Amazon now accounts for 41% of the e-commerce market in the USA. As a result, the Amazon marketplace is one of the most lucrative sites to be on. Whether you run a small, moderate, or large business, Amazon seller provides you with the tools to reach a wide customer base. Follow along as this article answers, is becoming an Amazon seller worth it?
Is Becoming an Amazon Seller Worth It as a Business?
Yes, it is. Also known as Amazon FBA business, anyone can now sell on Amazon. If your business is set up in a way that can quickly adapt to the Amazon process, it is 100% worth it. Additionally, your business should have strategies that will allow it to do well on the platform in terms of profit margins.
Selling on Amazon can become a very exciting venture if you hear and see success stories. However, you might ask yourself what your logistics will look like and if becoming an Amazon Seller is worthwhile. Here are the top reasons why it is potentially profitable to sell on Amazon.
Why Is Amazon Seller Worth it?
Amazon FBA Seller is a way to take advantage of Amazon's growth. However, with many sellers also comes stiff competition amongst sellers. You can easily set up a virtual booth on Amazon and have multiple product listings. As you begin your selling journey, it is normal to wonder whether Amazon seller is worth it. Here are some factors that could help your decision on the giant ecommerce platform.
a) No Outside Marketing is Required
Unlike other platforms like launching your own website for your online store, Amazon FBA doesn't require any outside marketing. With other sales channels or non-FBA sellers, you will have to invest in digital marketing as a separate strategy to sell your items. For instance, startups usually have to set aside a significant budget for marketing.
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However, with Amazon FBA, sellers can access Amazon Seller tools for product promotions. The tools are:
- Sponsored brands
- Sponsored displays
- Sponsored products
- Stores
If you decide to use the Amazon FBA program, you can set aside a budget and work with it. Additionally, you could set the maximum daily amount to use per day. Each Amazon tool has built-in widgets and templates to help you sell your branded products.
Unlike paid advertising, with Amazon advertising, you have control over your budget and can calculate your return on investment in the short term or long term.
b) Large Consumer Base
If you don't already know, Amazon has the largest customer base and the largest ecommerce marketplace. Additionally, most consumers turn to Amazon to search for the best prices, reviews, and products instead of Google. Plus, doing product research on Amazon is easier since it offers you the most competitive prices for guaranteed customer satisfaction.
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The convenience and centrality of Amazon offer consumers a one-stop shop for everything they need. They can also make a purchase immediately. Furthermore, it is a way for third-party sellers to have a reliable fulfillment service. Since Amazon is still growing, online shopping is also expanding its consumer base. Hence, new sellers on Amazon can easily increase their brand's visibility and encourage growth using Amazon FBA.
c) Easy Way to Cultivate Growth
After you master Amazon FBA, you are on your way to being a fully-fledged Amazon business. First, of course, with Amazon FBA, you must work to grow more efficiently. However, the more you put into utilizing FBA tools consistently, the quicker you will grow. Additionally, once FBA tools like optimizing products based on analytics, creating strategies for brand promotion, and promoting coupons and deals are fully integrated into your business, you can concentrate on other channels.
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Amazon fulfillment allows you leeway to reach current and potential customers. Additionally, since you won't have to focus on Amazon FBA, you can focus on other features of your business, like brand alignment, to gain more customers.
d) Delivery and Shipping in One Place
Shipping costs from different merchants are costly. This is why Amazon requires all its sellers to store their products in Amazon's fulfillment centers, where they pay monthly inventory storage fees. But you can facilitate delivery and shipping for your clients through your account. Nevertheless, Amazon FBA allows you to attend to product listings and creation, as it handles shipping, delivery, inventory management, and some parts of marketing for you.
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The FBA program works best if you have compact products, especially for small online sellers. Additionally, registering with an Amazon seller account will help you prepare products before they are shipped to the next Amazon warehouse.
Remember that each product you list will require a unique description, code, and other requirements by Amazon listings. These requirements help with tracking since Amazon receives thousands of products daily from multiple sellers. They then package and ship your products from Amazon fulfillment centers.
e) Seller Fulfilled Prime Tools and Features for Faster Delivery
After you become an Amazon FBA business, your Amazon fulfillment needs are catered to. However, your customers will also receive benefits that only an Amazon store can offer. Most sellers sell products, but Amazon offers benefits such as same-day, 1. or 2-day shipping. Plus, Amazon prime members have more benefits.
