Amazon is one of the most popular online shopping websites in the world. Recognized as the largest ecommerce platform, thousands of businesses turn to Amazon to open an online store or start an online business.
The prospect of selling on Amazon is enticing to so many people, especially those knowledgeable enough about running a business and the dynamics of the ecommerce industry.
Despite this, starting a business online is not as easy as one might think.
To help guide you through the process of starting an Amazon business, here is an overview of the Amazon FBA system as well as some tips on how to outsource products to sell on Amazon.
What Is Amazon FBA?
Fulfillment by Amazon (FBA) is one of the most popular business models new business owners and rookie entrepreneurs try when stepping foot into online selling. This system allows third-party sellers to automate most of their Amazon customer transactions, including order fulfillment and shipping processes.
Through Amazon FBA, sellers simply send out their products to Amazon and allow them to take control of their customer orders from picking, packing, and shipping. Amazon FBA services also offer product warehousing, inventory management, and return and refund transactions.
Under this system, all that sellers need to do is to send their products and ensure that Amazon’s inventory never runs out. Order processing is all left to Amazon to handle. Arguably, the best use of Amazon FBA is to partner with a product manufacturer that would also handle the process of sending your products to Amazon.
Benefits Of Using Amazon FBA
Running and managing an Amazon business can be challenging. If you’re doing it on your own, you would have to deal with a whole lot of responsibilities. This includes product research, product sourcing, product listing, inventory management, order fulfillment, shipping processes, customer service, and so on.
In situations like this, your Amazon business would be so demanding that would require you to work for the most part of the day. Unfortunately, this setup can prevent businesses from reaching their full potential and achieving growth.
Amazon FBA lightens your workload by taking responsibility for your orders. Once you’ve shipped your products to an Amazon warehouse, you don’t have to worry about shipping and even returns and refunds.
However, you can benefit a lot more from Amazon FBA aside from this. To give you a better idea, here are some of the benefits of sourcing products and running them through Amazon’s fulfillment services.
- Save time to focus on scaling and growing your business.
- Launch your Amazon products sooner by letting Amazon handle product organizing and tracking.
- Have more time to optimize your Amazon store and products.
- Experience streamlined inventory management.
Guide On How To Outsource Products For Amazon FBA
With Amazon FBA, all that sellers need to worry about is how to find products to sell on the platform. Product sourcing is arguably one of the trickiest and most important parts of running an Amazon business. Your sales and revenue would highly depend on the value and marketability of your products.
With that being said, here is a short guide on how to outsource products to sell on Amazon.
Look into potential manufacturers
The first step to sourcing products to sell on Amazon is to find a suitable manufacturer. There are different ways to find and research product manufacturers.
There are trade shows or convention centers where you can find potential local manufacturers. This can be time-consuming and laborious but it offers the advantage of being able to visit the site whenever needed.
On the other hand, many business owners look into sourcing products overseas. In this case, you would have to find potential suppliers or manufacturers from across the globe.
While production costs are generally cheaper when produced overseas, there are other factors to consider such as shipping costs and time manufacturing costs that can affect your overall expenses as well as the product’s availability timeline.
Test product for approval
Once you’ve selected a manufacturer, the next step is to communicate your plans for the product you want them to produce. This includes product design and standards, But before mass production, it is important that you ask for samples to see if it meets your standards and quality expectations.
Don’t be discouraged as It is fairly common to have multiple trials and revisions when it comes to manufacturing products. Continue this process until you come up with a product design that you are satisfied with.
Finalize the ordering agreement
Before completing your orders with your manufacturer, it is essential that you go over and review your ordering agreement. Always include guidelines and regulations that will help avoid issues related to miscommunication as well as protect you from delays and other errors.
You can also add NDAs as protection from possible legal issues when sourcing locally while a sample form would suffice for overseas orders.
Direct products to an Amazon warehouse
After all of your products are produced and ready, the final step in product sourcing for Amazon FBA is to have your products shipped directly to an Amazon Fulfillment Center (FFC). To do this, you need to register and create an Amazon Seller Central account.
With this account, you can manage your product inventory and send inventory to Amazon by simply creating a purchase order, choosing an Amazon FFC, and entering all the required shipment details.
Once complete, your manufacturer will ship your order directly to the Amazon warehouse. From there on, customer orders and transactions would be handled by Amazon through its FBA services.
Factors To Consider When Outsourcing Products
Entrepreneurs want to maximize profit when selling their products online. While outsourcing products and using Amazon FBA services are easy and convenient, there are some more factors that can influence the success of your products. Here are some factors that you should consider when choosing a product to outsource and sell on Amazon.
Supply and demand
Supply and demand are key factors that can help determine whether a product would sell or not. High demand for a product means that there is a large market for it and customers are pining to get a hold of that product.
At the same time, supply can also indicate whether a product would be profitable or not. A large supply means that there is also high competition in the market which would make sales harder. Always conduct market research in order to understand and analyze the current situation. The ideal condition is when selling products would be a high demand and low supply.
Another way to understand the Amazon market is to look at the products that are popular on the website. Amazon’s search results come with a simple monthly search volume that shows how popular a product is based on customers’ search input.
You can use keyword research to find Amazon products or product categories with high search volumes to help you decide on what products you should sell in the future.
Size and weight
Moving on to more practical considerations when choosing a product to outsource, it is important to take into account the size and weight of the product you want to ship out. The smaller and lighter an item, the cheaper it is when it comes to shipping costs. Logically, shipping socks would cost less than shipping a refrigerator.
Another factor that Amazon sellers fail to consider is the durability of the item that they are selling. One downside of Amazon FBA is that you don’t have control over the quality of their shipping services.
Taking this into consideration, it is best to stick with durable and non-breakable items that would not be affected or damaged by poor handling or shipping conditions.
Having an Amazon business can be a dream come true for many people. However, starting a business is only a part of it. It is important that you are able to maximize and best utilize Amazon’s features and services to boost your business’s growth.
With Amazon FBA, you can streamline your operations and rid yourself of some of the most time-consuming tasks involved in running an Amazon business.
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