Running a business is not as easy as putting up a product listing and expecting an immediate increase in sales—all the more if you don’t have a thorough background in marketing.
Still don’t know how to start developing your e-commerce business on Amazon?
No need to look any further because in this article we will provide you with a basic guide on what Amazon FBA is, how you can profit from starting a business on Amazon, the three macro fundamentals to drive your market, and the eleven strategies you should apply when choosing the right Amazon FBA business suppliers for your brand.
Eager to get started? Continue reading this article, and let us help you in growing your business.
The FBA program—which stands for Fulfillment by Amazon—is currently being offered for third-party sellers to allow fast and automated order fulfillment and shipping services. The process is really simple: all you need to do is sell and Amazon will take care of the shipping.
Once you enroll for this program, Amazon will handle all shipping concerns such as returns, refunds, pickups or packaging, and product warehousing across hundreds of Amazon’s warehouse locations.
This program is also convenient for sellers; instead of problematizing the safekeeping, production, and distribution of items, they now only need to worry about restocking their supplies with Amazon. To replenish their stocks, all they must do is send their amazon FBA products to Amazon who will process all incoming orders for the seller after they’ve been paid by the customers. Aside from shipping and delivery, the Amazon FBA program also consists of the following perks:
Amazon continues to be a giant in the online retail and fulfillment landscape due to the countless sellers that resort to the influence of e-commerce sites. Over the past year we’ve seen an increased usage of Amazon, and the platform has garnered over 300 million active customer accounts around the globe.
You can only imagine the impact that this number could have on your business plan. While you still can manage the direction of your business, it’s never too late to enhance your marketing strategies and incorporate Amazon FBA business suppliers. Before we delve into that, let’s touch on how exactly you profit from selling on Amazon?
As mentioned earlier, people have been shifting to online selling or e-commerce sites for their businesses to flourish. This tactic has manifested in the seller’s intent to be making money on Amazon—a successful online platform by the virtue of its 1.6 trillion USD market capitalization.
Luckily for you, it is not that difficult to earn on this e-commerce giant. Contradicting the perception that Amazon generates revenues through online sales, Amazon has grown rapidly in other facets like Cloud Services and Digital Advertising—all thanks to its founder, Jeff Bezos.
Throughout 2020, Amazon has earned a 21.3 billion USD net income and an 84% increase compared to the previous year. Moreover, sales have escalated to 386 billion USD or 37% in percentage. In contrast to other segments, online selling has generated 51% total sales or 197.3 billion USD.
Given these pieces of data, it’s no wonder why Amazon has proven its credibility. If you’re seeking an opportunity to thrive in the e-commerce industry, here’s how you can be earning just by selling on Amazon:
The general rule is that the company or business owner purchases goods at a wholesale price and resells them on an e-commerce platform to gain a profit. As you can see, the company, by default, possesses a warehouse and an inventory, and gets to decide on the pricing, fulfillment orders, while managing the customer care and support. The ability to control these variables is what creates profit.
Third-party sellers are among those businesses that can independently grow from a wide range of commercialized new and used amazon fba products. Regardless of the products they offer in single purchases or bulks, there will always be a market for them (e.g., kitchen essentials, retro and modern gaming consoles, school supplies). This is why small and medium-scale business owners often start with the third-party selling structure to significantly increase their commissions.
In the U.S. alone, there are approximately 2.3 million third-party resellers, and they comprise about 20% of the money that Amazon makes with sales. Third-party selling is a profitable business, and their gross margin rate of 60% solidifies this stance.
Besides online sales, a substantial portion of your revenue comes from the sales you create through Cloud Services. Companies nowadays have stopped investing in expensive IT infrastructure, servers, and other hardware since they can turn to Amazon for extra storage space.
Since Amazon Web Services can generate a huge operating income amounting to 60%, they can also promise to hold and guard a database or bandwidth for hosting sites and processing complex software.
Amazon, being a fast-growing high-profile platform, can now generate advertising revenues that are significant to your business. Using digital advertising grants sellers the capability to offset narrow margins from the core of their retail business.
