Fulfillment By Amazon Overview

If you are completely new to the Amazon FBA business model then you may be wondering what in the world “FBA” stands for.

Well, FBA, simply means “Fulfillment by Amazon”. We realize that saying Amazon FBA is a little redundant but it just seems like the thing to do.

Let’s take a quick peak at how Amazon FBA works and then look at both the positives and negatives to this business model. Hopefully, this will give you an idea if it is right for you.

Amazon FBA

Fulfillment by Amazon is a simple program that the eCommerce giant has set up to help anyone sell their items on their platform. Here is a short list of what Amazon will do for you when you register for their FBA program:

  • Store your products in their warehouses, scattered throughout the country;
  • Pick, pack and ship products to your customers;
  • Handle all refunds and returns;
  • Provide amazing customer service to your happy customers.

So, if Amazon is doing all of this, then what the heck do you need to do if you are selling products using the Amazon FBA program?

Great question!

Here are a few things you will be required to do:

  • Manage your inventory levels, so you always have products in stock;
  • Answer customer e-mails about your product;
  • Drive traffic to your product page;
  • Increase the conversion rate of your product page;
  • Focus on expanding your empire.

It is important to note that Amazon will gladly offer their fulfillment services to both 3rd party sellers doing arbitrage as well as private label products.

ArbitrageBasically, this is a labor intensive but highly profitable practice of purchasing products on sale from box stores, flea markets, Craigslist, etc., and selling them for a higher price on Amazon. In a week, you may sell Disney princess dolls, easy bake ovens, kitchen knives and whatever else you can get a good deal on.

Private Label - This is where you source a product from a manufacturer and apply your own personal brand to it. You are the owner of this product! You will store hundreds to thousands of this one product in the Amazon warehouses.

For the sake of FBA Empire, we deal solely with private label retailers as it is less labor intensive and offers an amazing opportunity to become financially free.

Getting back to the whole Amazon FBA process…

It may sound like it is too good to be true but it really is a great program that can help handle a large portion of your business. Much like anything else in business there are some risks, so let’s take a quick look at the negatives and positives of using Amazon FBA for your eCommerce business.

Amazon FBA - The Negatives

Cost

While Amazon is doing a great service for you and handling a lot of the tasks you would rather not do, they don’t do it out of the kindness of their hearts. That’s right, they will be charging you a storage fee as well as an FBA fee. These costs need to be considered when pricing your item.

Less Control

It can be a little scary depending on Amazon to store your product and handle the entire sales process, however, it is also this business relationship that will give you the time you desire to do other things.

Similarly, your product will depend a lot on the Amazon platform, so if they decide to increase rates, or deactivate your account for some reason, you will be at the mercy of the largest eCommerce retailer on the planet. There are things you can do to help ease this such as branching out to other platforms and selling your product elsewhere – essentially, you are not keeping all of your “eggs in one basket”.

Amazon FBA - The Positives

Freedom

While you may be giving up control and paying for Amazon’s services, it is most definitely worth it as they are basically handling all of the mundane, day-to-day tasks of your eCommerce business. This provides you with the freedom to continue building your FBA Empire, hanging out at the beach or going to the park with your kids. The entire time, you know that your business is in good hands and running like clock work.

Built In Customer Base

Earlier we said that you would be responsible for driving traffic to your product page. While this is true, Amazon certainly makes it easier since they have a TON of shoppers already using their site.

Leveraging the customer base of Amazon is simple and it ensures you will always have people landing on your product page. The best thing about this is the people shopping on Amazon are ready to BUY. When people go to Google to search for a product, they may just be browsing and doing product research but when they go to Amazon, they are prepared to open their wallet and buy that wonderful product of yours.

Profitability

One of the biggest advantages of the Amazon FBA program is the opportunity to create wealth and ultimately financial freedom. The sky really is the limit with the FBA program. If you create a solid brand and follow the FBA Empire methods, you could easily be selling upwards of $50,000 every month…for ONE product. This is certainly achievable and it is one of the things that make FBA such an attractive program.

Hopefully this basic overview of the Amazon FBA program gives you a better idea of what it is all about. From here, you can decide if this program is right for you and your business.

Please Note:  These guides are part of our free beginners series.  If you are looking for our private members area with the training videos and forum you can sign up by clicking here.

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Amazon FBA Getting Started Guide:

Please Note:  These guides are part of our free beginners series.  If you are looking for our private members area with the training videos and forum you can sign up by clicking here.