With a market cap of over $1 trillion, Amazon ranks first among the leading large-cap e-commerce companies worldwide. It has over 2.45 billion monthly visits to its app and website combined. It dominates the US e-commerce, i.e. 49.1% of the market. In the US, customers buy roughly 7,400 products per minute from Amazon sellers. It is the largest e-commerce company in India as well, which is one of the world’s fastest-growing economies with over 1.4 billion people. Data shows over 620 million of them use the internet, and 74% of those users shop online. India has a $70 billion market segment, and Amazon is playing a big part in it.
Between 2020 and 2022, the fulfilled-by-Amazon (FBA) model caught on, with 68% of merchants relying on Amazon’s logistics to fulfil their orders. Amazon has over 200 million paid Prime members globally and hundreds of millions worldwide active customer accounts. You can scale up your business globally on this platform. This is the best platform for customer acquisition. With FBA (Fulfillment by Amazon), sellers send their products to Amazon’s fulfilment centres, and Amazon picks, packs, ships, and provides customer service for those products.
In other words, you must provide your products and Amazon does the heavy lifting for you against some fees. (know that Amazon FBA is not a free service, you have to pay for it. So it is safe to say that a little investment will be required on your part). There are many ways through which you can provide your products to Amazon:
- Private label
- Retail arbitrage
- Wholesale FBA
We will talk about them later in this article!
Select The Product To Sell
Source The Product From Manufacturer
Finalize The Product via Alternatives
Send The Product To Amazon
Provide Better Service Than The Competitors
Break-down of Procedures – A Beginner’s Guide
Is Amazon FBA profitable in 2023?
Over the years, Amazon FBA has attracted many people to its model. This way the competitors kept pouring in and competition kept levelling up each day. So it is the right time to ask questions like how to start an Amazon FBA business in 2023 to stay there for longer and to be able to call it a consistent source of income. The following is the know-how of this very question:
Select The Product To Sell
It is the most important step. You should pay due care in choosing the product that is going to give you returns. It is quite obvious that if there are too many people selling the same product, the profit share of each individual becomes negligible. So you need to select the product which has a decent demand and less supply.
Websites like JungleScout help you know which product can give you maximum returns. It gives you an idea (an estimate) about the current product status in terms of demand, supply, and competition based on prior data. If you don’t want to spend your money then you can use Amazon’s Best Seller rankings (BSR) tab but you have to do your bit to make the calculated guess when you’re selecting the product.
- Know your niche: Before selecting a product you should have an idea in which niche you want your product to fall so that it covers long-term gains and not only short-term profits.
- Selecting correct BSR: After selecting your niche, you should select a particular BSR range according to the product selected. Please note the product doesn’t necessarily have to be from the top 3 of BSR. It just has to be sellable which means a product with comparatively less competition and high demand.
- Narrowing down the product: You can then narrow it down from a list of products to the product that meets the basic criteria.
Source The Product From Manufacturer
After deciding what your product will be, you need to source the product from the manufacturer. This is not an easy process because you have to make sure the product you’re sourcing is of decent quality and reasonable price to match your cost estimates. Consider yourself a customer here and then start negotiating the price with the supplier if you do not feel that the supplier’s quoted price suits you.
Things to note:
- You should ask for sample products first to keep from losses.
- Try to take everything on paper so that you have an edge if you feel the supplier has compromised with the product (in case you are sourcing the product from different countries or from a place where you cannot be physically present).
Finalize The Product via Alternatives
Do you remember I talked about providing the final product to amazon via three alternatives? We will now see what those alternatives mean:
The private label: It is somewhat like collaboration. You are sourcing products from a particular brand and adding your label to it (on its packaging/product itself). And then you’re selling it under your brand. It requires your investment and is comparatively a sustainable source of business. You essentially create your listing on Amazon including pictures of the product, the title of the product etc.
Retail arbitrage: It is buying stuff at cheaper rates from thrift stores or retail stores and then comparing the cost and profit margin of the product via amazon itself. For the same, you have to provide amazon specified barcodes on the product before sending it to Amazon. However, it is not a sustainable business model as there is no guarantee that you will find the products regularly to make the sale on Amazon.
Dropshipping: It is a business model for people who do not have a product or money with themselves. All you do is act as a mediator between supplier and buyer by listing the supplier’s product on your account. After receiving the order (from the customer) at your listed price, you place the order with the actual supplier and ship it directly to the customer. This way dropshipping help you save yourself with a decent profit margin.
Wholesale FBA: It is primarily sourcing the product from a wholesaler, listing it on amazon and selling it. Wholesale FBA is like day-to-day retail shops that we come across in our cities, the point of distinction is here we are doing it online.
Send The Product To Amazon
After deciding your way of sourcing the product and doing the needful you are now ready to send it to the Amazon warehouse and get on with the sales part. You can choose any mode of transportation according to your feasibility and time preferences.
