- 1 Reselling on Amazon – Thoughts from The Former Head of Selling on Amazon:
- 1.1 How does FBA work?
- 1.2 Benefits of using Fulfilment by Amazon (FBA)
- 1.3 Effective ways of Reselling on FBA by Amazon:
Reselling on Amazon – Thoughts from The Former Head of Selling on Amazon:
Fulfilment by Amazon (FBA) can act as a great catalyst to increase your online sales by giving you access to Amazon’s world-class fulfilment resources along with fast, free delivery options for your products. You have to simply send your products to an Amazon fulfilment center, and they’ll store your inventory, pick, pack and ship your orders and provide customer service.
After you join FBA, your offers become more visible and more competitive: your FBA products become eligible for One Day Delivery as well as Free Delivery options and hence, you gain access to millions of our loyal customers.
FBA also helps you in competing for the Buy Box which appears with the “Add to Cart” option when customers click on a product in order to buy. According to an Amazon survey done in 2014 among FBA Sellers in India, 86% accepted that they witnessed a sales increase after they started using FBA.
How does FBA work?
Set up FBA
If you already have a seller account on Amazon account, add FBA to your account. If you don’t have a seller account on Amazon, then you need to register for it first before you can go for FBA.
Product listings are Important
Add products to the Amazon catalog. You can do it one at a time, in bulk, or even by integrating your inventory-management software with Amazon’s API.
Preparation of Products
You have to make sure your products are “e-commerce ready,” this will enable them to be safely and securely transported all the way into a customer’s hands. If you need supplies, then you can get Amazon preferred prep and shipping supplies delivered to your door.
Shipping your products to Amazon
You have to create your shipping plans as well as engage discounted partner carriers. Then you have to ship and track your shipments to Amazon fulfilment centers. Here, Amazon’s online seller tools can help really you through the process.
It’s all done by Amazon
Amazon Prime customers get fast and 5free shipping on your products while all customers can qualify for FREE shipping on eligible orders. Amazon fulfils those orders quickly and efficiently using their advanced, web-to-warehouse, high-speed picking and sorting system. Customers receive tracking information directly from Amazon.
Amazon provides the required customer support
Amazon’s world-class customer-service team manages customer inquiries, initiates their refunds and returns for orders on Amazon marketplaces. This is done 24 hours a day, seven days a week.
Free One-Day shipping available
Amazon has taken delivery to the next level with Amazon Prime FREE One-Day Shipping. You just have to maintain the target inventory levels flagged in the Restock Report. This will increase your chances of offering One-Day delivery.
This was about the basic od Amazon FBA before we could go to our next section about the benefits of FBA by Amazon.
Benefits of using Fulfilment by Amazon (FBA)
Let’s you focus on your business
Amazon stores your inventory and takes care of the shipping to your customers. This gives you an ample amount of time so that you can focus on your business.
Amazon Prime Feature
Your Amazon FBA products become eligible for unlimited free one-day and two-day delivery options with Amazon Prime feature. The option of premium delivery enhances the shopping experience of the customers and, in turn, increases customer demand and loyalty.
You can pay as you go
FBA’s flexible rate structure allows you to only pay for the services you use. There is no additional subscription fees, no minimum units, and no start-up fees.
Build Trust through Amazon
Customers have a huge trust in Amazon’s world-class packaging, shipping, customer service and returns. This will also result in your brand benefits.
With an increasing number of sales, there’s no need to worry about inventory space as well as manpower for managing, packing and delivering orders.
With FBA, Amazon supports customer service and returns for products sold on Amazon.com. Your products will also be eligible for Free Delivery options available through Amazon. You can send your products to Amazon’s fulfilment centers using Amazon trained transporters without any hurdle, who then can pick up products from your doorstep.
Cash on Delivery payments
With Cash on Delivery being extensively used worldwide, you can fulfil your orders using this facility through FBA, and get your funds deposited directly in your bank account.
Effective ways of Reselling on FBA by Amazon:
Go for a low-competition product
There are two approaches for reselling on Amazon:
a) You can sell products that have proven success but high competition.
b) Or you can sell products with low competition but no proven success yet.
