Here's what Amazon sellers can't stop talking about — and why that's great for Amazon

At a recent conference in New York City, professional Amazon sellers and consultants kept talking about one thing.

The topic that kept popping up: Fulfillment By Amazon, or FBA.

FBA first launched nearly 10 years ago to let businesses use Amazon's infrastructure to store and ship their goods, but it is still seen as one of the biggest opportunities for sellers right now, according to several people whom Business Insider spoke to as well as a panel of presenters talking about the "unwritten rules" of Amazon sellers.

Four of the five members of the panel answered a question about the biggest opportunity for sellers in the coming year by pointing to FBA.

"There are very few things in the world where you can say, 'If I just do this, my business increases 30 to 50%,'" Eric Heller, CEO of Marketplace Ignition, a company that helps businesses sell their goods online, said of FBA during the panel. "It's a huge opportunity."

By using FBA to let Amazon handle shipping logistics, sellers can cut their inventory and shipping costs (though Amazon does charge fees for the service) and make their goods eligible for Amazon Prime, the company's $99-per-year membership program, which offers free two-day shipping on more than 20 million items. The Prime aspect is a big part of what makes FBA so valuable for Amazon.

FBA is generally a hot topic in part because Amazon is investing in it heavily of late as it becomes a bigger part of its business. In its fourth-quarter earnings last year, Amazon said goods sold through FBA made up more than 40% of its third-party sales. The company also announced last summer that it would add six new fulfillment centers and more than 15 "sortation" centers in the coming year to help it improve shipping efficiency for both its own inventory and FBA goods.

The discussion of FBA at the conference was overwhelmingly positive, which is great news for Amazon.

Why? Because in addition to fees from third-party sales, FBA can provide a big boost to one of Amazon's most important businesses: Prime. The more businesses that use FBA, the more products Amazon can offer through Prime. The more Prime products there are, the more willing people might be to shell out $99 for a membership. And people with a Prime membership end up spending way more money on the site than other users.

A recent Consumer Intelligence Research Partners survey of 500 Amazon shoppers concluded that Prime members spent more than double what non members did.

Amazon has spent the past year amping up its digital offerings for Amazon Prime and investing in FBA because it banks on the fact that when it hooks people into its Prime ecosystem, it will make more money from their increased shopping.

"Amazon is investing in FBA right now," Heller says. "Amazon is using these things to drive up the frequency of purchases from Prime."

Despite the warm reception it received Tuesday, FBA isn't all sunshine and rainbows for merchants.

Victor Rosenman, CEO of FeedVisor, the company that hosted the conference, told Business Insider that the risks associated with using FBA were that businesses were handing over all their sales data to Amazon and that if they misjudge demand and send too much inventory to Amazon for FBA, it can be a very costly mistake.

"It's like a marriage," he says. "There are parts that are good and parts that are bad."

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

(Source: http://www.businessinsider.com/amazon-sellers-fba-2015-5)

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....