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Top Challenges Faced by Resellers, Solved by Amazon FBA
If you want to start selling products for profit, you can set that up from home with relatively little trouble. Just order the products wholesale and then deliver them to your buyers when they buy them from you.
Here’s why you would need a service like Amazon FBA
Amazon FBA handles the delivery for you.
In a typical reseller business model, a business owner or entrepreneur would first identify a product they liked the looks of, then go directly to the manufacturers/wholesalers. They’d next put in an order for 100 units (or thereabouts) which would get delivered to their premises. A small entrepreneur might keep the stock in their front room, while a bigger business might own a warehouse. Either way, the individual then markets the product themselves and makes sales. Each time they sell something, they will package up the product, place a label on it, and pop it in the post.
When you buy wholesale, you will typically be able to get products at a discount. Usually, this is a very significant discount, as the sellers see the value in guaranteed sales and thus can offer a low price.
This means that for every pair of jeans, blank CD, or set of dumbbells you buy for $5, you can sell them onward for $10 or $15. Sell off your entire inventory, and it’s normal to make a solid 100% profit or more.
Fulfillment By Amazon (FBA)
Except not quite: because you also have to think about things like storage and fulfillment. This is where things can become significantly more challenging. Many independent entrepreneurs, for example, are not going to have the funds to afford a warehouse for storage, and nor are they going to hire staff to attach labels. Therefore, it becomes their job to store all those items in their own homes, while making sure they keep track of how many items are in their inventory (and preventing things like moisture and mold from destroying your goods.
Delivery is complicated too. You’ll now need to calculate the cost of the delivery, find the best couriers for buyers in all markets (including overseas in most cases), and make sure you have a smooth process capable of handling large influxes of orders without missing deliveries! Imagine if you have a sale and you sell 250 units. Would you be able to manually package and deliver all those items?
That’s where Fulfilment By Amazon comes in.
Being a reseller and selling products from your front room is a highly entrepreneurial endeavor, and one that can certainly be successful. BUT it also comes with a lot of drawbacks and limitations. That’s why more and more sellers are moving to Amazon FBA (Fulfilment By Amazon).
Here are just some of the problems that Amazon FBA will solve for you.
Storage with Amazon FBA
One challenge for many front-room businesses is storage. If you are selling something relatively small and only putting in small bulk orders, then perhaps this won’t be an issue. But if you hope to grow your business to sell to hundreds of people daily, then you will start to run out of space fast. That leaves you with two options: invest in an expensive warehouse, or use Amazon FBA.
The other big bottleneck for a small home business trying to grow is delivery. Even when you have roped your partner, kids, Mum and Dad, and neighbor into the packaging and sending your items, this still limits the number you can shift in a day. More to the point, this is soul-crushing work. Didn’t you start running a business so that you could enjoy what you do? Is this what you envisioned?
What’s more, is that Amazon FBA provides your buyers with the benefits of Amazon Prime – giving them an incredible experience every time.
Then there’s the issue of how to deal with returns, with damaged goods, with missing deliveries… all these things significantly add to the challenge and can certainly eat into your profits.
Too many businesses will forget this: they will calculate their profits based on COGs, keystone pricing, and other clever-sounding strategies. But they forget that sometimes people return orders.
For particular industries – the clothing industry in particular – this can often be crippling.
Marketing and Promotion
And after ALL of this, you are still going to need to handle marketing and promotion. You could be giving away blocks of gold, but if you don’t tell anyone that this is what you are doing, then you won’t manage to shift any units!
While Amazon doesn’t quite solve this problem, what it does do is to put your products onto the world’s biggest distribution platform. That counts for a lot!
This is why so many people avoid the reseller business, even though it might be an appealing and straightforward model on the face of it. With Amazon FBA, many of these issues are solved. All that is left then, is to choose an amazing product and to market the heck out of it!
Getting the Best Reviews for Amazon Products
Depending on the nature of your industry, a few reviews can even make or break your business success. A perfect example of this is the mobile app industry. If you release an app and the first 10 reviews leave a 1-star rating, then you can all but guarantee your sales are going to slow down or even completely halt.
The same is, of course, true for Amazon sellers, and it only takes a few bad reviews – which are displayed right in the search results – to ensure that people choose a different product over yours.
So, what do you do? Providing the very best product and service you can is one important step but these additional tips can also help a great deal…
Offer a Freebie
One way you can avoid negative reviews is to offer a free sample of whatever it is you’re selling. That could mean standing outside your restaurant with tasters, or it could mean having a free ‘trial version’ of your app. This isn’t just good marketing – it also works to actively turn away the kinds of customers you don’t want.
Of course, this will cost you money as an Amazon seller and it only works if your product is inexpensive (ideally something people order in bulk). While it might hurt you upfront, it can pay off big time in the long run – it’s called a “loss leader.” Give away one of your amazing razors from your website, then link your lucky recipients to your Amazon listing.
In turn, this will then help you to make sure that the vast majority of your reviews are positive. Why? Because anyone who tries your freebie and doesn’t like it, won’t become a customer. The only people entitled to leave a review are people who paid for your services and if they have all previously tried whatever it is you’re offering, then you know that in theory, they should at least be impressed. Meaning positive reviews only!
Another strategy is to over-deliver on your promise by pleasantly surprising your customers. One obvious strategy is to deliver a parcel faster than you say you will, another is to include a gift. Otherwise, you can just make sure that aspects of their experience are better than they would have predicted.
Either way, people will be so pleasantly surprised at getting something ‘extra’ that they will be almost guaranteed to leave a positive review.
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