Is Amazon FBA a good business model?

by danielavlad 7 replies
Hello,

Is Amazon FBA a good business model? And what about the risks how big are the risks that you buy 1 product and then you remain in stock with it and won`t be able to sell it and pay storage tax and so on.
#ecommerce sites, wholesaling & drop shipping #amazon #business #fba #good #model
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  • Profile picture of the author DWaters
    IMO Amazon's FBA is one of the best business models going. Last I checked Amazon is pretty big and the majority of online shoppers go directly there first when they want to make a purchase. About 45% of the items sold on Amazon are sold by third party sellers, many using FBA.


    So with the HUGE amount of buyer traffic and the high level of consumer confidence in only makes sense to have some of your inventory for sale on Amazon. The risks you refer to can easily be minimized by doing your due diligence prior to purchasing inventory. It is usually easy to determine what sells, how often and at what price. I usually use camelcamelcamel for that.
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  • Profile picture of the author Brent Stangel
    Is Amazon FBA a good business model?
    Not for a newbie.

    Brent
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  • Profile picture of the author Steve B
    Originally Posted by danielavlad View Post

    Is Amazon FBA a good business model?
    Daniel,

    IMO, Amazon FBA is not a business model - its a fulfillment or delivery service where Amazon stocks the product, does the financial transaction, then ships the purchase. That's just a small part of the whole selling business model which could include any number of strategies you might employ to market your business, set boundaries for your niche, build an email list, create or arrange for products to sell, send those products to Amazon, advertise or promote products, drive traffic ,etc.

    My point is, Amazon does their part but you must still do your part and that can be a significant challenge to do it all cost effectively. eCommerce with FBA can be a losing proposition if you don't know what you're doing.

    Maybe that was Brent's point (not to put words in your mouth Brent).

    Steve
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  • Profile picture of the author JohnMcCabe
    I recently did some research on using FBA for an e-commerce project (on the back burner, so don't bother with the PM spam).

    What I learned is that the most successful people "make their money when they buy, not when they sell."

    Doing your market research, deciding on a product, and then sourcing that product and getting it to Amazon is where the money is. After that, you have to keep an eye out for too many things to list here.

    Definitely not a passive business.
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    • Profile picture of the author Importexport
      Originally Posted by JohnMcCabe View Post

      I recently did some research on using FBA for an e-commerce project (on the back burner, so don't bother with the PM spam).

      What I learned is that the most successful people "make their money when they buy, not when they sell."

      Doing your market research, deciding on a product, and then sourcing that product and getting it to Amazon is where the money is. After that, you have to keep an eye out for too many things to list here.

      Definitely not a passive business.
      I have posted many times about the fact that profit begins with buying. I see countless newbies buying products at prices they they call "wholesale" but they are totally unaware how much lower they can buy the same product if they buy direct from the manufacturer.

      B2B websites list thousands of suppliers as manufacturers but they are traders in disguise. They offer "wholesale" prices, but they have bought from the actual manufacturers, added a big margin, and they sell the products to unsuspecting buyers who think they are going to make a killing when they import and sell on Amazon.

      A major factor in the failure of so many new businesses that do that, is that they have not done their market research, other than to find "hot sellers" and they can't compete in the race to bottom price wars.

      I recommend finding unique products from countries outside of China, and private labeling them.

      Walter
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  • Profile picture of the author Connann
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  • Profile picture of the author JohnMcCabe
    Originally Posted by Connann View Post

    The BEST o business model is definately Email Marketing.

    Better thab FBA.

    Rinse and reapeat Email Marketing Model and then try different model
    Originally Posted by danielavlad View Post

    You mean building a list and then selling to that list?
    You forgot "and signing up for the coaching in his sig"...

    If you read his posts, he's like a kid with a hammer - everything looks like a nail.

    John is an email marketer and sells email marketing coaching, so email is the obvious answer to everything.

    I'm not trying to disparage him in any way, other than a bit of tunnel vision (a very common affliction).
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  • Profile picture of the author Fred Kimberly
    In a seller’s point of view Amazon FBA program not only take the pain of fulfilling the order but also takes care of the customer service, returns, shipping, etc. at fraction of the cost that you would incur with a full time staff. Basically, it takes all the hard work out of your business and give you piece of mind to improve your business.

    Amazon FBA is kind of a stamp of credibility to the customers because they know product is Fulfilled By Amazon. So, they don’t have to worry that seller may send them a bad product and wont accept returns and all that. Most of the buyers prefer to order FBA products.

    On the technical grounds as a FBA seller you also get some favor from the Amazon and get more chances of winning the Buy Box than a simple individual seller.

    Nowadays, competition is very high on Amazon so regardless the fact that you’re FBA or FBM seller, you need to gather business intelligence to beat the competition. You can do this by using Amazon research and tracking tool like AMZ Insight to find profitable niches and track product listings, keeping eye on competitors and for monitoring keywords ranking.
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