Whether you’re a new entrepreneur wanting to build your first startup, or an experienced business person looking to expand online, Amazon and its additional fulfilment services is a platform worth exploring. This article introduces the Fulfilment by Amazon (FBA) and why it is becoming increasingly popular amongst entrepeneurs.
Since its emergence in the late 1990s, Amazon has grown to become the largest e-commerce retailer in the world. Now, over 310 million active online customers flock to Amazon’s website globally to purchase products, contributing to Amazon’s market capitalisation of US$480 billion and making it more than twice the size of traditional “bricks and mortar” retail store giant Wal-Mart.
So why is Amazon FBA so popular and what is all the fuss about?
To put it simply, as a third-party seller you can focus on sourcing the product and selling, while Amazon delivers to the customer and takes care of customer service and even returns, all from the comfort of your laptop.
Fulfillment can be one of the most challenging aspects of selling online and despite the many fees Amazon FBA charges for storage, order handling, pick & pack, weight handling and commission, it can still be worth it.
With Amazon looking to roll out a fulfillment centre in Australia, the opportunity to take advantage of the FBA platform of “low prices, vast selection and fast delivery” (with talks of 1-hour delivery times) should, at the very least, be explored.
Some important questions come to mind – is FBA the right choice for you? Is it worth it? What are the challenges, benefits, and alternatives?
In essence, your decision will be based on:
- Who are you on Amazon – wholesaler or retailer
- Control – how much control you want over your brand, price & day-to-day operations
- Product and Sales velocity
- Amazon support, reporting, and analytics
- Costs – margins and accounting/tax implications
- Fulfillment management and customer returns
At the end of the day, you need to see if selling via FBA will make a big difference to your bottom line and then figure out how to set it up properly so you can focus on selling your products and possibly scaling your business.
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