Being a seller on Amazon and why choose the platform to manage the sales process (FBA)
If you are thinking of doing e-commerce or are already doing it, you have certainly considered using the Amazon Marketplace. Already 3 million active sellers do so. Well, regardless of the systems they use, almost all of them are having successful sales. In 2020, according to the Jungle Scout Sellers Report, 66% use the FBA (Fullfilment By Amazon) system. This is the most convenient method, as the seller only has to send his entire product inventory to Amazon who will store it in their warehouses until the sale takes place. Before deciding if this is the right plan for your business, you should consider the sales strategy according to the brand idea, the characteristics of the product you want to sell, your own logistics and the business idea. At Linketer we can help you develop your Amazon sales plan. You will choose this option if your products are light and small, as Amazon’s commission structure encourages this type of product, which also has a rapid turnover of inventory. It is also your plan, if you have no problem with Amazon managing your customer service.
There is no doubt that at Amazon, you get a greater reach and visibility by having your shop window in a Marketplace with 300 million accounts. This will save you the effort required for the positioning of an e-commerce website. Another point is that, by having greater visibility, your brand will be strengthened. It will also benefit from the added value of having the Prime option for your product. This means that the Prime user has fast delivery in his purchase. The products in the FBA system are automatically classified to have the Prime benefits, something that does not happen with the FBM option. Being a company present in several countries it is quite easy to make the jump to internationalization. In addition, entry barriers are almost non-existent because of the simplicity of creating an account. And as if that weren’t enough, they do all the management: preparing and sending your products, simplifying the sales process. This option is also appropriate if you want to have more free time (and less benefits) as only 18% of FBA sellers spend more than 40 hours a week in their business at Amazon against 23% of FBM.
The other face
The negative point of the FBA mode that we found in the first place, you can imagine. The high competition. No less than 198 million sellers. This is understandable given the advantages it offers. Which need not be a problem if you make an assessment of your direct and indirect competitors and a long-term strategy. Something that Linketer can also help you with. Another point to bear in mind is the cost of commission. Apart from the payment of the plan you choose, you will have to pay a commission for each sale. This will depend on the type of product. In addition, the FBA option requires a minimum of dedication. You will have to control the stock available at Amazon, because if it runs out of units it can have a negative impact on your brand. Finally, think that as Amazon is a payment intermediary, it controls all the money flow. This can mean a delay in the payment of the sale due to customer complaints or other reasons.
The alternative FBM
However, if you are selling products that you think would better fit into the FBM system (in which you manage the entire sales process), keep in mind that you have the option of using both systems, thus maximizing profits.