Why are Amazon FBA sellers a tough competition?

With ever evolving buzzword in this industry, the one that has been top notched for over a year now is “FBA”, Fulfilment by Amazon. The industry has discussed and debated a lot on its affiliate marketing but has shied away from expressing opinions on FBA.

So what is all ruckus about? What’s the deal with FBA business model that has caused hullabaloo?

Well, for one thing, it holds the future for entrepreneurs. If I look back at the time, I don’t recall a single massive, reliable e-commerce platforms where you can sell and get a fair share.

No wonder FBA sellers have been more successful than others and are as true to competition as the platform.

Scalability

FBA businesses are very scalable compared to other enterprise. The main reason being you need not have a large team to function and can be on your own even as you grow. All you need to do is create and obtain inventory to sell and that’s all for your primary expense.

Moreover, there is no as such limitations on how your product category sale. As an FBA seller, you can sell anytime whatever suits you best and can grow faster. You can also hire staff to look over when it becomes unmanageable.

Takeaway: You need not shell out more, and keep it low cost while you expand the search for other products and profit opportunities. As an entrepreneur, you can stay focused on priority, yet explore.

FBA sellers get a competitive advantage:

Amazon offers a competitive advantage to its sellers. Most FBA sellers are the one’s who knows how to establish a relationship or bond over with the customers. Not every seller is great at marketing, but the one’s who are, FBA is a blessing to them.

For instance, if you are an FBA seller selling some kitchen product, you can ‘Affiliate’ with a food blogger or a well-known chef.

The biggest sellers on Amazon often have some kind of competitive advantage which is difficult for others to replicate. They might have a better marketing plan than everyone else, but the chances are that includes working on building relationships that others don’t have.

For example, if you sell kitchen products, what might happen if you develop a good relationship with a well-known food blogger or even a celebrity chef?

Takeaway: Most FBA sellers are focused on investment that scales the business. Hence, by being FBA sellers they end up saving high on all of the fulfillment logistics.

Creating Private Labels

My personal favorite word in business is ‘niche’. Finding a niche in product enhances your business sense and helps your business to grow. However for an online store, finding a niche that too a profitable one and generating a private label product to sell, is becoming quite a trend.

I would like to credit Amazon for that. FBA sellers are utilizing it to the fullest with Buy Box win being the center of it. Sellers selling on omnichannel faces difficulty in competing for Buy Box with other sellers selling the same item.

With the rise of another giant “Alibaba” that served as a one-stop solution to connect with manufacturers globally, it only made more feasible to source and brand a private label and avoid the competition for the Buy Box.

Takeaway: Amazon FBA s Private Label is somewhat like this

  • Find a niche product to sell on Amazon. A product that could be customized in some way to make it stand out from the crowd.
  • Find manufacturers who make the product using Alibaba.com.
  • Contact manufacturers to negotiate costs, minimum orders and customizations.
  • Decide on a manufacturer.
  • Receive samples of your customized item until you are happy with it.
  • Get manufacturer to add your own brand label to the product.
  • Get manufacturer to ship inventory directly to Amazon.
  • Cross fingers for orders!

Final Thoughts

FBA services are regarded best for their on-time fast delivery and precision. It also gives an added advantage to seller on Amazon marketplace by enhancing their visibility in the Buy Box, thereby making them eligible for the most popular Prime free shipping programme

Perhaps it shouldn’t be surprising then, that 79% of all sellers surveyed use FBA for some or all of their products sold on Amazon. 44% use FBA for 90% or more of their sales, and 27% use FBA for everything they sell.

$1M+ sellers are less reliant on FBA: a third use it on 90% or more of their sales, but only 10% use it for everything they sell.
At least now we know what makes FBA sellers a tough competitor.

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