What is Amazon FBA and is it time your business jumped onto it?

What is Amazon FBA and is it time your business jumped onto it?

If you already have, or you’re contemplating, a start-up with an actual physical product to sell, then you have probably heard of Amazon FBA – but what is it exactly and what are its advantages and any potential drawbacks you need to know about?

Let’s say you are new and have created your own product. Now, you are ready to go to market.

Then you discover, a design of packaging (again very expensive) was a major challenge. Logos and branding took time and creativity. The initial sales (obviously on a loss basis for quite a while given the development costs) were to family and a network of friends. But there was a vision. The vision held firm and the viability grew. Finally, there was proof of concept as the sales took hold online and some great exposure was achieved when a major homewares brand with several suburban stores agreed to stock some of the range.

It was time to start thinking big. You may decide to lease a bigger space just for the production itself, and the rental was a significant expense. By now the real problem was storage, managing inventory, and delivery. Packaging and posting individual orders and hand delivering the store orders had become unmanageable.

Amazon FBA (Fulfilled by Amazon) entered the Australian market space just 12 months ago – at exactly the right time for alot of new startup businesses. As a great example if IaaS (Infrastructure as a Service), Amazon FBA manages every aspect of the pick-up, storage, inventory management, order shipping, and even customer returns.

It’s useful to clarify that your product does not need to be sold on Amazon itself (although of course it can be). The winning point of differentiation for Amazon FBA is that it’s an end-of-the-line system which saves your business time and money because Amazon stores your products and manages their delivery in your direction. The fulfillment fees are extremely competitive, given Amazon’s vast network of storage, delivery, and inventory management systems. Their advanced data management systems allow you to monitor and track all inventory, orders, and deliveries as they are happening.

The fulfillment fees include all packing of orders, inner packaging, and delivery, even including the management and accounting for any returns. Separately there is a monthly storage fee, based essentially on your cubic metres of stored product. It would be impossible for a small start-up company to access its own rented storage facility in an equally cost-effective way.

So, if you have the perfect product, now is the best time to take up Amazon FBA. Contact us if you want to know more.

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What is Amazon FBA and is it time your business jumped onto it?

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