Ecommerce is an excellent opportunity for small business owners. One way to use eCommerce to great success is through Fulfillment by Amazon (FBA) and using Amazon arbitrage, which we will explain in more detail here.
With the FBA business model, you don’t have to splurge on a lot of space or have your own website or warehouse to start building your own eCommerce empire.
Here to talk about it more is Kristin Ostrander, Founder and CEO of Mommy Income. She sits down with the Shawn Hessinger, the Executive Editor for Small Business Trends to discuss building an online business with FBA Amazon.
For more from Kristin Ostrander, visit Mommy Income at classes.mommyincome.com.
What is Amazon FBA?
Shawn: What exactly is FBA, and how does it work?
Kristin: Amazon FBA is fulfillment by Amazon. Say you have a Shopify store, and you wanted to move it to Amazon. What happens is that Amazon gives you a specific label that you put on all your products, and you ship it all in one giant box or several giant boxes, pallets, truckloads, whatever.
You send it to Amazon, and they distribute it to their warehouses—so that when your Amazon prime customer wants 2-day free shipping, they order from Amazon just like they usually would. Afterward, Amazon takes your product and ships it to your customer.
So, they are fulfilling all your customer orders instead of you.
Like right now as we speak, I am probably selling something on Amazon. And Amazon is doing the work—they are picking it, packing it, and shipping it all, freeing business owners, sellers and everyone else to do important things, rather than fulfill shipping orders and having warehouses and all that stuff.
Shawn: How do you get started doing this; what’s the first step?
Kristin: The first step is deciding how and what you want to sell. If you already have a product or a brand, and maybe you are even in retail stores and want to bring your brand to Amazon, you will sign up for their fulfillment program—or even just as a seller on Amazon.
She adds that you don’t have to use FBA by Amazon, but most people choose to because that gives you access to all Prime customers.
If you choose to fulfill your items yourself, you’ll have to store them at your warehouse or your own facility—and then distribute them to each customer who buys them. So that’s kind of the difference between what they call merchant fulfill and FBA.
But then—if you are just bringing your brand to Amazon and want to do FBA, sign up and go to their sell on Amazon, you can literally type that into Google “sell on Amazon.” Then, you can follow their step-by-step process.
She explains that it is not complicated to get started selling on Amazon, but it’s not as easy as snapping a few photos on eBay, sending the stuff off and then you are off and running. To verify it’s you, they do things like requiring your passport and going to a Zoom call where you hold your license next to your face to prove to them it’s you.
She says they’ve been cutthroat about this because there have been bad players opening multiple accounts.
So, getting started is just signing up as a seller, and if you have a product, you are ahead of the game. If not, you need to start looking at the products you would like to sell and get started that way.
What is Amazon Arbitrage?
Shawn: Is there another way of selling with Amazon that sellers might want to try first?
Kristin: Amazon has many different ways, methods, and business models. For example, one of the ones that most people start with in the beginning is retail arbitrage, which is going into regular stores like Target or Best Buy and buying stuff from their shelves and selling it on platforms such as Amazon.
She adds that it’s breaking the ceiling, but there are people making millions of dollars doing Amazon arbitrage. So imagine it: many people are making a decent income selling their items while sitting at home surfing the net for deals to mark up and sell in their jammies.
Kirstin says that another model is having your own private label brand. These sellers have created products that they sell on Amazon. Then you have your regular wholesale business model. It’s what typical brick & mortar stores do; they buy in bulk and then mark it up and sell it on their storefront. You will be doing the same with FBA, except you will be doing it digitally.
Kristin goes on to say that she uses a unique hybrid model that combines the private label concept and wholesale. In addition, she’s created her own model that she calls a ‘bundle gift set’ or ‘accessory pack.’
Kristin gives an example: Say you have a Dodge Ram that needs seat covers and other things. She says she puts together an accessory kit with about five common items to sell. She adds that she combines products people are buying anyway.
How does she find out what those items are? Find that out and more when you watch the rest of the interview.
Find out More About How to Sell on Amazon
Be sure to find out more about how to sell on Amazon and how to be an Amazon FBA business owner by watching the second part of the video. There, you’ll find helpful and actionable tips, such as:
- How much you need to invest, what equipment you need to buy, etc. to start you FBA.
- Where to learn how to be an FBA seller without resorting to mining through a ton of DIY YouTube tutorials.
- How to pick a niche item that will make you money on Amazon.
- How easy and inexpensive marketing your items is as an FBA seller.
- How long it will before you can expect to see returns on your initial investment.
Let us know in the comments about how you feel about the video and whether you are thinking about becoming an Amazon FBA after watching.
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If you’re going to succeed with FBA you need to have a very firm grasp on all your costs and likely have a high-margin product. If you can do that then it can be wildly profitable.