Provide Better Service Than The Competitors
The real competition: In a sentence, this is the point of competition. Many sellers are selling the same product as you. What you do to stand out of the crowd so your traffic turns into sales is the most crucial part of this entire process. The question of starting Amazon FBA today arises from the many sellers that are now there on this platform. You have to know this is not a get-rich-quick recipe. It is just another business model. The only difference is Amazon is doing the heavy lifting for you. So you need to truly start by taking this as a business entity. You have to do all the work that a businessperson is supposed to do, including branding, advertising and marketing.
Ads can do their bit but to be the best in your niche you have to provide the best service possible by including things like
- Actively solving customer’s grievances
- Reading consumers’ reviews to get their experiences with the product
- Always aiming for improving the services
- Asking for genuine customer reviews
- Going for influencer marketing to attract traffic
- Initially providing good discount offers
Of course, after a point of time, Amazon will promote your products on your behalf but for that, you have to be able to come into the eyes of amazon. After all, it is a search engine doing things with algorithms!
Deesha Bakshi
Break-down of Procedures – A Beginner’s Guide
Step 1. Visit Amazon’s official website
Step2. Click on Sell
Step3. Create an account
Step4. List your product
Step5. Ship your product to Amazon
Step6. Grow your business
❖ Create an amazon seller’s account: To sell on amazon, go to the seller on the Amazon section and create your seller central account. Link your Bank Account and provide your identity, business/company details, and other information.
❖ List your products: There are two ways through which you can list your products on Amazon which depend on the product you’re selling.
- Selling the already available product on Amazon: In this case, you need not list your product as such. All you need to do is select and list the product along with the number of units you want to sell.
- Selling under your brand: When you want to be a unique seller on Amazon with your brand you will be required to list your product which mainly includes the title of the product, size of the product, its images, description of the product etc.
❖ Selecting the way of fulfilment: Here you have an option as to how you want to deliver the order. You have three options: FBA, Easy ship, and self-ship. Here we will see FBA. In this case, Amazon will take your products and store them. After receiving the order it will pack and deliver it to your customers.
Some important things to note:
- Pay due care when you pack your products, you don’t want to mess up when labelling the product with barcodes.
- Paste the barcodes with sticking sheets instead of using cello tapes. If lost, they will be treated as unfulfilled orders in Amazon’s fulfilment centres (FC) under which you will be at a loss.
- Carefully schedule the pick up for shipping the products to FC. Pay good care while filling in the product’s details including the number of units and its dimensions.
You can also use the option of easy shipping. The only difference is here you have to store the products and Amazon will deliver the products to the customers.
❖ Shipping the order to AFC: Now you’re ready to ship your products to AFC. You can use Amazon transportation service (ATS), third-party service, or courier service, or you can go yourself (in case your products are small and do not require a transportation service).
- If ATS is available in your area, you can go for this. For this, you can simply schedule the time in your seller’s account.
- Amazon also provides third-party services which you can avail of from your account to send your products.
- If you find your courier service better, you can go for this option too.
Please note that if you’re using any service except ATS you will be required to make a carrier appointment request via the carrier appointment request portal.
❖ Expand your reach/Wait for sales: After sending your inventory to FC, your big task is done. Now you have to wait for customers to place orders. During this time, you can focus on marketing your product off-amazon. You can expand your reach by telling the uniqueness of your product through influencer marketing, Youtube marketing, digital marketing etc.
Is Amazon FBA profitable in 2023?
In 2022, three-quarters of sellers are in profit. The competition is indeed really high and it is increasing every day. But we have to consider the fact that FBA is a business model. And every business takes a certain period to be termed as ‘stable’. So the risk factor lives irrespective of FBA. FBA is comparatively easier as you can choose from many business models within FBA and with less investment.
For FBA sellers, amazon provides a prime badge which is an assurance of fast delivery, and good customer experience. This option is only for FBA sellers which again gives your product a better chance to get a buy box.
Of course, there will be times when amazon will frustrate you with its algorithms even when you have done all the bits-and-bats of gaining the buy box from buyers. Nonetheless, there is no denying that FBA has changed the game for many when people have been consistent in their work. And it can do the same for you too!
FAQs
What is Fulfillment by Amazon (FBA)?
Fulfilment by Amazon, (FBA) is a service offered by Amazon. Through FBA you store your products in Amazon’s warehouse, and Amazon packs and delivers the orders to customers.
Is Amazon FBA available in India?
Yes. Amazon has more than 60 fulfilment centres in 15 states.
Is Amazon FBA profitable in 2023?
Amazon’s FBA business is quite profitable if done with consistent efforts.
How much does FBA cost?
The FBA cost depends upon the below factors:
- Category of the product
- Product Price
- Size and weight of the order
