eCommerce sales in the United States increased 14.2% year over year in 2021, hitting $870.8 billion. Amazon accounted for 41% of all sales. To put that market share domination into context, Walmart was the next closest competition, accounting for only 6% of total eCommerce transactions.
Amazon is the king of the digital eCommerce business. It's also the place to be for vendors. Because of the benefits provided by Amazon's end-to-end Fulfillment by Amazon (FBA) services, not only because of its large user base.
Is Amazon FBA worth it for new eCommerce firms, given that 85% of Amazon's largest sellers utilise it?
Yes, in a nutshell. Today, we'll go over the reason's why it's the best place to be.
The Advantages of Running an Amazon FBA Business
1. For Ecommerce, the majority of consumers rely on Amazon.
As previously said, Amazon owns roughly half of the eCommerce sector. It has gotten so widespread that it has altered customer search and purchase habits.
It has become a go-to location.
Instead of utilising Google to perform product research, 71% of shoppers will go straight to Amazon in 2021 to look for pricing, reviews, or to make a buy.
Because of Amazon's convenience and prominence, people have grown conditioned to expect it. They understand that conducting product research and locating competitive pricing points on Amazon is simple. It's even better when the third-party merchants offer excellent customer feedback, fair price, and dependable fulfillment.
Because Amazon's market share is expected to continue to rise, it only makes sense for businesses to explore starting an Amazon company and using FBA to boost their brand's visibility and future growth.
2. You've got your own order management software.
Managing orders on Amazon, like any other eCommerce business, has become simple thanks to the Marketplace Web Service interface, which enables customers, third-party sellers, and individual merchants to communicate with one another via user-friendly software that makes data transfer extremely efficient.
Additional features such as automatic reporting on sales performance, pricing adjustments, and inventory level updates, among others, round out the package, making it the ideal tool for tracking your online transactions, whether or not you use Fulfillment by Amazon.
3. Order fulfilment is easier and faster.
You won't have to worry about particular things or products with this company strategy since they'll all be handled identically. As a result, if one product is delayed in shipping and it will take several days for you to get it, your other purchases will be unaffected. This implies that instead of losing clients to rivals who may provide the same thing at a lesser price, you'll gain access to a larger market while maintaining their confidence!
So, if you're an Amazon business owner trying to figure out the best method to cut costs while increasing earnings, you should look at ways to cut costs. Although outsourcing is a viable option, some people are hesitant to do so due to the numerous dangers associated with relinquishing entire control of their inventory management system. Fortunately, Amazon FBA Business is just what you require! They'll not only manage your inventory, but they'll also handle delivery, so all you have to worry about right now is selecting high-quality items at low wholesale costs.
4. More people will hear about your items.
If you sell on Amazon, you're certainly aware that there are already millions of merchants on the platform. The sheer quantity of merchants in the marketplace is mind-boggling. As a result, if your items aren't visible enough, shoppers are unlikely to locate them. This can be an issue, especially as most consumers find navigating the site's pages challenging.
With Amazon FBA, on the other hand, all of your items will be available to purchasers right away, and they'll be able to see all of their alternatives with just a few clicks.
Enrolling your firm in this programme is ideal, especially if you're seeking an internet platform to market your items globally, due to the potential quantity of exposure. Although eBay has long been renowned as a diverse marketplace that offers a variety of things in a variety of categories, Amazon FBA makes it easier and less expensive to export large quantities without going over budget.
There are certain vendors that really benefit from this option since they've been able to optimise their profit by customising prices for each nation based on the current exchange rate. So make this a terrific benefit for you as well!
5. There is no need for outside marketing.
The majority of companies will need to devote a large portion of their cash to marketing. However, with FBA, no outside marketing is required.
What are your strategies for utilising the FBA marketing tools?
You may start advertising your items by setting up marketing and Amazon seller tools from your Amazon seller account. This includes the following:
- Sponsored merchandise
- Brands that have been sponsored
- Sponsored displays
Each of these services comes with built-in templates and dynamic widgets to assist you in creating personalised advertising to get your goods in front of more people and reach a certain demographic.
You can control your monthly expenditures and simply assess your return on investment with Amazon advertising since you establish your own budget for the maximum amount you wish to spend each day on your advertisements.
6. A Straight Path to Scalability
The next stage is to stimulate development once you've mastered the fundamentals of running an Amazon FBA business.
For that reason, Amazon FBA is well worth the investment, as long as you use all of the tools and approaches available on a continuous and planned basis. Aside from sponsored articles, Amazon FBA gives you the ability to:
- To help your business develop, promote special offers and discounts.
