want to sell, ship it to an Amazon warehouse, list it, then using the backup of Amazon’s services have it stored, shipped and supported with their second to none customer service.
FBA is a way to lessen or eliminate the hassle as a reseller. Allowing you to concentrate on improving and growing your business.
What Can I Sell?
With this program you can sell almost anything.
It’s easier to list what you can’t sell these include illegal products, products that are illegally marketed, prescription medication, illegal drugs, guns, ammunition, and tobacco.
You need to find a product that will sell for profit –easy right.
It’s better if you choose something you are interested in. You can choose a general topic like gardening or clothes.
This will allow you to hone your skills in finding and marketing the products you know. As time goes by you will get to know where to buy from for the best deals and know the quality of the product you are selling.
You will need to research on Amazon to find the successful selling items.
Things which establish an item as a potential good seller are:
- High volume of consistent sales
- Price that is acceptable
- Solid number of satisfied reviews
You will need to establish that you can make a profit on the item. Once you have balanced these criteria you have found your niche market.
See <> here<> for an indepth guide to selecting items for FBA.
How Much Can You Make?
Before going out and buying items to sell you will need to work out whether you will make a profit on them.
It’s important to gain an understanding of the fees and charges involved.
FBA can seem like an expensive method of selling, but if you take into account that you can get the items stored at the warehouse and get exposure to a large amount of people – well the charges may seem smaller than if you are running your own shop in a town!
There are various fees, which can add up, to be considered.
These include :
- Inbound shipping cost – general cost to get the products to the warehouse, Amazon have good UPS rates but you can investigate your own shippers.
- Amazon commission – this is the cut Amazon take, the amount varies dependent on the category you opt to sell in.
- Handling fee – varies by item
- Pick and pack fee – varies by item
- Weight based fee – varies by item
- And storage fees – very reasonable
So from this list it can be seen that very low cost items like cd’s, dvd’s and books may make very little profit. You will need to sell a lot of low cost items to make a living from them!!
See <>here<> for a more indepth article on costings for FBA.
Will it Work For Me?
Now you are still interested and you have a little background on FBA you can begin evaluating whether the program is right for you.
It may appear overwhelming at first with all you need to know before you start but the system is a simple one.
There are only a few key steps.
- Input the goods you want to sell on your FBA account.
- Generate the shipping label, then ship the products to the warehouse.
- On arrival, the products are checked and verified. the items are listed on the site.
- Amazon takes care of all of the outgoing shipping as well as customer service.
- You don’t pay a penny until the goods are sold.
- Money from your sales will be sent to your bank account every few weeks.
Using the power of Amazon to distribute your items is one of the most beneficial parts. Imagine if you sold 300 items in one day and had to organise packing and posting on that day! It would be virtually impossible!
It’s a very good way of getting started in ecommerce, using the trust that amazon has with its customer base to increase your sales.
Getting Started
FBA has two types of account, one an individual account the other a professional account.
The individual account is limited to 33 items per month. There is a £0.75 per item fee. If you are happy with this then sign up.
The professional account will cost you £25+VAT (£30) per month, for this there are no limits to the lisings you can have or the money you can earn . This account also gives you access to the sales rank feed.
The sales rank feed gives you information on the popularity of the product, the lower the number the more popular the product.
It is important to remember that you will always be learning throughout the time you are in business with FBA. You will need to be vigilant about tracking item trends in order to stay on top of your business.
You need to approach the business with the right mindset, knowing what FBA can do for you. There will be times when you are getting started that the system may appear to be fighting you. Stay focused, keep on top of items, make sure that you supply enough items, keep accurate records and ensure that you do your research.
You will need a few items to get up and running. A few things are recommended to make your life slightly easier
- Scanning application – these apps can be used to make your research easier. They will provide you with information to assist in acquisition decisions.
- Computer with internet and a laser printer– you need to be able to research the products, print out labels and setup your listings
- USB barcode scanner – this will make the listing of items easier, you will not have to type in the universal product code(UPC)
- Shipping scales – accurate shipping weights will translate into accurate shipping costs, minimising loss rounding up packages.
- Poly bags – useful if you intend to create multipacks or have to bag items for shipping
You will need to keep track of your finances, keeping receipts in a boxfile or scan them.
