Is FBA still profitable?
Updated: Dec 13, 2021
Is The FBA Business Model Profitable?
By far, the most important question these days is, “Is Amazon FBA worth it in 2021?“. Amazon FBA has almost 10 million FBA sellers but there are almost 200 million buyers. There’s always a place to compete when you’re dealing with that many market participants. So the short answer is yes, it is profitable. The long answer is that you have to have an established brand to compete. Many factors come into play which will determine profitability in your e-commerce business but it's becoming more profitable as time goes by. According to Jungle Scout Data,
Every product you can think of probably has multiple sellers so you have to have an online presence across the internet. Amazon is the best tool for sellers, but many buyers spend a lot of time on other websites before they decide what to buy. It’s not enough to put a product on Amazon and rely on Amazon‘s marketplace to get enough sales for you to live on. Until you have a brand that will sell itself, you must work on developing the brand. Furthermore, if you want to create passive income, you have to learn how to retain your customers and keep them coming back.
What Isn't Amazon FBA?
When you say Amazon FBA, you are only suggesting that Amazon will fulfill your orders for you. You send your inventory to them and they store it until it sells. There are storage fees and “fulfilment” fees. The implication is that Amazon will advertise, develop your brand, and make sales for you on the amazon platform. That is a common misconception for new sellers. The way to be successful on Amazon FBA is to have a brand while simply using Amazon to fulfill your orders.
Build an automatic income for your brand
Your brand should have a website with a blog that is relevant to people who would buy your products. It should fit into a niche that already has high demand. You need your own brand and a supplier who will put your label on the product. You should have your own universal barcodes on the labels. This is different from affiliate marketing, retail arbitrage or online arbitration because you’re not selling other people's products, you're selling your own branded products. FBA is simply a way to describe Amazon's fulfillment services. In order to use FBA you must send some of your product inventory to Amazon's warehouses so that they can guarantee their customers two day shipping. That also qualifies you for “Amazon Prime”.
How To Be Successful With FBA
The correct way to be successful with Amazon FBA is to have your product listed across the web. There are 20 or more websites where you could post your product for sale. And there is a lot of software that will automatically send orders from other websites to Amazon for fulfillment. Amazon offers you their fulfillment services whether you’re using their website or someone else’s to get the order. Fulfillment service on Amazon is just that, a service that Amazon offers to online sellers.
Creating a brand takes time and effort. Many people want to just put products on Amazon and make a “passive income'' from it. Unfortunately that does not work effectively anymore due to the level of complexity involved with Amazon’s website now. With the covid pandemic in full swing, online sellers are more prolific than ever. There is a vast sea of online sellers and anybody can do it on a small scale. Selling online, and selling effectively online for long term passive income are much different goals. To sell effectively long-term you must have your own brand and you must have an online presence across the Internet, not just on Amazon’s website.
How To Get You Audience To Search For You By Name
Imagine how powerful it is to have someone go to Amazon’s website and search for your product by name. They buy your product without researching others because they know your product and they decided to buy it before they went to amazon.com. You can use Amazon as a base of operations. While listing your product anywhere and everywhere that is selling products online.
A blog will reach your customers during their research phase and that will make them much more likely to buy from you when they’re ready to buy. Just listing the product online without a blog, only reaches people when they’re
ready to buy, but they won’t know who you are before they search Amazon so you have to compete on price. The goal with having a brand is that you can charge a premium because they know your brand is good, they know your warranty, and they know you. Perhaps they have bought other products from you. Perhaps they bought one product like an air filter that requires refills, like changing the filters every month, so they buy 12 air filters from you and they come back next year and buy 12 more. They can’t get that filter from anyone else. Better yet, What if you got them to “subscribe” to an automatic monthly filter purchase? That is the power of having a brand.
How to start an FBA business with only a little money
The way to start with a little money is to start your blog and your YouTube channel. Start by doing reviews of products that are similar to the one you want to sell. Don’t give your reviews a hard bend favoring one or the other unless the differences are clearly favorable or unfavorable. Your reviews should be objective and come across as reasonable. You should review a product after using it for a while, not just unboxing it and making obvious observations about the product but after using the product for a while using various different versions of it. Then do a review explaining what it’s like to use them, what are the pros and cons after owning the products and using them for a while. That will be much more powerful than just unboxing a product and explaining what you see.
Anybody can see the pros and cons by looking or touching the product but not everybody wants to buy various different products to determine which one is the best. That is why they go online looking for reviews. They look at reviews to determine which is the best one to buy so they only have to buy it once.
If you don’t have a lot of money, a blog is almost free and you can do it with very little money. Use the time building your blog to build your brand across the web. Go on YouTube, Instagram, and Pinterest. Make sure that you are known among a certain audience of people who would use your product. That way, when you have saved up enough money to buy inventory, you will have an audience already and your product will take off right away. Once you put the money into it you can get the money out fairly quickly rather than investing money for 3 to 6 months before getting a return. The best way to start a business with a little money is to become well-known before you start. Build your audience with a blog and/or a YouTube channel before you start selling the product.
