Last updated on May 27th, 2023 at 08:04 pm
E-Commerce has come to be known as a great avenue to make passive income by many. For some people, it’s a way of generating passive income while for other people, it’s the chief source of their livelihood.
Fulfilment By Amazon, otherwise called FBA, is an interesting business model designed by Amazon and it is one efficient way of selling online.
Amazon FBA is a service provided by Amazon company that offers many services such as storage, packaging and shipping assistance to online sellers.
In this age and time, the journey into being an online seller is what most people have thought about. The purpose of this article is to explain how to start an Amazon FBA business as a side income in layman’s terms.
How To Start an Amazon FBA Business As a Side Income
The before, during and after processes of becoming an online seller in Amazon FBA rests much on product research.
This deals with finding the right type of product that is suitable for you goes a long way to tell how successful your FBA business will be.
There are many sellable products that you can consider before coming up with what you deem best for you. You might want to look out for some factors before you make your decision, such as:
1. Products with Uniqueness
Some products have fewer competitors because of many reasons.
Sometimes it’s because sellers do not realize how great selling those products can improve their income or it might just be because of the type of those products themselves.
2. Products with Less Competition
Most times it’s safe to sell products with much less competition.
Thorough product research must include knowing your competitors( knowing the other sellers selling the same or similar products as you), your chosen products should be the type that will give you an edge over fellow competitors.
Such an edge can be achieved through private labelling and branding, seeking out ways to improve on your own products or getting more creative with your distribution channels.
3. Products that are Environmentally Friendly
According to research done by a tech firm called GreenPrint, 78 per cent of consumers are more likely to buy a product that is clearly labelled as environmentally friendly and are even ready to pay more to get these eco-friendly goods.
4. Products that are Easy to Sell
Investopedia grouped consumer goods or final goods into four distinctive categories. There are the “convenience goods” that are always consumed daily and from time to time, such as beverage drinks and foodstuff.
There are also the “shipping goods” that are not bought by impulse but require the consumer to save up cash so as to be able to purchase them.
Gadgets are in this category. Speciality goods are luxury goods that can only be afforded by the consumers with high purchasing power such as luxury cars, high-end jewellery.
The last is the unsought goods whose existence is not clearly known to consumers and consumers are not interested in purchasing them.
Examples are Long-term and short-term disability insurance, accident insurance and nursing home insurance.
The ease of selling out several units of the products in each of these categories is a good factor to consider, any of them can be sold effectively given the right approach.
However, it’s easy and safe to choose either a convenience product or a shopping product as a beginner.
5. Products that are in High Demand
The more the demand for final goods, the more the number of units that will be ordered. This will ultimately affect production as more units will be produced.
6. Products that Consumers are Passionate About
Apart from being great, some products also hold sentimental biases in the consumer’s mind, so they want to purchase more of such products.
Knowing consumer behavior on a product, how the consumers buy them and how often they buy them is very important.
7. Products with a Good Profit Margin
You will want the product that you decide on to be one that can steadily grow your income. It is also good to note that setting the prices of your products too high or too low is a bad way to start.
You should set your prices at a profitable scale which at the same time will not put you in a disadvantaged position or prevent you from competing favorably with other sellers of the same or similar products.
Other Strategies to Implement in Amazon FBA
1. Private Labeling and Branding
A good way to command uniqueness to your product is by adding your own logo to it.
You would want to do this in order to tell your product apart from every other similar product that is available or from other sellers that are doing the same thing as you.
2. Setting up an Amazon Seller
The first thing to do is to sign up on the Amazon website (www.amazon.com). It is good to note that some personal information and identification means are needed for successful registration.
You will be required to show your means of identification, a credit card and your tax information.
The next thing to do is to set up an Amazon seller. There are two options that you can decide on. There is the individual account and the professional account, each with its pros and cons.
However, there is a service charge of $0.99 on every sale made on the individual account, this is not applicable to the professional account, although it also requires a monthly subscription of $39.99.
For a large number of sales, a professional account is advisable. The professional account also has other exciting features that will be of help to a seller, such as:
- It offers an advertisement option.
- It has advanced setting tools such as APIs and Reports.
- The seller can sell products in restricted categories.
There are several kinds of advertisements that a seller can employ to boost sales. Amazon runs ads on the seller’s central account through what is known as ‘sponsored Ads.’
This can be used to increase sales for a new product or to move your product to the first page for a better search ranking.
Another advertising opportunity that exists is social media campaigns. Sellers may decide to go on social media platforms such as Facebook and Instagram to look for intending buyers for the products in their Amazon listings.
Advantages of Amazon FBA
1. It’s an Ever Dynamic Fulfillment Network
This business model has seen some drastic changes over the years to suit the growth of sellers and to create a business-friendly e-marketplace for both sellers and buyers to meet and carry out satisfactory transactions.
2. Sales Increase through Prime Shipping
The Prime shipping option in FBA means that customers that have an Amazon Prime subscription can receive your item with two days of shipping at zero additional cost.
Disadvantages of Amazon FBA
1. It Requires Capital
Getting to start selling online requires you to have money, this is one of the important necessities that a beginner must consider.
2. The Problem of Returns
Due to Amazon’s open return policy, more products are being returned by buyers due to one complaint or another ranging from non-satisfaction to damaged goods.
3. The Problem of Accumulated Storage Fees
Amazon is reasonable enough to have set fairly considerable fees for inventories held at Amazon’s warehouses but this fee can accumulate fast if the products are bulky and are not sold on time or are made to stay in the warehouse for a long time.
4. The Problem of Amazon’s Rules and Regulations which Limit Seller’s Control
With FBA, you are expected to follow certain regulations as stipulated by Amazon.
For example, your products must follow certain rules of packaging and labelling of inventories before they will be accepted to be stored in Amazon’s warehouse.
You can’t also be permitted to check your products at the warehouse.
5. Comparatively High Amazon Charges
Some third-party logistic companies under FBM charge less than Amazon for storage and shipping.
Deciding Between Seller Central and Vending Central
Two key options in Amazon fulfilment are Amazon seller central and Amazon vendor central.
Choosing seller central implies that you will be the one responsible for selling your products directly to customers while choosing Amazon vendor means that Amazon purchases your products from you and then sells those products to the customers.
In this case, you are not selling your products directly. There are two types of seller accounts:
- Individual seller account
- Professional seller account
Note that the major differences between these two types have been explained already.
As a seller, product orders that are received can be fulfilled by any of these two options:
- Fulfilment by merchant (FBM) – This is when you manage the work of shipping the product yourself or through a logistic company.
- Fulfilment by Amazon (FBA) program – This is when Amazon is responsible for the task of shipping your products to the consumers.
Learning to Use Amazon Seller Central Effectively
Amazon seller central is an online interface that is employed by third-party sellers to sell their products directly to consumers.
Once you have signed up on Amazon, a good knowledge of how Amazon seller central works are essential for the smooth and effective running of your Amazon FBA business.
Questions like how to access sales reports? How to create a shipment? And Lots more will occupy your mind.
Conclusion on Amazon FBA Business
The influence of this business model on individual incomes and the world’s economy in general–more than never–was experienced during the recent Covid 19 pandemic.
This saw an astronomical rise in the income of many online sellers in the cybermarketplace. With over 300 million active users and over 200 million Prime members worldwide (according to Statista).
Amazon is where every seller who wishes to go into E-commerce would want to be.
You might also want to check out How To Recover a Hacked Amazon Account
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