Use application software or a spreadsheet to document your inventory and sales.
What Have You Got To Sell?
When using the FBA system you will need to manage your inventory according to boxes. This is simple if you are only sending one box, but can get complicated if dealing with more than one box!
Every time a box is sent you must effectively list the contents, this will enable the Amazon employees to unpack, sort, and store items effectively.
See <>here<> for a how to list your items on FBA
How Are You Going To Send It?
There are two main methods to deliver your boxes to Amazon
- Sort out your own courier to pick up and deliver your items to the Amazon warehouse
- Use Amazons partnered shipper. This is carried out online where you will buy a label to the cost of shipping. they will pick up from your premises and deliver to the warehouse.
What Are The Pros And Cons ?
There are a few key pros that using FBA could bring to your business.
- For sellers and small business owners, the FBA allows them greater capacity to expand their business.
- If you are on a pro account you are eligible for the super saver shipping. This allows you to increase the price of the product, allowing greater profit margins.
- Using this scheme you will only need to ensure that you send the product. Once this is done you sit back and wait for the money, as long as you have done your research the products should sell. Your items will be shipped whether you are now on holiday or overnight into Europe.
- You are piggybacking onto the impulse buying habits of the Amazon shopper. Amazon customers tend to buy more items than other shoppers.
- There are customers who would never buy from anywhere other than Amazon. Using FBA these customers have the trust in the Amazon brand and never sometimes know that they are buying from a third party seller.
- The items you sell through FBA are shipped at a far faster rate then products from other retailers. Along with this the buyer has a 24/7 customer service and the ability to track delivery throughout the process.
- Due to the minimal effort to sell the products you can invest more of your time into researching and buying inventory, to ship to Amazon to sell.
- If you were to carry out the shipping, storage, and customer service that the Amazon brand has, you probably would be paying more than you are charged.
As for the cons
- Cheap items, such as books or DVD’s are not great on FBA. If you can’t get over £4 for the item you are better off selling it elsewhere. Amazon will let you know what you will make when you sell your item – so you are informed before you send it in as to what you will make.
- There are restrictions as to what you can sell on Amazon.
- Amazon will require certain packaging to be present in order to assist with their service. If you are missing a barcode or ISBN number you may have trouble adding it to the system.
- Due to Amazon’s returns policy you need to factor in that a certain percentage of goods will be returned. Amazon will determine whether these can then still be sold or need to be either scrapped or returned.
- When you first list an item for sale you may be the only one selling. Amazon and other sellers will notice this and quickly you will find yourself in competition with them.
- Due the the numerous number of distribution centres, Amazon will sell the product closest to the buyer. This may not be your product, this is classified as co-mingling. This may help you sell your products faster but you are at the mercy of other sellers as to the quality of the product and disputes over returns can get messy.
- With the number of products Amazon has to deal with, there will inevitable be losses. If Amazon are at fault you will be compensated for the loss – but the buyer may mark you down for this.
Making It Work?
Choose a niche and understand your customer.
With that niche use your knowledge for buying the correct product at the right time.
Become an expert in one area and you will gain valuable knowledge in the movement of the market.
If you are looking to turn over inventory at a reasonable rate you will need to be realistic with your pricing. It’s important to be competitive with the market you are selling into. Learn the pricing and make sure your product falls within the range.
Abide by the rules and regulations, if you break one regulation your account maybe suspended. Remember its their business and they have a reputation to uphold.
Even with all of these constraints you can make a living using FBA. Using Amazon’s popularity, reputation and resources you can increase your sales.
You could also set up a virtual shop detailing all of your products listed on Amazon.
For this you will need a website. You could start with two free sites <>here<>
The training for setting up a business online is second to none.
You will be rubbing shoulders with business owners who have had online business for a number of years and can learn from their experiences.
You can ask questions of any of the members, gaining valuable insight into the fascinating world of online business.
Hopefully this article has explained some of what is Fulfillment By Amazon. There are links throughout to more indepth posts to show you how to carry out the various section of starting up a FBA business.
If you have any questions or are in a FBA business I would love to hear your experiences or questions, please use the box below. many thanks in advance.
Phil