Is 2019 the year you will launch your Amazon ecommerce business? If you are planning on launching your own Amazon business for the first time, FBA may be the way to go to build and grow a successful online business.
In this article we will cover the basics of selling on Amazon FBA, launching your product and driving sales in order to build and grow your business well beyond your expectations.
What is Amazon FBA?
FBA is short for “Fulfillment by Amazon”, and is a large fulfilment network by which Amazon essentially arranges shipping of the products you sell. Under FBA, as the seller you are only responsible for labelling and shipping to an Amazon warehouse. Amazon then handles all storage, packaging, shipping and customer service.
As a seller you can arrange shipment to the Amazon warehouse through Amazon’s Seller Central platform. Through the platform you can also track inventory and restock items to the warehouse as required.
Why Should You Use FBA?
The obvious benefit of Amazon FBA is that it significantly reduces the amount of time, effort and stress required to sell products on Amazon. Not only do you not need to worry about the shipping process, Amazon will also take care of customer issues and returns. This frees you up to focus on other aspects of your business, such as creating successful product launches and driving sales (more on these later).
Using FBA also opens up some of Amazon’s shipping options. Under the program, your products will be available for Amazon Prime free Two-Day Shipping, Super Saver Shipping and FREE Shipping, which gives customers an extra incentive to shop with you and will improve your conversion rates.
Finally, having Amazon FBA status gives you credibility as a seller: customers will place more trust in you if you are linked to Amazon and they have the extra peace of mind knowing that Amazon will look after any issues or problems. This will also improve your conversion rates.
How Much Does Amazon FBA cost?
At first glance, the fees associated with FBA may seem rather high, especially if your business is just starting out. However, once you consider the cost offset of the service against the time and manpower you save as well as other costs, along with increases in potential revenue through higher revenue, you may find it actually saves your business money in the long run.
For the latest fees and pricing, check Amazon’s official FBA Inventory Storage Fees Policy page. It will depend on each business whether it is cost efficient to use Amazon FBA, so way up the fees and charges per item against other business costs, manpower and potential benefits (especially improved conversions).
Risks To Be Aware Of
Amazon FBA is a low risk activity, but there are a few potential pitfalls to be aware of. Firstly, you should know that Amazon automatically splits shipments: meaning that when you send products to the warehouse, Amazon will typically send them to two or three different Fulfilment Centers (FC’s). This doesn’t normally impact on the seller, but know that if you opt-out of split shipments you will be penalised and need to pay extra to send your product to a single FC.
Sellers should also be aware of the risk of “co-mingling”: having your items mixed with units from other sellers in the FC. For this reason it is important that all units are clearly labelled so they do not get confused with units from other sellers.
How To Launch Your Product
Especially for new sellers, it can be difficult to know how to launch a product on Amazon in order to maximise sales. When launching your product on Amazon, it is important to keep one thing in mind: sales conversions. Sales conversions are important for any business: it is not enough to have potential
They are, however, doubly important on Amazon. In order to understand Amazon you need to keep one thing in mind: Amazon is itself a business, which, like you, has one primary goal: making money. Therefore it has a vested interest in promoting sellers and listings which will help it to make money, and it identifies those listings by looking at their sales conversion rates. These are the listings which Amazon which will then rank mostly highly in its search results, which is essential for attracting more customers and driving more sales.
In this way, having great sales rates on Amazon not only brings the obvious short-term revenue, but also helps you to rank your product, thus driving more traffic to your listing and building much more revenue over the long term.
How To Drive Sales on Amazon FBA
This, then, brings us to the next point: how do you drive high sales rates on your listings?
Great sales rates essentially comes down to two things:
- Attracting potential customers (traffic) to your listing
- Converting those customers into actual sales
Bringing potential customers to your site involves a combination of inbound and outbound lead generation. On Amazon your main source of inbound leads will come from ranking highly in search results, which is governed mostly by sales rates and using the best keywords. Outbound leads can be generated through external marketing efforts such as Social Media, content marketing and PPC (pay-per-click) advertising.
