Amazon FBA the different models and the route to growth:
By Julie Čolan
One of the best things about using Amazon FBA to grow your e-commerce empire is the low barrier to entry which enables some really cool and low-cost models to be adopted to start your journey towards e-commerce millions!!
I'm putting together a series of posts to cover my thoughts on the incremental steps that are needed, to take off small and ultimately, make it large!
In this first instalment, I'll look at what approaches to take at the beginning of the journey (steps 1 & 2). This is just my opinion and, as ever, I welcome the contribution of others:
Step 1: Retail Arbitrage
I'm not a big fan of the term "retail arbitrage", it just reeks of Internet Marketeer jargon to make something sound sexier and more sophisticated than it actually is. Retail Arbitrage (or RA for short) is simply about reselling stuff - specifically stuff that you purchase in brick and mortar stores that you know (or at least confidently predict) will sell at a profit on Amazon (after FBA fees). Although I hear about some people making incredible profits from adopting this model, I don't believe it can be easily scaled to a point that is going to make you mega-rich, it also doesn't really qualify as a provider of the magical "passive income" as you have to spend your days rummaging through the bargain sections of your local ASDA!
Still, it is lots of fun (and quite addictive!) and a great low-entry barrier place to start and to learn about the intricacies of selling on Amazon (and maybe getting un-gated in a few categories too :-) - lots lots more on that in later posts (e-book for ungating is under development:-)).
How do I do it? This one is really easy, download the Amazon seller app / Profit Bandit on your phone and walk around your local stores zapping the barcodes of anything that looks like it may be a bargain - you're app will tell you how much profit you could make on each item as well as the Best Seller Rank (so you can gauge how quickly the items are selling). Once you've loaded up with stock, chuck them in a box, set up a shipment in seller central and wave them goodbye before watching the sales roll in (hopefully!).
Tip: I have printed off the categories and rank tables (my preference is top 1%) and carry that at ALL times in my bag. Also, use Keepa or CamelCamelCamel to check BRS consistency.
Step 2: Online Arbitrage
Again with the "arbitrage" terminology!! In case you haven't worked it out from the title, Online Arbitrage (often labelled OA) is simply buying stuff from online stores and reselling on Amazon. There are plenty of benefits of OA, for a start you don't have to get out of your PJs and drive / walk to your local stores to find your stock!
Seriously though, the obvious benefit is that you can do ALL of the OA work from your laptop. Once you graduate to OA and are purchasing relatively high quantities of stock then I would advise employing the use of a FBA Prep Centre (more on these in later posts) who will take delivery of your stock, prep for FBA (the clue is in the name!) and send it straight off to the Amazon fulfilment centre.
See at this point you don't have to see / touch / smell the stock at all and the incremental cost of using a prep centre is usually pretty minimal. Now you start to really see the potential, it's not quite as much fun as RA but it starts to feel more like a business - and one that can scale.
How do I do it? Do some online shopping! Check prices of items, compare to Amazon, make sure there is a reasonably good BSR (use Keepa or CamelCamelCamel to check BRS consistency.) and then buy buy buy. Get the goods shipped to you, or an FBA prep centre, and then on to Amazon to sell sell sell!
Next time I'll delve into Step 3 (Distribution) which I have found to be a particularly lucrative approach....
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