Amazon has emerged as on the biggest e-commerce website. Because of its unparalleled customer base, Amazon attracts new sellers and customers every day. Selling on Amazon means you do not have to set up a store to sell, all you need is inventory, laptop, and internet connection. And as a customer, you get to choose from thousands of different product while sitting at your home.
Because of a busy lifestyle, physically going to a store has become difficult. Here, online shopping comes to the rescue. But to buy online, there need to be sellers whom you can trust. And with Amazon FBA, one can be sure about the product service.
Due to increasing sales and comparatively low investment, many people are selling online. Since Amazon is the biggest platform, it has captivated the interest of many sellers. You must have heard about people selling online through Amazon FBA businesses or might have noticed that some products have “sold by xxx Fulfilled by Amazon.”
If you have ever wondered about how are these Amazon FBA businesses are conducted, and have thought about doing so yourself, keep reading further. In this article, we have listed everything you need to know about Amazon FBA business.
What Is An Amazon FBA Business?
Whenever you buy anything from Amazon, the chances that the product has been sold by the third party through Amazon FBA. “Fulfillment by Amazon” or FBA is a service provided to sellers by Amazon.
Basically, Amazon looks after all of the stock of the seller. So, if you place an order, it goes straight to the FBA warehouse by-passing the seller completely. Amazon will pick out the order and deliver it to you. Even the customer service is managed by Amazon FBA. It manages all the customer returns and only passes it on to the seller if you have some specific queries. To the customer, buying from Amazon directly and Amazon FBA seller is same. The delivery options are same, return policy is same and even the customer service team does not change.
If you are planning to start an Amazon business, selling using Amazon FBA would make your work easier. It takes the same amount of work to sell 10 items or 10,000 items. Amazon’s large team will efficiently manage all your orders and returns. Even your customers will be happier because they will get service from one of the biggest brands in the world.
Another benefit is that you just have to focus on getting stock delivered to Amazon and look after the sales. It is a great way to centre all your attention only to the sales. Moreover, this service makes it possible for you to sell thousands of products every month, all over the world.
Why Choose An Amazon FBA Business?
- E-Commerce stores are always open. You do not have to worry about missing out on the opportunity of selling your products.
- Amazon’s reachability is to everyone with an internet connection. The customer base is, thus, gigantic.
- Amazon is widely used all over the world. If you sell on Amazon, you can sell worldwide while still sitting at your home.
- Amazon FBA ensures quicker shipping.
- Selling online is cheaper than setting up a physical store. You just need to manage your inventory. With Amazon FBA, you do not have to even worry about storing your products. That means, you save a lot on rent.
- Amazon FBA service picks up your products from you, stores them, and them delivers them to your customers.
- Your customers will get customer service from one of the largest brands, Amazon.
- You can focus on expanding your business rather than managing it, Amazon FBA will manage your business for you.
- You can sell thousands of products or various types every month while sitting at your home.
How To Source Products?
- Invent a product: You can always design your own product, manufacture it, and then sell it.
- Improve a product: You can choose to sell an existing product that is selling well. By implementing some changes, you can enhance its quality.
- Buy from manufacturer: You can source products from a manufacturer and sell them.
- Sell white label products: You can contact the manufacturer to produce their items with your brand name on them. This way, you will be selling products with your brand name without taking up the hectic task of manufacturing them.
How To Find The Perfect Profitable Products?
It is probably the biggest task, choosing a profitable product. If you select a product that is not profitable enough, you will end up earning no or meager profits. You should keep in mind the following keys to find a profitable product.
Probably everyone knows that a product with high demand will sell more, generating more profits. You should consider the product’s or similar product’s sales and revenues. Another thing to remember is that out of your revenue, almost 50% goes to Amazon as fees. So, select a high-demand product that can be sold at profit-generating prices.
You should check the number of reviews of similar products. If the reviews are more than 500, the product has a very high competition. It is wiser to select a product that has up to 200 reviews. This way you will know that it is demand but has limited supply.
3. Listing Quality of Competitions
While checking for the reviews, you should also check the listing quality of you competitors. Listing quality means the images used, reviews, description, and features of the product. If the images used are of poor quality and blurry, it is good news for you. By reading the reviews, you can know whether the customers are happy, and what will make them happy. This way you have a benefit of attracting unsatisfied customers. Also, what looks good, sells good.
