Amazon, to this day, is the most used e-commerce service, the world’s largest online marketplace. If you were to look into the back of a USPS or UPS delivery truck, I’m almost positive over 80% of the boxes are from Amazon. As of September 2019, there were over 150.6 million mobile users and over 103 million active Amazon Prime subscribers. According to Oberlo’s blog “89% of buyers agree that they’re more likely to buy products from Amazon than other e-commerce sites, 98 % of those who purchase on Amazon daily or almost every day and 99% who purchase on Amazon a few times a week agree that they are drawn to Amazon over its competitors”. Consumers are more demanding and impatient now; they want their goods right then and there, not a week or two later. Amazon fulfills that demand by offering free two-day shipping (sometimes even one) to all of its Amazon Prime subscribers, which draws customers to buy more and frequently, appeal to a broader audience, and making Amazon the consumer’s go-to choice. Amazon has two types of sellers, Amazon FBA (Fulfillment By Amazon) and FBM (Fulfillment By Merchant). FBA is a service that provides storage, packaging, and shipping assistance for the sellers; this requires the sellers to ship their merchandise to a fulfillment center, then stored in its warehouses until its sold. When an order is placed, an employee will prepare, package, and ship the goods. FBM, the seller houses its inventory, pick, pack, and ship the products themselves. Yes, selling through FBA sounds fantastic and easy, but it comes at a cost. Amazon charge fees for using their services, here is a list for using FBA,
- Standard Seller Fee – Amazon charges between 15-18% of the product price.
- Fulfillment Fee – Charges a fee by each unit and it’s size, which covers the picking, packing, and shipping of the merchandise, handling, customer service, and product returns.
- Inventory Storage Fee – A monthly storage fee for housing your goods in their fulfillment center.
Before starting the adventure, consider what’s best and most profitable for your business. Although FBA seems like a good choice, you must factor in the many fees and see if it’s still beneficial to go this route. I would recommend doing FBM to start, and the profits are much higher because of all the fees saved. Yes, you’ll have to handle everything yourselves, which will require labor and time, but all businesses start this way. Once you get the hang of everything, make enough profits, and want to start scaling the business, consider FBA, Until then do the work yourself. The downside to selling through Amazon is that it requires you to have a decent amount of capital to purchase the inventory, and you may not have a quick turnover. You have to dedicate time and money into this.
Overall, using their selling platform is impressive, with there algorithm, they help you market your products, doubling your exposure and sales opportunity. If your product already exists on their website, your inventory will sell under the same listing, no effort is required for the descriptions, pictures, etc., everything is pre-filled. Due to the recent pandemic, Amazon was one of the few businesses that remained open throughout. According to NBC News, Amazon reached $75.5 billion in sales in the first quarter of 2020 compared to $59.7 billion during the same time last year. Their website traffic surged to 2.54 billion visitors in March alone, a 65% jump from the previous year. To wrap it up, Amazon is here to stay, It’s not going anywhere, and it’s just going to get bigger, so “If you can’t beat them, join them,” they say, so why not sell on Amazon.
-https://www.oberlo.com/blog/amazon-statistics
-https://www.nbcnews.com/business/business-news/amazon-has-been-indispensable-during-pandemic-it-s-clear-who-n1197341
-https://feedvisor.com/university/fulfillment-by-amazon/
-https://feedvisor.com/university/fbm-or-fba/