amazon-fba-in-2022

As the year draws to a conclusion, many people wonder if Amazon FBA will be worthwhile in 2022 and beyond. In a word, yeah. But first, let’s look at why.

Amazon’s revenue in 2021 will be $469 billion, rising from $386 billion in 2020 and nearly a quarter (22%) of that will come from third-party vendors!

89 percent of those third-party merchants use Fulfillment with Amazon (FBA) to run their Amazon business.

While the competition on Amazon as well as other e-commerce platforms has expanded, so has consumer desire for online buying 63 percent of consumers begin their product search on Amazon.

We’ll discuss how selling on Amazon in 2022 is still worthwhile in this blog.

Table of Content

Chapter 1: What is Amazon FBA in 2022?

Chapter 2: FBA Sales Maximization Tips, Tricks, and Tactics

Chapter 3: Amazon FBA Program Advantages

Chapter 4: Disadvantages of Using Amazon FBA

Chapter 5: How to Become an Amazon FBA Seller

Chapter 6: 5 Reasons Amazon FBA Is Worth It In 2022

Chapter 7: Opportunities with FBA Assets: Scale for Higher ROI or Sale Price

Chapter 8: Frequently Ask Questions About Amazon FBA

Chapter 1: What is Amazon FBA in 2022?

What is Amazon FBA in 2022

1. Is Amazon FBA Profitable? – Breaking Even

Well! It is an important question. The answer depends on four key elements.

  • Understanding the competition and finding the suitable niche
  • Doing a lot of research
  • Understanding the demands
  • Sourcing and branding

Let’s discuss each of them to get the answer.

  • Understanding the competition and finding a suitable niche

Amazon is a very populated marketplace. You’ll find a lot of top-ranking sellers that are impossible to beat in generating sales.

If you are a new seller it would be a blunder to think of competing with them as they can easily overcut you.

You first need to understand which product niches are the most saturated ones. There will be more competition. You’ll not go for those niches.

Instead, look for a less competitive niche and try to dominate it.

Rule that niche because big sellers will not bother to undercut you. It will give you new experiences and a lot more knowledge.

  • Research

For your Amazon FBA business, FBA product research is a must to do.

 It helps you to know about the future trends, people’s demands, best products, and other important information about the marketplace.

  • Understanding the demands

Some products are high-demanding throughout the year while others are low in demand or people buy them on special occasions only like birthdays, festivals, etc.

In understanding the demands, research plays a very important role. Let’s take the example of party poppers just to understand how research supports understanding the demands.

They are not a part of one’s daily life. People mostly buy them at birthday parties.

If you had already researched the time of the year most people celebrate their birthdays in a specific region, you can stock your inventory and sell all the party poppers at that time.

It is important to understand people’s demands or you can also create the demand for your product by understanding the Amazon FBA market.

  • Sourcing and branding

Sourcing means buying products for your inventory and branding means selling the products under your brand name.

 For sourcing, the product quality should be good and the price should be low to get a big profit. The cheaper you buy the product, the more the chances of generating money.

A brand is identified by the quality of the product it sells. In branding, quality is the key player.

Customers buy products from brands that sell good quality, reliable products. Your goal in all the Amazon FBA activities should be to build a brand.

These are some of the important elements that make Amazon FBA profitable for the sellers.

2. But What Products Should You Sell?

What Products Should You Sell

The choice of the product depends on your research and the marketplace competition.

If you are new, it is better to go for niches where the competition is less. The reason is that you’ll have more chances to dominate the niche.

3. Is It Too Competitive To Sell On Amazon?

The competition depends upon the niche. A few niches are highly saturated and the competition in such niches is also high.

Where else, others have less competition. So, it depends upon the product niche.

4. How Do I Learn To Sell On Amazon?

A lot of blogs and articles are available on the internet that tells every tidbit about selling on Amazon. You can read those.

 Moreover, you can also take help from people who know about e-commerce and Amazon.

Many free and online courses are also available that teach about selling on Amazon. There are a dozen of videos about this topic on YouTube as well.

