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Amazon FBA: Dream Business Model Entrepreneurs Have Been Waiting For?

by Leonardo Schwartz

E-commerce is actually exploding right now and there is no doubt the upside trend will remain and even accelerate during the next 10-15 years.

Is no secret that being capable of bringing to the market a popular physical product is a sure way to make a fortune. This actually is a proven formula that’s not at all new: it has been put to test time and time again for decades and many billionaires and worldwide known brand names got in fact started this way.
But of course, even if there is no secret to it, being able to produce and sell physical products has been always beyond reach for the average Joe or Jane.

It just called for complicated logistics and some deep pockets just to give it a fair try.

But not anymore.

Nowadays there exist hundreds if not thousands of fulfilment centers all over the US alone ready to take care of the grunt work involved on distributing physical goods for a reasonable price and the sourcing part of the equation has seem itself vastly simplified too thanks to global marketplaces such as Alibaba.com or Tradekey.com

But the real revolution came about when Amazon launched its Amazon FBA program back in 2006.

In a nutshell, Amazon FBA – Fulfillment By Amazon- not only takes care of what any half-decent fulfilment center would, but it add to the offering several advantages, you won’t find anywhere else.

My favorites ones being:

1) Amazon doesn’t charge you in advance for using their warehouses. They keep your inventory for free until you sell it and just then they take a cut on your sales price.

This FBA feature alone helped to mitigate the risk of this business model quite a bit and took away one of the main worries people have in mind when considering to get involved in this profitable game.

2) Amazon takes care of mostly all customer service related tasks, including return handling and refunds. They even provide free shipping for most orders at their cost!

3) They manage all the finance side of the business by charging their customers’ credit cards and sending the seller his earnings every other week.

This may seem to be like a disadvantage at first glance but in fact, when you don’t have your own merchant account –which’s really difficult to get and so most entrepreneurs and start-ups don’t have it- you really can’t get thousands of orders through without getting your paypal account or whatever you’re trying to use to get paid limited or frozen for months, putting you instantly out of the business just at the very moment you had started to see some success!

Amazon solves this issue from the let go.

Not only that: Amazon is said to have more than 250MM customers’ CCs on file. Thus, purchasing a product in Amazon.com is so easy: just click the orange button and you’re done!

And of course, everyone trust Amazon’s brand.

You just can’t beat Amazon when it comes to conversions.. Hundreds of millions of dollars have been invested to perfect this selling machine over the years.

Fortunately for you, as an Amazon FBA Seller you don’t have to compete against Amazon anymore, you now have access to all of these incredible competitive advantages and can use them to promote your own products just as if they were yours.

4) Last but not least, Amazon allows you to put your product in front of millions of people. This is the ultimate advantage for any entrepreneur!

Before Amazon FBA, most people didn’t have access to a distribution chain, and a distribution chain IS the real secret to success in this business.

Amazon, by letting you to list your product for sale in the most trafficked e-commerce site in the world gives you the closest thing to owning your own distribution chain!

And it’s worth it to remember that this “kind of” a distribution chain cost your about 15% of your product sale price and includes all warehousing, package handling and delivering, customer service and finance services FBA provides you as a seller, against 60% or more a traditional distribution chain would usually take just for the distribution!

All in all, Amazon FBA is the real deal and has just open the physical product game up for small guys just like you and me.

One last thing I don’t want to finish this article without mentioning: as someone who got started in the entrepreneurial world as an online marketer, I truly appreciate the advantages of not having a heavy overhead threatening to kill your start-up business at any time.

But there is something I learned a long time ago and that has been the absolute edge for me when considering digital products vs physical products: THE POWER OF AUTOMATION.

Without trying to enter in a subject that would make for a full article –or a full book for that matter- on and of itself let me briefly tell you that with a digital product you can automate many tasks that would require human intervention in the physical product’s business, being distribution and delivery the major ones.

Now, thanks to Amazon FBA you can build a business around selling your own physical products –and remember physical products make up 98% of the market- without having to resign to the automation advantage only digital products used to provide.

Of course, there still are and probably always be human beings behind scenes doing all of this work when it comes to physical products, no software in the world can really take care of this, but for you all of that labor is totally transparent and we’ve reached a point unthinkable just a few short years ago where you can setup and manage a full supply chain getting physical products produced –even overseas- packaged, imported and finally sold and delivered to the customer… without never having to touch a single one of them or even see them in real life!

So unthinkable, an even so true and SO POWERFUL that I have no doubt in my mind that this business model will be largely responsible for the creation of a new generation of millionaires in the world. We’ve seen some of them already.

Would you like to be part of this revolution? What are your thoughts?

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