From starting with a focus of making eBooks more accessible to shifting into developing the leading online sales platform. Amazon valued at over $1 trillion . It since has established itself as one of the most predominant companies in the world.
Due to Amazon’s popularity along with retailers’ success stories that sound like pipe dreams, doubts are emerging. Whether FBA is up to its premise . Being a powerful money-making tool that allows the average person to create a successful business.
In this article, we will disclose how effective Amazon FBA is and whether you should invest in it.
Business models: The difference between Amazon and Amazon FBA
To understand the full potential an Amazon FBA business can have, we first must explore the basics. Amazon and Amazon FBA business models.
Amazon Business Model
Unlike other online selling platforms, Amazon enables customers to purchase goods . Such as local and imported products via direct orders.
How does it work?
For example, if you are in the U.S. and want to order a product from China. Rather than waiting 30 days for delivery, you can buy the same product through Amazon. That will have a standard shipping time of 4 to 14 business days.
Also, Amazon has a subscription model, known as Amazon Prime. Which customers pay an annual fee to have items delivered in 2 days or less and to have access to streaming services (movies, series, music).
Amazon FBA Business Model
Amazon’s business model heavily relies on third-party sellers, which is the reason Amazon FBA (Fulfillment by Amazon) originated.
What the model entails
Through Amazon FBA, sellers — even beginners who lack experience in eCommerce — can set off an Amazon business easily.
The main benefits offered by Amazon FBA to sellers include:
- Management and storage of inventory
- Packaging and labeling products
- Shipment of their products
How does it work?
Amazon FBA charges fees to take care of the logistics and workforce necessary for packaging and shipping the products.
The main fees sellers should be aware of before setting their Amazon FBA business are:
- Fulfillment Fee. Represents the costs of shipping the products to your customers.
- Storage Fees. There are different types of storage fees. These fees apply whether you exceed your space limits or time limit for inventory storage.
- Returning Fee. When offering free shipping on products, if these are returned, the seller must pay the returning fee.
Are Amazon FBA Success Stories Legit?
We cannot assure that ALL Amazon success stories are legit. But, we can affirm that, regardless of your experience in eCommerce, it is possible to build an economically sustainable business on Amazon.
Also, take into consideration that, just as with any other goal, to sell on Amazon, you need to invest time and effort.
Success won’t come overnight, but it is achievable. And such is the case of Nine University’s founders, Kale Abrahamson — former division 1 college basketball player . As well as,Taylor Hoitt — former computer salesman.
Abrahamson and Hoitt are ordinary people who started selling in Amazon as a side project, only for it later to become a well-established business. Along their journey, they learn from their own devastating mistakes — such as losing $50,000 in Amazon sales.
To prevent others from making expensive mistakes and to help people understand how Amazon FBA can work at their advantage, Taylor and Kale created Project Nine University. This online resource is free and provides useful information on Amazon FBA and how to succeed in the business. They are also based in Pittsburgh (our CEO’s hometown).