Chapter 2: FBA Sales Maximization Tips, Tricks, and Tactics

FBA Sales Maximization Tips

You are using Amazon FBA for sales right! Like everyone else you also want more sales and more profit but don’t know how to do it.

Don’t worry, in this section, we’ll give you some tips and share some tricks to maximize your FBA sales. So let’s dive in.

1. Use Online Analytics Tools

In e-commerce, product research is very important. You should use different analytics tools to search for the products that will generate more profit.

 It also helps in identifying the best seller product categories.

2. Be Smart About Your Product Selection

Product selection is a critical stage of starting a business on Amazon. It’s better to choose between the high-ranking or the low-ranking products.

The problem is that high-ranking products have more competition and if you are a new seller, your chances of success are less.

But the advantage is if you manage to sell high competition products, your inventory will be moving constantly.

Whereas, the low ranking products have less competition and the products are also not going out at a continuous pace.

Its advantage is that it will be easy for you to dominate such categories. So you should think very smartly while selecting the product.

Well, we suggest low-ranking products. Once you dominate this category, you’ll have new experiences that will help you perform more efficiently.

3. Bundle Items When You Can

On Amazon, there are a lot of products that are the same with a slight variation in prices.

 If you also have the same products, bundle them together. You can also bundle items together on sale.

For example, you are selling a wallet at $50 separately but if you bundle it with a keychain and a pen, you can sell it at $120. It will catch people’s attention more.

4. Build Your Brand

Building a brand requires good quality products. Make sure that you are sourcing from a trustworthy manufacturer.

 Try your best to get good. Make customers happy and satisfied. It will help you to qualify for the buy box which will automatically generate more sales.

5. Answer Questions from Users

The users sometimes get confused. They ask questions from you (seller). You have to respond to them immediately and politely.

 It helps in building a good connection between the two parties that will be beneficial for both.

Chapter 3: Amazon FBA Program Advantages

Amazon FBA has many advantages. According to a study, more than half of the third-party sellers use this service due to the ease it creates for them. Let’s see what benefits do it offers

1. Top-Notch Logistics and Warehousing Facilities

Amazon has top-class fulfillment facilities. In its warehouses, apart from human assistance, robots also assist logistics.

Once you join Amazon FBA, you can use its shipping services, warehouses where your inventory is completely in safe hands, and all other services that have made Amazon one of the leading e-commerce marketplace.

2. Fast and Free Shipping

The moment customers order a product, they are curious to open their parcel and see the product.

They want their parcel in their hands within no time. Delayed shipping disappoints them.

Amazon understands this and that’s why it has fulfillment centers almost all around the world with plenty of FBA to deliver the product in less time and make the customers happy.

Moreover, in 2015 Amazon announced the same-day delivery in 14 cities in the USA which has entirely changed the online delivery system. Its prime subscribers now also enjoy Prime Now 2-Hour Delivery, One-Day Shipping, and Two-Day Shipping.

aOcean Freight Shipping Cost

3. Guaranteed Prime Eligibility

Amazon Prime is a paid subscription that offers various perks to its prime members. Free and fast shipping is one of them.

Though they have to pay extra sums, it’s not big against the perks they enjoy.

According to Statista, Prime members spend $1400 per year as compared to $600 per year by non-prime members.  So, join Amazon FBA and qualify for prime shipping to sell your products to prime members aged 18-34, as they make 81% of the prime buyers.

4. Take a Chance on Winning the Buy Box

The buy box is a golden box for sellers. 82% of Amazon sales occur through it. The sellers who perform the best win the buy box.

 But If sellers are prime-eligible, there are more chances of them to winning it.

5. Get the Most Economical Shipping Rates

UPS, USPS, FedEx, and DHL Express are shipping companies that are Amazon’s shipping partners.

They offer a discount to Amazon on the shipping fees. It is good for Amazon FBA sellers as they don’t have to negotiate with the shipping firms.