- Utilize analytics to improve the present items you have.
- Create a marketing and sales strategy for your brand during peak seasons.
However, like with any business, the amount of effort you put into it may have a significant impact on how fast and effectively you expand.
Furthermore, after you've put tools to work through your FBA dashboard, you'll have more time to increase your presence through other channels, reaching both present and future Amazon consumers. Amazon FBA gives merchants more time to focus on other aspects of their business because they don't have to worry about fulfilment.
For example, focusing on brand alignment and product familiarity will increase your popularity on Amazon and lead to more return consumers.
7. Shipping options that are easy to use
Aside from making your items visible to your target market, selling with Amazon FBA also allows you to take advantage of streamlined delivery options. This benefit is one of the main reasons why so many individuals are drawn to the FBA business model. With this, you won't have to worry about charging different shipping fees for each product. You'll also have access to materials that will assist you in shipping your items in large quantities. As a result, you've hit two birds with one stone!
8. Reduction in the amount of storage space required
Have you considered expanding your online retail business? If that's the case, you'll need to save money on storage costs and space. Although setting up a warehouse is a possibility, it is not the most cost-effective solution for new enterprises.
This is a problem that Amazon FBA can immediately handle. If you go this path, you won't need warehouses because they'll do it for you through what's known as self-service sortation. This will not only help your company function more smoothly, but it will also offer you more time to focus on other elements of the company.
What are the requirements for selling on Amazon?
You know how much money you may earn if you establish an Amazon business, but how much does it cost to get started? Not only will it necessitate a monetary commitment, but it will also necessitate an investment of your time.
"How much money should I start with?" is one of the most frequently requested topics at Jungle Scout. While the majority of Amazon sellers (58%) started with $5,000 or less, 28% started with less than $1,000, and 18% started with only $500!
Yes, you will need to start with more money if you want to develop your own private label business. Retail arbitrage or wholesale, on the other hand, are wonderful possibilities for lesser budgets if you want to start making money right now.
How did the vendors come up with the money to start their businesses?
58% of Amazon sellers choose to bootstrap their business or start with personal money when they initially started selling on the platform. I advocate bootstrapping (starting with a little quantity of money and reinvesting) or personal savings if you don't have much, to begin with.
Using credit cards or loans as a new seller is dangerous since it will be difficult to repay what you owe if you buy bad goods. Despite this, 17% of sellers borrowed money from a family member, and about 12% acquired a company loan to get started.
How long did it take for them to break even?
When compared to a normal modest brick-and-mortar firm, Amazon sellers benefit far sooner. While it may take the latter two years or more to get even, 20% of Amazon sellers said it took less than three months to break even. No, Amazon isn't a get-rich-quick scam, but it is feasible to make money right away.
However, this is not the case for every vendor. It may take a little longer for sellers who are just starting out with their business to see a profit. 17% of vendors said it took 3-6 months to generate a profit, and 16% said it took about 1-2 years. This is typical of a private label product, especially during its initial debut.
To help start the ball going on their listings, sellers are paying money on marketing and advertising.
To sell well on Amazon, you must invest the time necessary to succeed. If you're consistent, you'll be able to launch your first product in under three months, just like 54% of other Amazon sellers. In less than 6 weeks, 31% of companies were up and running!
But don't feel obligated to get up and running right away. The average time it took 14% of Amazon sellers to establish their firm was 6 months to a year.
Go at your own pace and in the manner that makes you feel most at ease.
How much time do salespeople devote to their business each week?
You'll still need to devote time to managing your firm once it's up and going. You may spend fewer than 10 hours per week on your business if you use FBA to manage all order logistics, as 39% of sellers do.
You will most likely devote more time to your business in the early phases. 16% of Amazon sellers work 21-30 hours per week on the business, while 17% sell full-time and work over 40 hours or more each week.
What you want to get out of your business determines how much time you devote to it.
Is selling on Amazon too competitive?
While competition has risen in recent years, as you discussed above, selling on Amazon may still be beneficial for new sellers. In fact, selling in the US Amazon marketplace is regarded to be the least competitive.
There will always be rivalry in any business you choose to pursue, which is a good thing since it implies there is a demand for your products.
This year, about 600,000 new vendors will have registered to sell on Amazon. Yes, there is a large number of vendors, but keep in mind that Amazon's market share grows every month, quarter, or year, depending on how you look at it.
So, what do you have to lose? If any of these advantages seem appealing to you, it's certainly time to consider jumping on the Amazon FBA bandwagon! Begin by learning more about the program's fundamentals, and then have a gratifying shopping experience with minimal financial investment.