In March 2020, the world came to a collective halt due to the outbreak of the novel coronavirus. Few were allowed to leave their homes, and many retails stores were shut down in hopes of containing the spread. BDO reports that at least 29 major retailers filed for bankruptcy through August of 2020, sparking fears of another recession. As a result, the majority of the population began ordering online and having goods delivered straight to their door. In addition to electronics, clothing, and other categories that normally make up top ecommerce sales, essentials like groceries, household supplies, and materials for DIY home projects were in demand as well. According to Amazon’s Quarterly Report, their revenue increased over 35% to a record $96.15 billion. They also set a record 196% net income increase over the third quarter of the previous year (2010). Many existing and new online sellers saw an unprecedented boost in sales in 2020, topping Amazon’s own 37% growth in sales with a staggering 20 billion and 53% growth year over year.
So, what about 2021? Below we outline 5 reasons why an Amazon FBA business is worth it in 2021.
Although ecommerce is not a new concept, the sudden surge and lasting impact of COVID-19 has changed online retailing forever. One Forbes article reports U.S. retailers had already experienced a 68 percent year-over-year online revenue growth in April 2020. Part of the growth is due to demand but also the ease with which people can buy products now - with offerings like Amazon prime making it even easier for a buyer to feel confident with their purchase.
For a seller that wants to increase their brand awareness or those who want to dive into the world of ecommerce as a new seller, there has never been a better time to start an Amazon business than in 2021. As we head into a new year, if you're asking why a third party seller should consider the Amazon FBA program, here are our top 5 reasons:
1) Majority of Consumers Rely on Amazon for ECommerce
The 2019 Amazon Consumer Behavior Report authored by Feedvisor, found that 74 percent of consumers head straight to Amazon when searching for a specific product listing. Rather than relying on the historically popular Google listings, the Amazon marketplace has become the main search engine for ecommerce business. Consumers know that doing product research and finding competitive price points is easy on Amazon. Amazon sellers that have great reviews, meet the customers shipping needs and price point help buyers feel more confident with their purchases. When nearly three-quarters of all shoppers are already prompted to go to an Amazon store for their purchasing needs, it only makes sense for businesses to consider creating an Amazon business as a way to increase their brand visibility and future growth.
2) Amazon Market Share
Amazon continues to grow its base, up from 48 percent in 2018 to a majority 52 percent of the ecommerce market by the end of 2019. Even with the early 2020 shipping halt and delays that crippled businesses and sellers, Amazon has more than 110 active U.S. fulfillment centers with more to come in 2021. With a vast network of amazon specific delivery drivers, the company ensures the products of their FBA sellers are being fulfilled and delivered on time to their customers.
Instead of having to rely on delivery companies that don't have a vested in your business, Amazon wants to ensure your success. By having access to the Amazon fulfillment center(s), an Amazon FBA seller can be released from the massive amount of work that goes behind fulfillment.
3) Built-in SFP Tools and Features Help with Faster Delivery
Still wondering if selling as an Amazon FBA business is worth it for you? Now that we know Amazon marketplace currently reigns at the top of ecommerce, it’s also important to point out how the FBA business model helps brands grow and scale. As an Amazon FBA business, not only will your fulfillment needs be taken care of, but your customers are able to receive the benefits that only an amazon store can offer, such as same-day and two-day shipping with amazon prime.
The Amazon platform recently updated its requirements for eligibility for their Seller Fulfilled Prime (SFP) program, set to go into effect February 1, 2021. The program is designed to help sellers meet customer demand efficiently and with greater satisfaction while maintaining the credibility of the site and attracting even more consumers to use Amazon as their first-stop ecommerce shop. Some of these tools include:
Shipping Region Automaton. This feature sets up delivery locations for one-day and two-day delivery based on your Amazon warehouse locations and preferred shipping services.
Delivery Speed Report. Analytics are a valuable part of the FBA seller network. This report allows you to evaluate which SKUs are holding up delivery speeds and which tools need to be applied to ensure faster delivery.
Automatic Product Classification. Amazon automatically lists your products as standard or oversize based on the weight and dimensions.
These are a few of the many features available through the Amazon FBA seller dashboard to maximize your delivery times and see where there may be delays to the flow. This helps to prevent customer dissatisfaction and alerts you to how certain products may be affecting your overall delivery model and business.