Chapter 4: Disadvantages of Using Amazon FBA

Advantages and Disadvantages of FOB vs. EXW

Though the perks of Amazon FBA are undeniable, it also has some negative aspects that I want to share with you. So here we go:

1. FBA Should be Called Fees by Amazon

Amazon is offering too much ease to its customers. As it is also running a business so obviously you have to pay for all the services it provides. All these fees are discussed below.

a) Storage Fees

When you join Amazon FBA, you are keeping your stock in Amazon’s warehouses. You have to pay for the space that your stock takes in the warehouses.

This fee is called the storage fee. Amazon charges you monthly storage fees and long-term storage fees.

The former is charged when any item from the inventory is left at the end of the month.

The latter is charged, along with the monthly storage fees, when an inventory is placed in Amazon’s warehouses for more than 365 days.

The more the size of the product and the longer it is in the Amazon fulfillment center, the more you have to pay the storage fees.

b) Individual Item Fees/Monthly Subscription Fees

Amazon offers two types of selling plans to the sellers. The individual selling plan is the one where you have to pay $0.99 for each item you sell.

 Monthly subscription fees are for the professional sellers. If you are buying the professional selling plan, you have to pay $39.99 every month irrespective of the sales you make in a month.

c) Refund Fees

If a customer wants a refund from Amazon, the fee it charges for the refund process is the refund fees. It is up to $5 or 20% of the refunded money, depending on which of the two is less.

d) Amazon FBA Fees

Selling Fees of Each Platform

Whenever you sell a product, you have to pick, pack, and ship it from the inventory to the customer.

You have to pay separately for all three steps. But if you join Amazon FBA, you have to pay Amazon FBA fees and the rest is Amazon’s headache.

You just have to ensure that the products in your inventory are small as they are charged less.

e) Referral Fees

A referral fee is a commission you pay to Amazon for using its platforms and customer base. You have to pay on every sale you make. Most sellers have to pay a flat 15% or less.

2. Amazon’s Return Policy

Amazon values its users therefore it has a simple and hassle-free return policy.

The disadvantage of it is that some customers demand a return without any flaw in the product. It also causes the seller to lose credibility in the eyes of Amazon.

3. Amazon Accounting and Taxes

Amazon has its fulfillment centers all around the world and it keeps your inventory moving as well.

If you are living in the USA and selling on Amazon FBA in Canada and Mexico, the taxes will be different. You will have to pay all the taxes at any cost.

4. You Lose Some Control

Once you become a part of Amazon, you have to send the inventory to Amazon warehouses.

Once send, neither you can change anything like packaging, or branding nor contact the buyers. You lose all the control over the inventory.

Chapter 5: How to Become an Amazon FBA Seller

Create an Amazon seller account

Now that you are well aware of the pros and cons of Amazon FBA, it’s time to tell you how you can become an Amazon FBA seller.

1. Select a Niche

To become a seller, the first thing is choosing the appropriate niche of products. Some products are restricted by Amazon FBA. These products include

  • Expired goods
  • Heat sensitive goods
  • Such products that require cool temperature
  • Damaged products
  • Alcoholic drinks

And the list continues. If you send such products to the Amazon FBA warehouses, you’ll face the following consequences

  • Inventory will be returned.
  • Future shipments will be blocked.
  • Amazon will charge you for noncompliance.
  • Amazon can also deactivate your seller account.

So, it’s better to do the research first and then select a niche.

2. Find Products to Sell

The next step is choosing the right products to sell on Amazon. You can do so by following these tips

  • Choose a product that takes less space and is easy to handle. Amazon will charge less for such products.
  • Select a product that is in demand throughout the year.
  • Products that have high demands and low competition are a good choice.
  • Make sure that the product is unpatented or does not have any trademark. You can sell such products under your brand name.

3. Create an Amazon FBA Seller Account

Amazon offers two types of selling accounts. These are an individual selling accounts and professional selling accounts. It is your choice which account you choose depending upon your budget. But for creating an Amazon FBA seller account, you would need certain documents/ information. These are

  • A business email address
  • A phone number for business activities
  • An active credit card
  • Your government ID
  • Your tax information
  • Bank account number for transactions

4. Prepare your inventory for shipment

7 Ways You Can Improve Amazon Inventory Management

For the shipment of the inventory, your products should be packaged according to the rules of Amazon.

