Is Amazon FBA dead? Can you still do Amazon FBA and is the gold rush over? These comments and questions are in the air and might have crossed by you, we are here to share our two cents on them.
Why Thinking This Way?
There are high chances that these opinions are based on comparison with Amazon selling results 10 or even 5 years ago. It was a ‘get quick rich’ thing back then and that time is gone, its not happening anymore.
Amazon’s Growth vs E-commerce
Amazon has become a Trillion dollar company and it does not only have the lion’s share but is also growing exponentially by day. It has doubled its market share of the U.S. E-commerce market in just 5 years! Below are some dazzling stats.
What’s the first retail site or app you visit when shopping online
(Source: Internet Retailer/Bizrate Insights online survey, July 2018)
Amazon growth rate compared to E-commerce sales growth in U.S.
(Source: Amazon Financial Reports & Digital Commerce 360)
Amazon Sales as a Percentage of U.S. Online Retail Sales
(Source: Amazon, Internet Retailer, U.S. Commerce Department)
As far as market indicators are concerned, E-commerce is booming, Amazon is expanding and greatest of all competitors are nowhere near Amazon. Things are only going north, Amazon is here for good.
AMZ Sellers: Old School vs New School
Buyer Options. Times have changed, there is a paradigm shift, sellers used to procure products randomly, throw them in FBA and customers would buy them. Buyers at that time didn’t have as many product options to choose from and weren’t as demanding as they are now.
Tools. Sellers before didn’t have access to sophisticated market intelligence tools and could not take smart decisions like sellers today.
Here’s the plan for 2019.
Recipe for Failure in 2019
This is one recipe you shouldn’t try and avoid the ingredients.
Bin of Failure. Less patience, lack of commitment, ill-prepared and eagerness to see immediate results are dragging people in the ‘Bin of Failure’. People used to get into FBA without any knowledge, learning & earning on the way while making errors, that isn’t happening anymore. You do that and you’re gone.
Initial Pace & Expansion. Go Slow and Steady. You need to take baby steps, take each day on its face value and wait for the right moment to inject more capital. Business asks for money itself at the right time and you will know yourself.
Quick Rich Mindset. Get rid of it already! You are destined to fail if you are falling prey to all the videos and blogs telling that you can get a mansion or a Lamborghini in just 6 months’ time and that selling on Amazon is extremely easy.
Plan A → B → C. After launching your product, you don’t need to get depressed if plan A isn’t working and no need to get egoistic by sticking to it till you meet failure. If you think you have given reasonable time to Plan A and that there is a wall you are headed towards, change your course and move on to Plan B. If that doesn’t work, go on to Plan C till you develop a successful plan. Principally, you need to develop a formula for success that is unique to you and works well for you. Trust us, as comforting as they sound, no guru is ever going to spoon feed it to you. Every product has its own market destiny and you have to find it out yourself.
Inventory Alert! ‘You should never go out of stock especially near peak sales seasons and that it will kill your BSR’, that’s the banter you would have heard if not thousands maybe hundreds of times. That stands correct but that doesn’t mean you keep ‘humungous amounts’ of inventory based on this or that you got a really low rate from the supplier. If your idea is to throw in inventory, sleep on the couch and wake up as a millionaire in a year’s time then you didn’t bear in mind the associated holding cost that will eventually kick in if your inventory remains in Fulfillment Centers after 6 months. You need to make your sales and marketing strategy to move your stock out within 6 months’ time avoiding the additional costs.
Naysayers. Stay away! Stay away! Stay away! Stay away! Stay away! Stay away! Stay away!
Mentor Selection. You are grossly mistaken if you are aiming to enroll in a course of a mentor and think he/she will handhold you onto the ramp of millionaires. Choose a mentor wisely, who gives you hope but does not sell an unrealistic rosy painting.
Data Driven. Get ready to drown if your decisions are based on your whims and not supported by data. You need to do your due diligence at all stages of the process and numbers should support your decisions at every step. Numbers never lie!
AMZ One Step Tips for 2019
Keeping in mind Amazon is not the same as before, it has and will continue to change in 2019. Let’s pull you out of this sea of negativity.
It’s a Business! Selling on Amazon is a regular business at its core, you need to treat and respect it that way. What does this mean? It means that you need to follow some discipline, be organized, have good relations with suppliers, invest time and money on marketing and develop channels to reach your target audience, timely.
Product Hunting. There are approx. 480 million products selling on Amazon at the moment and 235 million were added in the last 16 months. If you haven’t noticed already, that’s a lot! We advise you to spend rather invest a lot of time in this stage as product selection will be absolutely crucial and this will mostly be the ‘deciding factor’ in ascertaining sellers’ fate in 2019.
Sellable Asset. Your Amazon listing and your inventory is your asset that you can sell off whenever you feel you are done with a product, want to move to a different one or want to quit the game altogether. Valuation of your listing will be based on your monthly profits that you can showcase on flippa.com and empireflippers.com.
Proxy Selling. Increase your selling channels.
What is the concept? You can establish a partnership model with established sellers on Shopify or eBay stores and give them access to your inventory. This might be new for some but people are adopting this model and using it as a catalyst to ensure complete sale of their stock.