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The Amazon Seller Fulfilled Prime program helps sellers to attract more consumers and maintain their store's credibility by meeting the customers' needs quickly and efficiently. Additionally, the program also offers tools to do this, such as:
i) Delivery Speed Reports:
Using analytics, this tool allows you to know which SKUs are holding up speedy delivery. You can then apply the right strategies to ensure a quick delivery.
ii) Automatic Product Listings and Classification:
Based on the dimensions and weight of your product, Amazon lists your product as either standard or oversized.
iii) Shipping Region Automation:
Based on your preferred shipping services and Amazon warehouse locations, this feature arranges delivery locations for 1 and 2-day deliveries.
Since Amazon is always working to improve, soon, 1-day and same-day delivery options will be the standard. These features help to minimize customer discontent since they will receive their items on time. It all comes down to customers wanting convenience. After all, once you build convenience for your customer base, then you will build trust.
Also, building trust with Amazon customers can be in the form of Amazon reviews. No seller wants mostly negative reviews, hence why there are proven and safe ways of getting Amazon reviews. Therefore, when you automate and make your business the best using FBA tools, you will get positive reactions and more money from your sales.
How Does the FBA Program Work for Merchants?
Is Amazon FBA worth it for merchants? The FBA program enables merchants to hand off secondary activities to Amazon while concentrating on the core business activities. In addition, e-commerce sellers will appreciate the orderly and simple process. Here is how the program works.
- The merchant obtains the products (in other cases, merchants produce the product). The product can be anything.
- The merchant ships the product to an Amazon fulfillment center/warehouse to ensure stock availability.
- The consumer searches or browses for your products and buys the product at the purchase price. It would help if your product listings fell under some of the most popular products and categories on Amazon.
- Amazon sees the order, then starts to process it. In this stage, Amazon ensures to use your specifications to process the order, including private label products that make you the only seller in the search results listings.
- Amazon sends the customer's package and ensures they receive it on time. Also, any Amazon Prime member will receive expedited shipping.
What to Consider Before Joining the Amazon FBA Program
Of course, as a business person, before joining any venture, it is important to consider whether or not it is worth it. Here are some factors to think about before joining the program and how they will help you grow your own brand or any other online business.
1) Storage
Of course, this is one of the biggest issues to deal with, especially when you have products in bulk. However, with Amazon FBA, you don't have to worry about storage because it's already taken care of. You only have to monitor inventory to ensure your products stay in stock. All Amazon sellers have to do this to ensure straightforward and effortless operations.
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Keep in mind that if you require storage for longer, you will have to pay long-term storage fees. However, as long as you are focused on selling on Amazon FBA, it should not be a problem since you will have product turnover.
2) Products
Deciding on what you want to sell on Amazon is important. First, however, you should go into it with research and data to find the best product for your niche. To get quality products, you must differentiate your offerings from other similar products on the market—small tweaks such as packaging matter, in this case.
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While Amazon FBA provides the tools, it is up to you to create the success you wish to have. You can make money selling the best product in your category. However, you need to put in the work to build a customer base. After all, your product should always stand out.
3) Amazon FBA Fees
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Every ecommerce platform charges for its services, and the same applies to Amazon. Depending on your FBA options, your fees will differ from other merchants. The FBA currently has the following fees:
- Monthly inventory storage fees
- Selling fees
- Fulfillment fees
- Referral fees
- Returns processing fees
If you are considering selling on Amazon, you should ask whether the program will work for you after you settle these fees. However, Amazon FBA fees can be managed to maximize profits. Additionally, there might be other potential costs depending on how you have tailored your business operations.
3) Taxes
Of course, no legitimate business operates without tax compliance. To maintain said compliance, Amazon is also filing its taxes with the proper authorities and to the best of its abilities. Hence, you should also file taxes on your Amazon business, even if you are a new seller.
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You also have to use the correct tax forms (1099k-1040) to avoid any complications in the future. However, remember you can easily claim deductions in line with your business.
4) Workload
If you are honest with yourself, you might want to make the program your full-time job. This is due to all the long hours you will put in. Additionally, you must maximize the use of the FBA tools to have a successful Amazon business. Finally, you will have to invest daily in your Amazon store to have an impact.
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While you might start this job as a side hustle, you will have to make it a priority if you are serious about it in the long term. Your progress will be painfully slow if you can't handle the workload.
5) Providing Excellent Customer Service
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While there are aspects you can never control, such as client tempers, you should always strive to offer the best service. Amazon takes care of some of the customer services like returns and exchanges. However, having the best products and preserving your brand also falls on you.
The Bottom Line
Selling on Amazon is achievable. With the right research, you can grow and keep your business successful. However, it takes patience, effort, and utilizing FBA tools. Afterward, the money you will start to make will be worth all the time you put in.
Setting up an Amazon store can have very profitable margins for some businesses. However, other outfits might be better off taking an independent path. Either way, your business still requires effort and patience.
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