How much money should you invest to start your Amazon FBA business?
Here is another question about the FBA Business The answer is not a simple one. $15,000 is enough to get profitable with the FBA Business model. What you need to spend on your new business to be successful is flexible and depends on your budget. If you have money to invest, perhaps hiring a consultant service like “FBA Business In A box LLC” is the best way to create a passive income from FBA. But if you’re dealing with a small budget, follow the instructions in the previous section and buy a small amount of inventory to post for sale on many websites including Amazon. You should still send your inventory to Amazon‘s warehouse in order to take advantage of their fulfillment services.
Is FBA Still Worth It In 2021?
Amazon FBA is worth it because you don’t have to send out any packages. You sent all your inventory to Amazon at once. Perhaps they have you send 50 to one warehouse in California, 50 to a warehouse in Texas, and 50 to a warehouse in New York. That way they have your product close no matter where your customers are. The fact is, you don’t want to try to box up and ship out every order as it comes in because when you scale your business, you will get 10 to 30 or even more (maybe a lot more) orders every single day and that becomes a very big problem keeping up with all those orders. Also if you’re starting this business and you still have your job or another business, you simply won’t have time to send out all these packages to your customers. FBA is worth it because they guarantee two day shipping and their fee is all inclusive. There are plenty of fulfillment centers other than Amazon so if you have been kicked off of Amazon perhaps those are good options, but in general, your best bet is using Amazon because they have over 40 million credit cards on file for people who take it vantage of their Amazon prime service and when you send your product to Amazon it qualifies for Amazon FBA.
Can I Get Rich From Amazon FBA?
Absolutely, emphatically, yes! People get rich with Amazon's FBA business model all the time and they stay rich by developing their brand, expanding their product catalog, and improving their products. If you want to get rich selling products online, the FBA service is by far the best business model because it is, by it's nature, scalable. Sure, at first you could
send out 5 or 10 packages per day to different customers but what if you have 10 different products and you get 5 or 10 orders per day for each. That’s 50 to 100 different packages going to all different addresses every day. You can easily fall behind on your order flow. Then you’ll have other problems. If a product doesn’t make it in time, you will deal with cancellations and other problems, like bad reviews. Amazon FBA will help you avoid most of the issues that would otherwise prevent your success.
Getting rich selling physical products is a matter of volume multiplied by profit margin. You will never be rich selling 10 products per day (unless you’re making a lot of money per sale). But if you’re selling 50 to 100 products per day, it is very likely that you will get rich, whatever that means to you. The key is profitability. If you scale up your volume but you’re only making a dollar per transaction in profit, you’re still only making $100 a day. If you really wanna get rich you need to aim for a higher profit margin, perhaps $10 per order. That way when you get 50 to 100 orders per day, you’ll be making $500-$1000 per day. I think that would make you quite wealthy by anybody's standard. Very few people in the world enjoy that kind of income, especially when they don’t have to work 8 hours for it every single day, all week, all month, all year, forever.
Make It Passive: Scale Up
When you build a brand online, you can create passive income from it by scaling up the volume. That’s where Amazon comes in. But building a brand is not passive. It takes work, time, and special attention. You have to put in the work and the time. You have to pay attention to what your customers are saying in the reviews. You have to constantly improve your product.
If you do all these things consistently, you will find your business getting bigger and bigger until you are becoming wealthy. After you build a great product with a strong brand presence across the internet, your orders will keep coming whether you work on them or not. But that doesn’t happen immediately. At first you will have to put in the time, or hire someone who knows how to do it properly, so that you’re not wasting your money paying someone to build a brand and then discovering that their work only causes more work for you in the future.
Protect Your Investment
We are “FBA Business In A Box”. Our service builds the business for you initially. You pay one time and we provide the business for you. We start the business in your name and you can walk away or pay us to blog for you. We will build your audience for you initially. We offer a “passive income” option where you can pay us monthly to manage and grow your business for the first 6-8 months in order to get it going to the point where it is passive. At that point, you can either take over, or continue paying us to manage inventory. Either way, the income is not immediate. You will invest your money for 6-8 before it comes back as passive income.
Profitability takes time. You will not be profitable in your first week or even your first month. It is realistic to be profitable in two or three months but that requires serious cash flow. You will invest in inventory, advertising, graphic design, and other aspects of your business in order to make it grow. Generally we estimate it will take $15,000 of investment to build this business to the point of profitability. So once you have $15,000 into your business, it is reasonable to expect profitability and from that point, your investment should always come back bigger and bigger. Since, from that point on, you’re not paying design services or other fees involved with getting started, you're only buying your inventory which you sell for a higher price. That equals profitability and scaling that up equals riches in the long term.