Once packaging is done, next, you have to select the products for shipment according to the following steps.

  • First, you have to register your Amazon seller account for FBA.
  • Go to Inventory > Manage Inventory, on your seller central account.
  • Choose the products that you want to ship.
  • Next, choose to Send/Replenish Inventory in the Actions drop-down menu.
  • Write the address from where the inventory will be sent i.e. your location.
  • Choose either individual or case-packed product packaging type.
  • Click Continue and create a shipping plan.
  • Next, you’ll fill some pages like the quantity page, prepare products, label products, and review shipment. Once approved, you’ll move to the next page.
  • The next page is the “prepare shipment page” where you have to choose the feasible shipping method and the shipping carrier.
  • Next, see the shipping charges and approve them by clicking the I Agree option.
  • The last step is the selection of the Print box label. This will print the FBA shipping labels that will be on the top of each box and pallet that you are shipping.

5. Launch Your Product

The most nerve-wracking step is the launching of your product. Here’s how you can make it easy.

  • First, optimize your product listings so that they appear on search results on Amazon. Make sure you add every bit of information that the purchaser wants to know.
  • Create the need for your product by writing blogs about its uses and importance. Advertise it on social media platforms using catchy hashtags. Create the buzz of your product.
  • Go for Amazon PPC campaigns. These are platforms where the third-party sellers create ad campaigns to increase their sales on Amazon. These campaigns are paid campaigns so you have to keep a specific amount of money aside.
  • Use Amazon’s early reviewer program for $60 to get organic reviews. You can also request customers for reviews. It will build people’s trust on your product.

Chapter 6: 5 Reasons Amazon FBA Is Worth It In 2022

According to a report, In the USA in the year 2021, e-commerce sales escalated by 14.2% from the year 2020.

 Out of these sales, Amazon was responsible for 41% of the transactions. It cut down its competitor Walmart which contributed just 6% to all the sales.

Keeping this in view, it seems like Amazon FBA is worth it in 2022 as well. Why are we saying so? Read the reasons given below:

1. The Majority of Consumers Rely on Amazon for Ecommerce

According to research, 71% of the consumers search about products, their prices, and reviews on Amazon rather than searching on Google.

 It is because of the popularity of Amazon among consumers.

Other reasons are that Amazon thinks about the convenience and ease of its customers.

 For instance, it provides many perks to prime subscribers like free and fast shipping. The Amazon FBA is another program that makes it easy for sellers to manage inventory.

It also provides many benefits to the buyers like they have the refunding option if the product gets damaged during the shipping.

 Its rules are consumer-friendly. Therefore, the majority of consumers rely on Amazon for e-commerce.

2. Built-in Seller Fulfilled Prime Tools and Features Help with Faster Delivery

seller-fulfilled-prime-2

When you become a part of the Amazon FBA business, you enjoy a lot of bonuses. Amazon looks after your products, its prime members can enjoy one-day, two-day, and same-day delivery services (within a state).

Apart from it, in February 2021, the Amazon Seller Fulfilled Prime (SFP) program also came into effect.

Like other programs, its purpose is to aid sellers in fulfilling customers’ demands and attract other customers to Amazon too. Three of the tools of this program are

· Shipping region automaton

The shipping automaton tool sets up delivery destinations for one-day and two-day delivery depending on the location of Amazon warehouses and the shipping service sellers choose.

· Delivery speed report

Which stock keeping unit is delaying the delivery and how can the delivery speed be enhanced is told by the delivery speed report.

· Automatic product classification

Under this feature, the products are classified as standard or oversized automatically by Amazon after measuring the product dimensions.

Hence, these and many other tools available on the Amazon FBA dashboard can be used to satisfy the customers with the delivery speed.

3. Shipping and Delivery All in One Place

If a person has an online store and a customer places an order.

The seller (person) has to pick the product from the stock, package it properly to prevent any damage, label the package with the buyer’s address, and has to ship it by contacting a courier company. He has to do this entire thing by himself. What if someone else does it for you?

Yes! Amazon FBA provides this service. It picks, packages, labels, and delivers the products to the buyers.