Instant gratification is part of what customers pay for - getting their Amazon purchases as quickly as possible.
It comes down to convenience. By building trust through Amazon's extensive customer reviews, and eliminating fees like shipping cost, selling products becomes increasingly seamless for you, and boosts customer satisfaction at the same time.
We wouldn’t be surprised if, in the very near future, a two-day delivery window will seem slow compared to the one-day and same-day shipping options that are quickly becoming the standard.
4) Shipping, Delivery, and Marketing All in One Place
Maintaining a successful online business requires several moving parts, which are often handled on multiple platforms. However, Amazon FBA allows you to relinquish responsibility for shipping, delivery, and even part of your marketing. Everything you need for your shop can be handled through your account. This allows you to focus efforts on product creation and/or sourcing, inventory supply and building your brand through cross-channel promotion.
In general, an FBA business setup works best if you have smaller products that sell quickly, especially if you are a new seller. For many shoppers, it requires a build-up of trust through customer reviews and brand recognition before they’ll become loyal to your store or invest in a bigger-ticket item.
To get started, register an account and list what products you’re sending. Amazon Seller Central will help you prepare your products before you ship them to the nearest Amazon warehouse. This requires attention to detail, as each product requires a unique code, description, and other requirements laid out by Amazon in order to track your products accurately.
Once Amazon receives your items, your products are stored until purchase, at which time Amazon also takes care of packaging and shipping your products, in addition to handling customer service requests regarding product and delivery satisfaction.
From your Amazon seller account, you can then set up marketing tools to help promote your products. These include sponsored products, sponsored brands, sponsored displays, and stores. Each of these offerings has built-in templates and dynamic widgets to help you build customized advertising to get your product in front of more people and reach a targeted audience.
Through Amazon advertising, you set your own budget for the maximum amount you want to spend per day on your ads, which gives you control over your monthly costs and allows you to easily review your return on investment.
5) Clear Path for Scalability
Once you have the basics in place for running an Amazon FBA business, the next step is fostering growth. At this point, you may consider again: Is Amazon FBA worth it? Yes, with a caveat. It does require utilizing all of the tools and techniques at your disposal on a consistent, strategic basis. In addition to sponsored posts, Amazon also allows you to promote deals and coupons to help grow your business.
As you increase your Amazon product inventory, there are ways to grow to a larger, international audience, optimize the current products you have based on analytics, and create strategies regarding brand promotion and sales during certain high seasons. Like with any business, the work you put into it makes a difference in how quickly and efficiently you grow.
Additionally, once you put tools to work through your FBA dashboard, you will have time to expand your presence through other channels in order to reach both current and potential customers. By no longer having to focus on fulfillment, Amazon FBA allows sellers more bandwidth to focus on other important parts of the business. For example, when you focus on brand alignment and product familiarity, you will gain more popularity across the Amazon platform and create more repeat customers.
The Staying Power of Amazon FBA
Amazon will continue to grow in popularity and create user-friendly functionality for new sellers, which makes it easier for both those who are just starting out in the ecommerce world and those already experiencing rapid growth. Amazon knows it makes sense to support its sellers, because it's the third party seller that continues to make it so successful.
Even prior to 2020, numbers have steadily increased for people who rely on online shopping for everything from household goods to fulfilling gift wishlists. It’s the digital age, where people rely on their smartphones, tablets, and desktops to research and buy products. While there is still room left for in-store shopping experiences, the majority of people shop online in some capacity, even if they occasionally step foot inside a brick-and-mortar business.
Entering the market with products already in high demand puts you at the forefront of potential success. By building your brand and inventory and staying consistent with optimization and product feedback, you’ll make launching or continuing your place among Amazon FBA sellers worthwhile in 2021 and beyond, leaving room for plenty of new opportunities in the future.
Once you’ve established the inner workings of creating a profitable business selling through Amazon FBA, you can duplicate the process and apply it to other ventures and product lines.
Forum Brands was created to reward e-commerce entrepreneurs that have created a profitable business and wish to sell for an immediate cash out. This money can then go toward future business ideas, investments, and build upon the success you’ve already achieved online.
Whether you’re just getting started in the world of Amazon FBA or you’re an experienced business that wants to expand your options, e-commerce is here to stay and will only continue to grow with time. How you decide to use it to your advantage is up to you.