Why Amazon FBA is Still a Dream for Small Businesses

It’s 2019, and the e-commerce industry is ripe with growth opportunities. At the center of this growth is Amazon. The giant online retailer has been at the forefront of transforming the e-commerce industry into what it is today. Through Amazon’s marketplace, millions of customers shop conveniently and have their items delivered to their door. The same platform has allowed millions of businesses to reach a worldwide customer base. Some small companies have become global brands by using Amazon as a launching pad. Amazon, however, has it’s fair share of critics and many brands have failed to capitalize on the opportunity. But the Amazon FBA opportunity is only growing, and I’ll show you why you can’t afford to continue to igore it in 2019.

Change is good

One of the reasons why some brands have given up on FBA, is Amazon’s habit of sporadic policy and regulation changes. Amazon FBA was easy to get into and profit about ten years ago no doubt. There was less competition then since the e-commerce industry was still in its infancy stage. Things are, however, a little different today with more stringent policies and higher FBA fees. For instance, in July 2018, Amazon introduced a new Inventory Performance Index. This introduction meant that Amazon FBA sellers had to maintain an excellent record of quality service delivery to have access to storage. At the same time, Amazon also increased the FBA fees.

On the surface, these policy changes seem unfriendly to FBA sellers. However, Amazon is a business, and like any other business, they have to focus on customer satisfaction to survive. Every company needs some level of discipline and quality control to thrive. By introducing some policies, Amazon can keep up with the growing demands in the e-commerce industry. Simultaneously, it’s able to maintain a clean reputation both as a company and a marketplace. Who wouldn’t want to sell on a platform that encourages quality service delivery? The truth of the matter is, Amazon sellers require a certain level of adaptability. You can either adapt to the policy changes and grow your business or remain in the past and watch your business decline.

Amazon’s share continues to grow rapidly

The e-commerce industry has seen massive growth in the last ten years with players such as Shopify and Woocommerce entering the market. Despite all the emerging competition, Amazon has managed to maintain steady growth on all fronts. The e-commerce giant has registered a substantial increase in its stock price, sales volume and number of users.

Amazon’s stock price rose from $750 to $1400 between 2017 and 2018. That is not where the growth stops. Over the last five years, Amazon has doubled its market share for the e-commerce market in the US to 54%. Amazon’s sales have also been on an upward trend since 2007. According to Stastica, Amazon’s net sales for 2018 totaled to almost $56.6 billion up from $51.04 billion net sales in 2017. According to these statistics, Amazon still has room for growth meaning that there is still a vast untapped market for sellers to explore.

The e-commerce industry as a whole also paints a picture of tremendous opportunities ahead. As of 2017, total annual e-commerce sales amounted to $2.3 trillion with the number projected to reach $4.8 trillion by 2021. The growth rates and projections for both Amazon and the e-commerce industry as a whole are evidence that Amazon is here to stay.

Does Amazon’s rapid growth rate contain any benefits for sellers? Absolutely! For starters, Amazon has more than half of the e-commerce customers. This means that as an Amazon seller, you have more than 50% of online shoppers as your potential customers. One of the commonly mentioned reasons why Amazon FBA is dead is market saturation. However, even with competition, there is a large enough cake for everyone. Amazon already had 310 million active customers as of 2016. If the number were to remain static since then, which is impossible, a customer base of 310 million people is too huge to ignore.

Cutting-edge fulfillment network

Let’s face it; Amazon has the best fulfillment network in the e-commerce sector. The biggest challenge in the e-commerce industry has always been shipping and fulfillment. Online shoppers hate long shipping periods and exorbitant shipping fees. Amazon FBA addresses the customers’ pain points with a reliable, fast, and free shipping and fulfillment system. Being an Amazon FBA seller cuts you in on Amazon’s fulfillment network and gives you an advantage over other e-commerce players. It is a selling point by itself and customers will instinctively pick the fastest and most shipper.

Amazon’s fulfillment network isn’t for the customers’ benefit alone. It also benefits the sellers by eliminating the hustle of Storing, packaging, shipping, and delivering products. With Amazon FBA, sellers can automate their businesses to run with minimal human interference. The automated business approach helps sellers free up more time to pursue hobbies, other business pursuits, and adventure.

Cashing in on the Amazon FBA opportunity

Being successful on Amazon is without a doubt, harder today than it was five years ago. However, it remains an extremely viable business model in 2019 and will stay feasible for years to come. Yes, Amazon might change their policies without warning. They might even remove existing features or add new ones which frustrate most brands. However, Amazon’s never-ending focus is a smooth customer experience which also benefits its sellers in the long-run. A great customer experience gives Amazon a solid reputation that you can leverage as a seller to increase your sales.

Although Amazon has some pitfalls, and it’s not a success in every category, it doesn’t mean that you should write it off as a channel completely. Instead, let’s take a look at Amazon FBA and how it can impact your business. A quick consult can help you map out the best growth strategies and whether the Amazon FBA opportunity is right for you. So, are you ready to capitalize and take your business to the next level? If your answer is yes, then book a free consultation session with me to get started.

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