3 Things to Consider Before Owning an Amazon FBA Business

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When you think of e-commerce, chances are Amazon comes to mind.

With 9.5 million Amazon sellers worldwide and 73% of sellers using FBA (Fulfillment by Amazon), there is no doubt that participating in this lucrative market in 2022 is a phenomenal idea. After all, major aggregators have invested billions of dollars from institutional investors to acquire Amazon FBA companies and sell them for a profit, expanding their portfolios.

Whether you’re considering starting your own Amazon FBA business from scratch or buying an existing one, here are three important things to consider before owning an FBA business.

Related: Guide to Starting a ‘Fulfillment by Amazon’ Business

Provide a unique sales proposal

In a saturated, competitive market like Amazon, you want to be sure that your product has a USP (unique selling proposition). Ideally, you want to sell a product that you fully understand, and even better, are passionate about.

Ask yourself these questions: Will it sell? How will it add value to my customers? Others do the same – how can I even do it? better?

Start studying your competitors. Read product reviews, understand their products and come up with a strategy that will give you an edge. For example, SEO (search engine optimization) can influence Amazon’s algorithm to favor your products, making your business rank higher.

By displaying the right quality images, using high-ranking keywords, and maximizing your product title and description, you can boost views to your businesses and increase sales.

Whatever your product of choice, make sure it has a good product margin as it can make your FBA business profitable.

Think Big: How Would a Person in Your Favorite Industry Sell? Strive to be the leading force in that industry and sell well. This can be like offering seasonal promotions when your competitors don’t, implementing a generous refund policy, or positioning yourself as a socially conscious business owner by hand-picking the best quality products with ethical labor practices.

Related: Your Pitch Deck Isn’t Complete Without These Slides

Work with the right suppliers

A reliable supplier means a thriving business. Finding the right manufacturers and suppliers will not only help you conquer the market but also help you grow a reputable business.

It is important to review and consider all factors involved in choosing the right supplier, such as supply chain interruptions due to labour, local Covid restrictions that may affect the movement of goods and workers, location-specific operating conditions such as power outages and weather, and the geopolitical climate of a particular region.

Measure the financial stability of the supplier you are interested in and read testimonials from previous entrepreneurs who have worked with the supplier. A good supplier has excellent customer service skills and delivery performance.

Weigh the pros and cons of choosing a supplier: Choosing a domestic supplier can mean faster shipping, while an international supplier can have delays and higher shipping costs.

Related: 4 Ways To Clean And Keep Your Supply Chain ‘Clean’

Prioritize scalability

An opportunity for growth should be the driving force influencing you to own an Amazon FBA company – that’s why you choose the Turn right product in a specific niche is crucial to boost sales and expand your business.

For example, if you only sell clothes for adults, you can also add clothes for children.

Consider scaling up into private label, where you can have products made specifically for your business with your company logo, or buy in bulk by partnering with a wholesale supplier.

Another lucrative way to grow your FBA business is to expand your Amazon business into international marketplaces. With Amazon expanding its FBA capacity globally by increasing its distribution centers by 50%, there’s no better time to expand your business internationally. Currently, Amazon supports 17 marketplaces that allow FBA sellers to advertise and sell.

When it comes to owning an Amazon FBA business, there are many factors to consider as the list is exhaustive. By considering these three most important steps, you will be well on your way to running a lucrative FBA business.

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