Nowadays, selling products online has never been easier than it is with the “Amazon Fulfillment by Amazon” business model. The technology-based concept of setting up a FBA store means that you don’t have to store your own inventory or handle customer returns and they are often priced much lower than your competitors.
In fact, if you plan to operate an Amazon Fulfillment by Amazon business, you don’t have to do anything but pay Amazon (or whoever handles your payments) a one-time set-up fee. Even after that, you will be responsible for virtually all of the regular expenses associated with the business, such as the cost of inventory, storage, marketing, customer service, etc. Though it’s true that “Amazon Fulfillment by Amazon” costs on average about 3.5% of the sales price of each item sold, this cost is small compared to the profits you can expect from this type of business.
So where does all that money go, and what are the top secrets to setting up your first Amazon Fulfillment by Amazon business? Let’s take a look…
Amazon Fulfillment by Amazon fees – Even though Amazon charges only a set-up fee, you will still need to pay an annual maintenance fee in order to keep your account active. This fee is typically $25 to $100 for an annual membership.
Amazon Marketing – Like any other merchant, you will need to provide your entire staff with training in order to properly deliver the goods and services that customers will be receiving from your site. You will also need to spend money on marketing your website to drive sales. Amazon marketing includes advertising through their Amazon Sponsored Products, as well as pay-per-click (PPC) advertising and an assortment of other ways to increase sales.
Managing customer returns – When you sell online, you will need to receive the returns from your customers. As such, you will need to invest a lot of time and effort into ensuring that your customers can return products as needed rather than have them sit in your warehouse with no hope of being returned.
High-volume inventory – Though you may be able to fulfill orders quickly and efficiently, you will still need to keep a lot of inventory on hand in order to meet the daily needs of your customers. This requires large amounts of storage space and means higher Amazon Fulfillment by Amazon fees.
Merchandising – You will also need to think about how to launch your business when it comes to selling merchandise through your Amazon Fulfillment by Amazon store. Amazon usually offers an “I AM A SELLER” program that allows you to use their Internet store as a showcase for your own items, in addition to taking orders for your own products.
Customers – You will need to hire customers to work on your site in order to drive sales. If you are lucky enough to get a large enough number of customers on your “I AM A SELLER” page, Amazon may offer you incentives like free shipping, credit cards, etc.
Marketing – Again, Amazon Fulfillment by Amazon fees are much higher than most traditional brick-and-mortar stores, so you will need to invest a lot of money into marketing and advertising to ensure that you keep your customers. In order to keep your customers, you will need to make sure that your website is easy to navigate, that your site offers the services your customers want, and that you use social media in order to communicate with your customer base.
Customer Service – As you work on your “I AM A SELLER” page, you may find that Amazon provides customer service centers and customer service representatives who can help you with anything you may need assistance with. That will be reflected in your Amazon Fulfillment by Amazon fees as well.
There are many secrets to how to start Amazon FBA business, but the bottom line is that it costs you nothing except your start-up fees. This is great news for people who are just starting out in their own Amazon Fulfillment by Amazon business, but it is a very expensive business model.