With Amazon FBA, Sellers Are Having Fun Again
By Greg Holden
Chris Green is a busy man. Just after we started talking, he interrupted me. "Let me give this to the UPS guy," he said. Green was shipping off part of his inventory to Amazon.com so it could be sold and shipped out using that company's Fulfillment By Amazon (FBA) service. It was inventory that he wouldn't have to worry about wrapping, boxing, labeling, and getting to the shipper. Amazon does all that for him.
"We used to ship 120 boxes at a time on eBay," says Green, 33. "That was work. It takes time to do that."
That's just one reason why Green is a big booster of FBA. He blogs and instructs sellers about how to use the service. He and his CTO Paul Retherford have also developed a set of hardware products that sellers can use to scan bar codes, gather sales data, and suggest pricing for products they may want to sell on Amazon and ship using FBA through his website FBAPower.
Green isn't the only merchant excited about using Amazon's fulfillment service. At the recent SCOE conference in Seattle, our colleague Skip McGrath reported that the FBAPower booth was constantly crowded with interested sellers, and had dozens of on-the-spot signups for their services.
Some of FBA's benefits are obvious. You clean out your storage area and, in exchange for storage and fulfillment fees, let Amazon do the packing and shipping for you. But all those people who are passionate about FBA see it as a way to boost profits and sales, too. What is it about letting Amazon.com handle your fulfillment that helps your bottom line?
As Green explains it in a guest blog post on SellYourBooksOnline.com, when you sign up for FBA, your products become eligible for Amazon's discounted shipping programs, such as Free Super Saver Shipping (FSSS) on orders over $25 or free 2-Day Air shipping for Amazon Prime members.
Because you don't have to charge for shipping, you can raise your prices to match your competition. As a result, your profit margin for each item increases dramatically. For instance, a non-FBA seller sells an item for $10 plus $3.99 shipping. An FBA seller can offer the same item for $13.99. Not only that, but the FBA item will show up ahead of the non-FBA item in Amazon's search results because Free Super Saver Shipping or similar discounted shipping status is used as a "tie-breaker."
You show up first, you are more likely to get the purchase, and you get more profit, Green says - even after you subtract Amazon's storage and fulfillment fees. (And don't forget to factor in the cost of getting your inventory to Amazon's Fulfillment Centers.)
"It's a margins game," explains Green. "That's what a lot of people forget about. I may not get all the sales other sellers get, but I get two or three times the margin on each sale."
Green, who is based in Massachusetts, has been selling online since 1999. At one time, he was a Platinum PowerSeller on eBay with several seller accounts. These days, he sells only once in a while on eBay. He started selling media on Amazon.com four years ago, and joined the FBA program three years ago.
"We realized new the bottleneck of our business: getting the stuff sent to FBA fast enough and priced properly (pricing FBA inventory properly is not the easiest thing to do)," he explains. "Finding stuff to sell was not hard, and selling with FBA was not hard, but we couldn't get things labeled and priced fast enough."
Seeing a need for tools to price and gather data for selling on FBA, Green put an ad on the freelance employment site eLance and found Retherford, who helped him developed FBAPower, FBAScout, and FBA Repricer. FBAPower enables sellers to list an item on Amazon, price it, describe it, label it, and ship it out using FBA. FBAScout is a smartphone app that helps sellers research items they might want to sell through FBA; FBARepricer suggests the optimal price for items sold through FBA.
FBAPower costs $39.95 per month for unlimited product submission. FBAPower Pack costs $59.95 per month and includes FBAScout. Both FBAPower subscription plans include a free 2-week trial and also include Re-pricing (coming soon) and WebScout. FBAScout is available by itself for $39.95/month and is for the iPhone and Android, it comes with a free trial of 250 scans.
Green is such a promoter of Amazon and FBA that he is occasionally asked by people (including me) if he is paid by Amazon. Not at all, he says. "We are completely independent of Amazon. Amazon loves us, though. We bring them a lot of business." He recently returned from a meeting with Amazon officials, in fact.
Some of Green's customers share his enthusiasm for FBA and how it has improved their business. Bob Willey sells books, media, toys, games, and "just about anything that I can make money on" through Amazon FBA. Currently he has about 2500 items stored in FBA inventory, and he's in the process of moving the rest of his inventory to the service.
"I have seen an easy 40 to 50 percent increase in sales after moving to FBA," says Willey, who sells through Bobs Neat books and Bobs Neat Stuff and has a page devoted to the benefits of FBA at fbarocks.com. He is also an FBAPower affiliate.
Willey doesn't just use FBA to sell on Amazon.com. He also sells on eBay, Biblio, Barnes & Noble, an Alibris, Scibblemonger. That's one of the best aspects of letting Amazon.com fulfill orders from you: they will fulfill orders from any number of other sales channels.
"People don't know it, but you can source your entire warehouse to FBA and you aren't tied to selling on Amazon," says Green. "I told Amazon they should start promoting multi-channel fulfillment more. "
Both he and Willey say that using FBA, learning which items to sell, and knowing how best to price items enable them to compete with other, bigger sellers. "The increased workflow I get using FBAPower allows me to touch the product just one time and makes getting boxes ready for FBA much more enjoyable," Willey adds. "I am actually having fun again."
Do you have an interesting story about your business or a set of tips to share with other ecommerce entrepreneurs? Contact me at email@example.com and you may be profiled in a future EcommerceBytes column.
About the author:
Greg Holden is EcommerceBytes Contributing Editor. He is a journalist and the author of many books, including "Starting an Online Business For Dummies," "Go Google: 20 Ways to Reach More Customers and Build Revenue with Google Business Tools," and several books about eBay, including "How to Do Everything with Your eBay Business," second edition, and "Secrets of the eBay Millionaires," both published by Osborne-McGraw Hill. Find out more on Greg's website, which includes his blog, a list of his books, and his fiction and biographical writing.
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