 You just have to pay an extra amount for it. This amount is not much as compared to the ease you get in return.

4. Zero Outside Marketing Required

On Amazon FBA, you do not need outside marketing. You can use Amazon seller tools that have built-in templates and dynamic widgets for customized advertisements. Hence, sellers do not feel the need of outside marketing.

5. Clear Path for Scalability

Amazon FBA provides several tools and features to up-scale the sales. It provides sponsored posts, sponsored products, sponsored brands, deals, coupons, and creates effective strategies that guarantee the growth of your business. In this way, Amazon FBA clears the path for scalability.

Chapter 7: Opportunities with FBA Assets: Scale for Higher ROI or Sale Price

opportunities with AmazonFBA assests

1. Global Expansion

Amazon is an international marketplace with fulfillment centers everywhere around the world.

It offers an “Expand Offers Internationally” tool to sellers to sell their products to the North American marketplaces.

Sellers can expand the launch of their brands on other Amazon marketplaces as well.

Its logistics infrastructure has crossed that of FedEx and is now on its way to beating UPS as well. It indicates how fast the businesses of Amazon FBA are expanding.

2. Supply Chain Management

Amazon has a limit on storing products in its warehouses. That’s why many sellers opt for third-party warehouses to store their products.

Still, Amazon provides them on-ground delivery services to fulfill the orders. They can also explore expensive air shipping.

 But sellers can save money by light packaging without compromising the product quality.

Moreover, sellers are also supported by several FBA communities. They have to observe how other sellers deal with the crisis.

 If you as a seller can come out of the crisis using Amazon FBA asset, you’ll appear in a low competition market and instantly dominate it.

Well!  You can also scale up your business by expanding on other e-commerce channels.

3. Platform Expansion

Platform expansion means opening an off-Amazon store like Walmart, Shopify, Etsy, etc.

It will bring extra revenues apart from Amazon’s revenue. If you build your brand on Google, Amazon will reward you extra because of the off-Amazon traffic you generate by branding on Google. Hence, your money inflow increases.

4. Affiliate Marketing

Affiliate marketing is a product advertising strategy where content writers write for your product to promote it and earn a commission.

You can boost your business with the help of affiliate marketers as well. How? Let’s see the answer.

 Search your product category on google. In the search result, find a content site that is generating traffic for a product.

Contact its owner. Offer him a fee and a free product to review it and publish the review on his/her website. It will generate more traffic.

5. Audience Building

You can build an audience for your FBA business by writing blogs about the product and attaching the Amazon product link to the blogs. It will create more audience.

Chapter 8: Frequently Ask Questions About Amazon FBA

FAQs

1. Is Amazon FBA Profitable In 2021?

The answer is yes. Amazon FBA is in the phase of continuous growth which makes it a profitable platform.

Though there are many negative opinions about the oversaturation of the marketplace, still it is a good choice. You just have to choose the right product market and the product.

2. Can Amazon FBA Make You Rich?

The harder you work, the more are the chances of your success. It is an undeniable reality.

If you work hard, you can be a part of 6% of the people having earnings of more than $250,000 a month from sales.

 On average, they spend less than 30 hours a week on their business. If you do the same efforts, you’ll also become rich.

3. Is Amazon FBA Hard To Start?

No, Amazon FBA is not hard to start. The process has a few steps that are easy to follow.

They include researching to find the appropriate niche and product, preparing the Amazon FBA seller account, preparing inventory for shipping, and launching the product. All these are easy-to-do steps but just need prior research.

4. Is Selling On Amazon Oversaturated?

People ask this question due to the fear of failure. But it is just one side of the coin. The selling is indeed oversaturated due to too many sellers selling their products.

 But on the other hand, the number of buyers is also increasing. So you have the chance to sell your product too.

 In short, if the number of sellers is increasing, the number of buyers is increasing too.

Conclusion

Amazon FBA business is a good option. Amazon FBA provides a lot of advantages to the sellers that make it easy to grow and expand their business.

All they need to do is hard work and continuous efforts. Though it has some cons as well, the pros overcome them.

So, if you are also thinking of doing a business, go for Amazon FBA business.