4. Total Cost Of Products
Consider the total fees charged by Amazon (supplier fees, PPC, FBA fees, etc.) to be 50%. You can have a rough estimate of how much will the product cost you in total. Based on this you can decipher the total investment to be made and the profit margin. It is advisable to sell a product for at least $15 to yield a minimum profit of $6.
You should choose a product that sells throughout the year. You can check if it is selling well by tools like Keepa (a chrome extension) and websites. You can obtain a sales chart and determine if the product sells in a particular season.
Most of the times, people overlook this important step. They find a product, connect with the supplier, pay for the product, list it online only to get a cease and desist letter. It is wiser to check if your product is patented. You can go to a professional if you are not too sure or scared. You can even check on Google Patents
7. Is Your Product Different?
Your product should not be an exact copy of your competitor’s. You can put better pictures, specially the first one. You can change color of the product. You can even fix its flaws, making it a better product.
A Detailed Overview Of Amazon FBA Business Plan Template
After deciding upon the product, its price, and its sourcing, it is time to write your Amazon FBA business plan. The template of Amazon FBA Business Plan will help you build an internal roadmap while starting and growing your business. It is crucial as it establishes the groundwork required, streamlines your business positioning, analyses the step-by-step process course in realizing your goals, and ensures that you have a viable commercial potential.
The core parts of a comprehensive Amazon FBA Business Plan Template are listed below.
1. Executive Summary
It is where you introduce your business. It should consolidate all important elements of your plan and structure your plan. You should fill this at the last to summarize your plan.
2. Description Of Company
It should include major details of your company like mission, vision, information regarding company formation, location, founders, and notable achievements, if demanded. You should fill these subsections:
- Main objective: You fill your purposes and goals of starting your FBA business.
- Products: This subsection is where you identify what you are selling. It should have details like developmental stage, pricing, product images, past test results, as well as anticipated future products.
- Value proposition: A unique value proposition will give you an edge over your competitors. It should contain the answers to what do you offer, what is different about your product, and why are you doing what you are doing.
3. Marketing Analysis
A marketing plan will act as a guide to which marketing exercises need to be done, what will be their execution and where your future goals lie in your mazon FBA Business Plan. You can include these points as well:
- SWOT analysis: This analysis focuses on strength, weakness, threats, and opportunities your business will face. This will give a clarity and help in determining the most lucrative opportunities to pursue to achieve your growth goals.
- Financial estimation: Based on your predicted sales figure, how much turnover are you expecting from your business?
- Target market research: It includes total addressable market, target market size, market trends, and what you will do.
- Target customer profiles: You identify your niche market here. Here you look out for the groups of people who might buy your products and the qualitative aspects that matter the most to them.
- Customer relationship: This subheading will be the answer to how you plan to build a lasting relationship with the target market.
- Product and brand positioning: It consists of the details of your brand and the product like whether your product is a premium, cheap, or designer one, and where your brand sits in the market.
- Elevator pitches and taglines
- Marketing channels to be used: Here you identify whether you plan to reach your customers via organic search engine ranking or paid ad placement, affiliate outreach, or a mix of all three.
- Marketing strategies
- Budget of marketing
4. Operation Plan
If you are beginning with a shoestring budget, this might be irrelevant. This part will organize the moving parts of business and give a practical understanding of your business. An operation plan has:
- Facilities and space needed in FBA warehouses or at your home, warehouse.
- Software technology needed
- Equipments needed
- Supply chain management
- Distribution plans and logistics
- Quality control checks
- Order and fulfillment processes
- Legal and accounting needs
5. Management And Organization
It will include names of your business’ management and organization team and their experience in their respective fields. It can contain details of:
- Founders and executive team
- Board of directors
- Any owners and shareholders
- Key team members and department heads
- Consultants and special advisors
6. Financial Plan
In the details of your financial plan, you show thorough startup cost, forecast, goals, and your current financial state. If you have taken a loan for your startup, you include the details of the loan.
It possesses finer particulars that are referred throughout your business plan. It can include:
- Copies of insurance contracts
- Articles of incorporation and company status
- Resumes of founders and key team members
- Shareholders agreement and company constitution
- Trademarks and patent registrations
- Employment and supply contracts
- Deeper research data or links to references
Ideally, you should keep your Amazon FBA Business Template simple, short, and straightforward. We have listed all the possible points you can include, however, you need no include all of them.
Amazon FBA is a great way to ensure efficient management of your business. If you are on an early stage of your startup, you should focus on action rather than detailed plans. If you are already into business and want to take your business to Amazon FBA, you should fill in a detailed business plan. The size of your business plan should be directly proportional to the scale of your business.