Building your net worth and achieving financial freedom is most easily done by creating multiple income streams. One of the best ways to make some extra cash is to start a business that will pay you directly.
Starting a FBA business is one option for selling physical products to make a profit. Simply sell to buyers willing to purchase your product and Amazon will take care of all the logistics. This makes it easy for you to pack and ship your products to be sent to your customers.
What is FBA?
FBA stands for Fulfilled By Amazon. Essentially, it means that you don’t need to touch any products to sell them and, instead, Amazon takes care of all the logistics. It is a form of dropshipping that makes it easy to start making money selling products.
Let’s say that you you have specialty t-shirts that you want to sell online. By using FBA, you would send your t-shirts to an Amazon warehouse in bulk. Amazon will then take on the responsibility of shipping them out to your customers.
How Does FBA Work?
FBA is selling your products through an Amazon warehouse and using the Amazon distribution network. You just need to market the product and find buyers for the products. Once the buyer completes their purchase, Amazon takes over with handling all the shipping and fulfillment.
In order to use the Amazon FBA business model, you will have to pay for Amazon FBA fees. How much you have to pay can be calculated by using the Amazon FBA calculator. Merchants in Canada, the United States, and Mexico are required to sell via their Amazon accounts.
As a merchant, you can add bulk products or one product at a time. This can be done by integrating inventory management software with Amazon or by using the application program interfaces of Amazon. Listings on Amazon.com can be viewed from the logo of Amazon Prime. There will be no more Amazon FBA fees for the free two-day shipping, and you will get free shipping for eligible orders. You can also integrate FBA into the website of the vendor for the customers to do shopping via Amazon, minus leaving the site of the third party.
Amazon tells merchants utilizing its e-commerce service to make sure that the products are ready for e-commerce to be safely transported to customers. It makes boxes, cartons, polybags, bubble pack, stretch wrap, and other shipping items available to vendors of Amazon.
Please be aware that there may be Amazon FBA fees applicable for optional services and for selling on Amazon. While some of these can add up, they can also be worth it to more easily make some extra money.
Benefits of the FBA Business Model
There are several great benefits of using the FBA business model to start your ecommerce store. Selling physical products online can come with a few headaches that FBA can help avoid.
FBA eliminates the cost of selling for maximum profit
A lot of sellers make money by selling through FBA. One of the biggest advantages is that as a seller, you will avoid the aggravation and costs of dealing with shipping, storing inventory, and other logistics issues.
The Amazon FBA qualifies your listing for free shipping, Amazon Prime, and other benefits. While selling through FBA, you have the ability to reap Amazon Prime benefits, a service that all Amazon customers love and know. You also get the free shipping benefit for eligible products, and a gold star just next to the listing, which is the logo of Amazon Prime.
All shipping fees are included in your Amazon FBA fees without any other charges. The fees include free shipping and Amazon Prime. Additionally, you will get charged for fulfilled orders and storage space.
FBA eliminates the hassle of customer service
Apart from sales boost, shipping, and inventory management, another benefit of FBA is that it eliminates the hassles of customer service. Once you make the sale, you no longer have to worry about working with the customer, thus giving you less stress.
As a seller on FBA, you do not have to worry so much about handling customers as Amazon will take care of all logistics including returns and customer service for you.
FBA allows for multi-channel fulfillment
This is among the best perks of being a seller of Amazon FBA: multi-channel fulfillment. It means that the inventory stored on the fulfillment centers of Amazon is not only qualified for sale on Amazon. It can also be sold on other platforms of e-commerce in the FBA warehouses, although the operator of the warehouses is Amazon.
What are the Downsides of FBA?
Are there any downsides to FBA? Of course, there are. There are several FBA downsides that you need to consider before agreeing to the terms of becoming a seller or merchant on FBA.
Below is a quick rundown of the disadvantage of a FBA Business.
Strict shipping requirements
Depending on the product, you have to abide by the regulations and rules set by Amazon FBA in the realm of shipping. This applies to merchants who will be actually shipping products.
For instance, below are a few packaging rules for products shipping via FBA.
- Eliminate old shipping labels or other markings, branding, or logo in case you are reusing boxes.
- Utilize just two padding inches between the items in the shipment box.
- All barcodes will have to be covered completely or removed if you choose to use recycled boxes for your shipments.
Strict packing requirements
FBA merchants should only use packaging material specified by Amazon. This means you should use polyethylene foam, bubble wrap, inflatable air pillows, or sheets of paper.
Do not use anything else there. If you utilize foam peanuts, the paper that shreds, or wrap that may crinkle, your shipment will be returned. On top of that, you will have to pay for it. FBA can be really bothersome for merchants when you do not follow the required guidelines and regulations.
Risks of inventory in case your account gets suspended
In case you have FBA inventory and your account is suspended, you have to handle the suspension with immediately. Otherwise, you may lose everything in the inventory. This is very risky when you have valuable items in FBA stores and warehouses.
Why Start an FBA Business?
Now that you know what FBA is and what the guidelines are, you may be starting to see the value. Amazon FBA is a game-changer for those who want to more easily sell online.
As you start to grow, Amazon is crucial for when you want to scale up your business. Amazon FBA makes sure that the seller can focus on growing their business without worrying about logistics.
Selling on Amazon by using FBA program beats out all other e-commerce models of business. Amazon makes it easier to sell physical products because they handle the most time-consuming aspect of selling.
How to Start an FBA Business
If you are interested in starting a fulfilled by Amazon business, here are a few things to consider.
Determine Your Product
First, start by finding the products to sell on Amazon. This could be a product that you have created yourself or have had manufactured for you. It could also be products that you have purchased from a third party for a lower price that you will resell.
You will then have to list your products on Amazon but your listing does not go live immediately.
You will have to prepare the products and send them to the Amazon warehouses. Amazon will unpack and store your inventory. At that point, the product will then become live on the site. The product becomes featured as the prime eligible purchase.
When an Amazon buyer places an order for your product, Amazon will package your product and ship it to the customer. The client receives it after two days and becomes happy.
Manage Your E-Commerce Store
As you can realize, you bear the responsibility for the products you are selling on Amazon, whereas Amazon will handle the rest. After listing the products and sending them to the Amazon warehouse, they are ready for sale. Your job is essentially done from a logistics perspective.
After the product is ordered, Amazon will find the product, schedule the shipment, pack the item, and make sure it reaches the buyer immediately.
However, you should still actively market your products to be able to make the most amount of sales possible. This can mean growing a social following, paying for advertisements, and creating an informative blog.
Scaling Your FBA Business
While selling on other platforms, you will make some profits but you will not have the ability or much room for scaling your business. It can be difficult to manage all of the shipping logistics if you are doing it yourself. At some point, you just won’t be able to handle more sales.
Making more money means finding more products, creating more listings, shipping more items, storing more inventory, and handling more customers. You will spend a lot of time on business and the thought of doubling it will drive you crazy.
That is where FBA can be a huge help to your growth. Instead of worrying about each piece of the supply chain, you can focus on marketing and building your brand.
You can easily sell out when you realize that you could make more sales on Amazon. You can send items to Amazon and they will quickly be sold, once you have your FBA account set up and automated.