What’s in it for them? Shopify and eBay sellers will have access to readily available inventory already present in U.S. to be shipped to their customers on a margin you guys agree upon. This is a definite win-win arrangement.
How will you benefit? Your product will have access and visibility on multiple platforms, you can easily increase traffic, help improve sales velocity and BSR of your product.
Why and when would you do that? This will be useful if you fear your inventory will be dead in the future and you foresee a diminishing demand of product.
Switch to Brand Selling Model. You need to come out of product selling mindset and work towards making a brand, a private label. Work hard on creating a ‘wow’ effect for the customer in terms of product quality, product information and after sales as this will definitely be beneficial in the long run.
Supplier Relations. This will remain as significant as it was earlier. Consider them as your business partners, you can only achieve success if your supplier provides you high quality, low cost products consistently. Your success is in their hands.
Sourcing Platforms. You can explore more platforms other than alibaba.com like 1688.com, alza.co.uk, gearbest.com, banggood.com etc. to introduce a new variety or improve quality of existing products in the market place.
Embrace Uncertainty. Expect nothing and accept everything. Amazon will continue to change its policies to safeguard and please its buyers and make things, let’s just say ‘interesting’ for its sellers. You can either be upset about it or embrace changes with open arms, it’s up to you. Some will drown some will survive, that will remain the rule of the game.
Explore Markets. If you see your product selling successfully, getting positive reviews and you are confident about your product, you might want to jump into new markets like the U.K., Japan, Germany, Australia etc. to test your product luck.
Data Driven Decisions. Decisions should be based on data and you are likely to succeed if you will have supporting stats. Data sources should be more authentic, verify same data from different sources and then move forward.
Tools Savvy. Market intelligence has changed the game altogether and there will be more tools coming into facilitate at every stage. Sellers that use authentic tools (in terms of accuracy) to extract data will be ahead in the competition for sure and will less likely crash.
Reviews Building Strategies. Come up with creative ideas to ask for reviews like placing a leaflet inside product package that requests them to submit a review if they were satisfied or to ‘email to you’ directly in case they faced a problem i.e. to avoid a negative review. Another way could be to put in an extra product if you are bundling and surprise your customer with a bonus article. This way you attempt to drag the customer out of the customer satisfactory zone into a customer delight zone which will most probably yield a review in your favor.
Marketing Channels. Explore new and creative ways to reach your customer with a combination of marketing avenues depending on the type of product you have e.g. Facebook, Twitter, Instagram, Pinterest, Youtube, Vimeo, Press Release, Google+ etc.
Optimize Product Listing. Do not ignore the title, product images, bullet points, description, back-end search terms.
Catchy Product Descriptions. A+ products are not generating sales due to inadequate and poorly written product descriptions. Think of it this way, you are not present yourself to communicate why a customer should buy your product. Your product only has 2,000 words for its elevator pitch which should include product details, keywords and should be written in a promising language that touches the customer and replaces the need for your presence.
High Quality Media Kit. Nothing draws more attention towards your product as effectively as pictures and videos you decide to share with your customers. Media kit should be appealing enough to make the customer want to click and then buy your product. Your video should give the feeling that you are talking to your customers for real and the product can potentially solve their problems.
Newcomers. Some specific tips for new sellers who are about to enter the market in 2019.
Test Yourself. Some people just keep on reading and are afraid to take action. You need to take that first step, you can’t learn everything just by sifting through text. See if selling on amazon resonates with you. Roll the dice to know what numbers you will get.
Combination. It’s not a linear path that you can conquer in a day or a week. Selling on Amazon is a unique combination of investing capital, gaining knowledge, practicing skills and developing a sense to sell stuff online that only experience can teach. This business will require hard work, at times making intelligent judgment calls, understanding and playing with data using authentic tools.
Consulting. Don’t think that going through this grind will all go in vain. Treat it as a journey, maybe a career. There are byproducts of acquiring the knowledge and skills you develop in Amazon business like giving consulting services to established and budding Amazon sellers. Provide assistance where they lack as you will already be ahead of the game. So you can work on your product selling while selling expertise on the side. Education and experience never get wasted.
Mentor Selection. Though we mentioned Mentors under a different header earlier, it’s still a healthy exercise to have one person who can walk you through this complicated journey, at least in the beginning. The best way to begin would be to go through a mentor’s guide, videos on YouTube and articles to develop a sense, direction and strategy of your own.
Pitfalls. When you have walked through the process and its complexities, search reasons why people failed. Yes, you will find plenty of failures out there. Wise is the person who learns from the mistakes of others, study failures to know the pitfalls to know which steps of the ladder to skip.
Use FBA Calculator. Newbies and rookies often get excited quickly by finding a potential product and looking at low purchase cost. This isn’t enough, ‘POP!’ there goes your bubble. You need to work on the landing cost to get a realistic picture. Always use the FBA Calculator available on seller central to build realistic castles.
The gold rush is over for people that are going to enter casually and aim to sit on the couch hoping to become millionaire quickly. People that are going to take Amazon seriously and treat it like a real business, work hard, commit, be creative and are honest in providing a good product experience to their customers will reap the profits and will always stay in the game.
Is Amazon FBA still worth it in 2019? It’s a ‘Yay’ from our side.