Is Amazon FBA a Reliable Business Model?

Amazon FBA is a great way to start a business for yourself, especially if you are just entering the world of online businesses.

You could potentially earn thousands of dollars every month, and there is not a massive growth period necessary to get there, which is part of the reason why this business model is so appealing.

Obviously, there are a few disadvantages as well, which I would like to discuss:

Dependent on Amazon: Your entire business model is not really your own because you are extremely dependent on Amazon’s marketplace for new customers and to make any sales at all. If tomorrow Amazon decided that they did not want to keep selling your product, your business would instantly crash. This is probably the biggest drawback of this business model.

You Don‘t Have Your Own Customers: Since all of your customers are coming in from Amazon, you do not actually have a customer base of your own like you would if you were selling products on your own website. This means your brand is very dependent on Amazon for customers.

Start-Up Capital: Since you need to buy goods to be able to sell them, this business model is not for everyone. You are going to need a certain amount of start-up capital to be able to do that. The amount depends on what product & method of amazon selling you want to start with Wholesale, Retail arbitrage, Drop shipping or merch by amazon.

Overall, this is a great way to start making money if you have a small amount of capital to invest in your project. It can be a good foundation to depend on as you scale your own business and create your own online empire.

How does the Amazon FBA business model actually work?

The Amazon FBA business model is a bit like a hybrid between a traditional e-commerce business and a dropshipping business. You provide the products, and Amazon handles the picking and packing of your orders, shipping of the product, customer service, and product returns. You are also able to list and sell your product through Amazon.com.

Where do you get your products from in the first place? Well, once you have chosen a product to sell, you will need to find a supplier— these are often in China. You create an agreement with the said supplier and then organize the shipment of the product to the Amazon warehouse in your home country. From this point onwards Amazon handles the rest. This means that technically you will never have to see or physically handle your product at all. You just need to make sure that there is always enough stock in the warehouse to fulfill your orders.

The way the sales work is pretty straightforward. List your product on Amazon, or another online store, and wait for someone to click on your listing, and buy the product, when they do, Amazon sends them the product and you make money. Simple!

Conclusion

Amazon FBA remains a great business model for people who want to take their first steps into the world of eCommerce. It simplifies a lot and makes your job much easier- especially in the beginning.

Depending on Amazon’s massive customer base and enviable distribution network is often a good way to get your feet wet and start making money online.

So, do you plan to start your own Amazon FBA business?