Although digital advertising is more practiced on Google and social media, Amazon is also opening its lines for this revenue engine so that you can have everything you need to boost your profits in one channel. You can attest to the efficacy of this approach with statistics that show 200 million unique users visiting Amazon per month.
You can certainly hit your target market with Amazon’s advertisements which continually attract various audiences.
Acquiring subscription revenue through Amazon Prime is another area where your business can reach successful heights. Customizing Amazon’s e-commerce structure is all thanks to the 150 million members of Amazon Prime; in fact, this avenue containing offers is the main reason why people trust and shop on Amazon.
Customers can enjoy benefits like free shipping and content streaming, compelling them and more people to sign up for the subscription. As a result, Amazon Prime has expanded its reach to 15 countries that are now indulging in Amazon’s video game streaming, grocery shopping services, and more.
Now that you know how selling on Amazon will benefit your business by already being on the platform, let’s talk about how driving the market allows sellers to be on the good side of the business spectrum. Three macro fundamentals drive the market to where it is and transforms its trends and turning points:
It is also one of the vital factors to be considered while you plan to recruit a mobile app development company. Look for app development companies who offer you end-to-end app development services, starting from designing, development, maintenance to marketing. You should also have prior knowledge that the app development company has in-house services or outsourcing them.
Simply put, liquidity refers to the demand or the willingness of consumers to purchase your brand’s products, services, and other assets. Demand is often driven by tightening and easing credit. While money is usually associated with hard cash and credit, hard cash within a system is relatively more stable than credit since the latter is extremely elastic and can be created by any two willing parties. The flexibility of credit is what creates the liquidity or emergence of “demand.”
Most credit is produced outside the bank or government; it is created between businesses and their consumers. Each time businesses buy wholesale supplies with credit, they generate money. This is analogous to opening your credit card to buy something online: say you’re buying a new gaming PC, you’ll have to create money to purchase the computer. The more liquidity or demand there is in the system, the higher your market gets pushed upwards.
Depending on the level of cash or credit there is in a system, demand constantly fluctuates. It has been established that credit is easier to generate than cash, and for this reason credit is what motivates investments in a system. Debunking the perception that the supply side of financial assets is the so-called total amount of shares or bonds, supply is technically the aggregate market value. Look at it this way: the sum of every dollar’s quantity at current market prices is what makes up supply.
The very law of supply and demand is that an equity market has a flexible supply. Should the demand for stocks increase, then the prices will correspondingly rise, resulting in a total market capitalization surge. Given that, business units will be compelled to create more supply to meet the demands, yielding a system that corrects itself.
When we talk about ‘risk cycles’, we are pertaining to the level of risk-taking that exists in a system. Markets need to be visualized with a reflexive behavior, which is why when a circumstance perceives the risk to be at its highest, it is approached as though it is at its lowest and vice versa.
When investors are most leveraged, the market becomes most fragile. Weak positioning’s become the aftermath of that leverage and manifest in margin calls or forced selloffs when the trend changes.
If you want to know where you specifically are in the risk cycle, you must track the positioning and general market sentiment.
After knowing what drives the market, it is crucial to determine the main difference between a failed and successful Amazon business. The latter scrutinizes the amazon FBA products being sold by finding profitable products that come with decent margins and choosing the best supplier that complements the setup of your Amazon FBA business.
The next question to ponder is how can you find the best business supplier for your business? Below are eleven strategies on how you can choose among your Amazon FBA business suppliers.
If you’ve got an idea that will guide our readers and move the App industry forward, we want to hear about it. Submit your entries by visiting our write for us section.
Selling wholesale on Amazon involves buying bulk products directly from the manufacturer or supplier of the product at a discount, then selling them as a reseller on Amazon for retail prices.
To be successful long-term on the marketplace you need great Amazon selling tools to excel in many different elements including price, feedback, finance, shipping, tax, payments, listing, sourcing, advertising and customer service.
For this, you have to first browse a category’s best sellers list and identify highly trending products with relatively little competition. next, research each best-selling product as well as about the supplier. Contact the supplier and start selling the product on amazon.
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