If you are a new reseller, it is recommended to start with option number 2. Low-competition products are a great way to build your platform as a leader in that product category. This can establish you as a brand and you can make a name for yourself in the competitive Amazon marketplace.
If you choose to sell a low-competition product, then it also makes it easier for you to win the Buy Box. Winning the Buy Box is critical in improving your visibility and gaining sales. This will also improve your reviews, seller rank, and branding. Hence, you can further grow your business on Amazon.
However, the risk with this method is that it has no proven sales record yet. There can be a valid reason why no resellers have chosen that product. There may be a scarcity of need or audience or maybe the margins are small. Make sure to do your research first.
Choosing to sell low-competition products can also be a challenge if you don’t have a strong seller rank on Amazon. Strong seller rank is needed to optimize on Amazon search which improves your visibility and boost sales.
Offering a relatively lower price on a high-competition product
High-competition products are hard to grow into, but they come with a proven track record of sales. Choosing to sell a popular product can help you get an influx of sales to your seller account. This will boost your seller ranking and stats on Amazon very quickly.
However, it’s tough to get sales if you’re up against a lot of competition, especially against competitors that already have strong seller rankings and stats.
If you want to overcome this, then it is recommended for you to offer a low price for these highly competitive products. This will help you in standing out in the crowd and boost your sales. A lower price can also help you in winning the Buy Box which attracts value-driven customers who are ready to purchase.
Nevertheless, there are some loopholes in this technique as well. If you keep selling products at a low price, then you will start establishing your business as a “discount” brand which will only attract discount shoppers. This will eventually make it harder for you to raise your prices in the future.
You also should be aware of how this is going to impact your margins. You shouldn’t sell at too low a cost just to get a high number of sales as this could actually cause you to lose money. These losses quickly add up and can bury your business into the ground.
Choose quality products
Regardless of you selling a low-competition or high-competition product, you should be sure that you are offering a good quality product. The products you sell are a representation of your brand. A high-quality product can make you identify as a high-end reseller and brand. This will help especially if you continue to grow in the future.
Moreover, high-quality products can allow you to charge a premium once you create a strong brand behind your product. This premium will surely help in improving your margins.
Selling low-quality products may temporarily result in high return rates but it will also result in poor reviews which hurts your seller account in both the short and long term.
High Margin Products
A product that has great quality but offers a low margin should be avoided at first. Low margin products are not that desirable for resellers as this can hold you back from growing your business.
Before you select a product, make sure to do a quick cost analysis. Research about how much would it cost to procure the item? Also don’t forget to incorporate the costs of labeling, packaging, shipping, warehousing, and other factors. You should even include average marketing costs in each unit’s margin.
A margin minimum of $5-10 per product is recommended.
Have a robust strategy for Inventory
One of the biggest mistakes done by resellers is that they don’t properly analyze their inventory issues. Their assumption that inventory levels don’t matter as much for reselling costs them big time in the long run.
Inventory is the basic foundation of a reselling business. A surplus of unsold goods can prove to be unbearably expensive. If you are forced to sell for a lower cost than purchasing price then it can lead to a huge loss. However, a shallow level of inventory can leave you without products to sell to your customers. Hence, you should constantly spend time looking for new products and orders.
Before you choose to invest in reselling a specific product, you should forecast your sales and inventory. It should be based on competition, pricing, quality, and market need.
Works towards building a brand
One of the major mistakes committed by Amazon resellers is that they resell any products that come their way. This can help make a quick buck in the short run; it’s not a healthy way to grow a business. If you want gradually grow your profits along with your business in the long term, you need to work towards building a brand.
Your brand is not the same as your product. The product can and will change, especially when you are a reseller. Instead, you should focus on creating a lifestyle and an ideology that can help you resell products.
For example, if you want to be a home cleaning brand. You should resell cleaning products and keep promoting your brand at the same time. This will also leave an option open for private labeling if that’s what you want to do that in the future.
At Seller’s Choice, you should focus on building brands from the inside-out. Ensure that your brand voice is consistent with your product listings, email campaigns, websites, and more. Create stunning images with the help of FBA by Amazon that will set apart your listing while giving you the key marketing tools to help you win the Buy Box.