Did you know that more than 600,000 new businesses are started each year in the US? If you’re planning on launching your own business as well, you’ve got a lot of competition to deal with.
While not all of these new businesses will be selling products online as yours will, you still have a lot of other businesses competing for web traffic and eyeballs.
If you’d like to compete in the online space, it helps to leverage existing audiences and customer bases. That’s just one reason to consider using the Amazon FBA program.
What is Amazon FBA? It’s the hands-off solution for selling to Amazon’s huge customer base. It takes the work out of selling and shipping physical products.
But why should you consider using this program? Keep reading to have Amazon FBA explained to you in simple language.
The Quick History of Amazon
While the Amazon FBA program is relatively new, Amazon has been in business longer than most people realize. Founder, Jeff Bezos, launched the company in 1994 in his home, located in Seattle.
The company began as an online bookstore. Jeff envisioned Amazon becoming the largest bookstore in the world, just like the Amazon rainforest is the largest in the world.
But Jeff never bought or shipped books himself. Amazon acted as a centralized book broker, connecting customers to individual retailers. Sales exploded within the first few months. In 1997, the company went public. Shortly after, Amazon began selling more than just books.
The company survived the dot com bubble, amid the destruction of many online companies. And it reached its first billion dollars in 2001 when it finally made a profit.
In 2006, 12 years after the company began, Amazon launched the FBA program, changing the e-commerce industry forever. With this program, small businesses could leverage the infrastructure built by Amazon, helping to lower their own costs and at the same time sell to more customers.
What Is Amazon FBA?
FBA stands for Fulfilment by Amazon. With this program, Amazon is finally starting touching physical products, though they still didn’t offer any of their own products.
Amazon opened warehouses where individual retailers could send their products. When a product was sold on Amazon, the retailer no longer had to pack up the order and ship it out themselves.
Rather, the Amazon warehouse staff would pick and pack the order, and send it out on behalf of the retailer. In the beginning, this meant shipping out products on existing couriers like USPS and UPS.
But soon enough, Amazon started to develop their own delivery fleet, which has come to rival these longstanding couriers in cost efficiency and speed.
Once retailers send products to Amazon’s fulfillment centers, they are done. Amazon handles the backing, shipping, customer service, returns, and exchanges.
As sales come in, money is deposited into their FBA account and can be sent to their business account. If products are returned to Amazon, the retailer can choose to have them shipped back to their own facility, or destroyed.
Benefits of Using Amazon FBA
So why should a small business use Amazon FBA? After all, there are quite a few fees involved with the service, cutting into profits. Here’s why it’s worth considering.
Lower Overhead Expenses
First off, it simplifies the supply chain. Companies that have products developed can send them straight from the manufacturer to Amazon’s fulfillment centers.
That means a small business doesn’t have to operate a warehouse of its own. Nor does it need staff to pack and ship orders. Nor does it need to pay for shipping materials.
This drastically lowers overhead costs, allowing businesses to operate in a much more capital-efficient manner. So the barrier to entry for new e-commerce businesses becomes smaller.
Sell to a Larger Customer Base
Amazon is the world’s largest retailer. Their customer base is massive. Regardless of what type of products you sell, your customers are on Amazon, whether they are proud of that fact or not.
Amazon is very clear that Amazon shoppers are Amazon’s customers, not yours. But that means you get to make your products available to millions of people every day.
Your products will be in front of many eyeballs. And with positive reviews, your products are going to sell themselves.
While you still need to market your products, you don’t have to build a customer base from scratch. This means more sales for your company.
Hands-Off Selling
Selling via FBA is the most hands-off approach to e-commerce. You can send the products to Amazon yourself, or have your manufacturer ship them to Amazon’s fulfillment centers.
Amazon staff (and robotic assembly lines) pick and pack orders. Amazon staff load them onto delivery vans, and Amazon drivers bring them to your customers, often in two days.
This fast shipping leads to higher customer satisfaction and repeat customers. If there are problems, Amazon deals with them. You don’t need a warehouse, a customer support team, or even an office building. Many sellers run Amazon FBA businesses from their kitchen table.
Amazon FBA Guide; How to Get Started
Assuming you already have your own products, getting started with the FBA program is easy to do. You’ll create a merchant account, and choose your subscription plan based on how many items you plan to sell per month.
You’ll enter your banking and identity information, to ensure you get paid. You’ll create your product listings on Amazon, including descriptions and photos.
Then, you’ll create UPC codes for your products, if they don’t already have one. This makes it easy to send in your products to a fulfillment center, and have them received and stored properly at the warehouse.
Once your products are stored and ready to ship, you need to get some sales. The first sales are the hardest, as it helps to have reviews.
Need some Amazon FBA tips? Amazon marketing is unique and often blends SEO, PPC advertising, partnering with influencers, hosting giveaways, and more.
You can learn more about the most effective marketing strategies for Amazon sellers here.
Once you start receiving positive reviews, your traction will increase and the products will sell themselves.
Selling the Easy Way
So what is Amazon FBA? It’s the hands-off approach to selling more products, to a wider customer base, and having them delivered faster than if you were to try doing everything yourself.
It can be an additional selling platform for your business, or it can be your exclusive selling platform, to eliminate overhead expenses.
Looking for more tips on building your e-commerce business? Head over to our blog now to keep reading.
