If you want to start selling products for profit, you can set that up from home with relatively little trouble. Just order the products wholesale and then deliver them to your buyers when they buy them from you. This might make you question why you would need a service like Amazon FBA that handles the delivery for you.
In a typical reseller business model, a business owner or entrepreneur would first identify a product they liked the looks of, then go directly to the manufacturers/wholesalers. They’d next put in an order for 100 units (or thereabouts) which would get delivered to their own premises.
A small entrepreneur might keep the stock in their front room, while a bigger business might own a warehouse. Either way, the individual then markets the product themselves, and makes sales. Each time they sell something, they will package up the product, place a label on it, and pop it in the post.
When you buy wholesale, you will typically be able to get products at a discount. Usually this is a very significant discount, as the sellers see the value in guaranteed sales and thus are able to offer the low price.
This means that for every pair of shoes, DVD, or set of dumbbells you buy for $5, you can sell them onward for $10 or $15. Sell off your entire inventory, and it’s normal to make a solid 100% profit or more.
Internet resellers are simply retailers who use the internet to sell their goods/services to their customers, rather than actual stores. There are two types of retailer, one category whereby e-commerce is the only operation undertaken by the company; examples of such organizations include E-Bay, Amazon, and Dell. The other type includes e-commerce as part of their overall marketing strategy, whilst still having a physical, bricks and mortar tore, whereby customers can still go in and purchase the good/service.
Those companies who operate purely as ecommerce stores are able to achieve greater profit margins, due to their set up and operational costs being much lower than that of a traditional store. They do not have to pay any rent on a building whilst they still often have to pay for their Web Hosting, the cost is much less, there are no added rates for such overheads as water, electricity, gas, etc.
Labour costs are significantly less, where one person could realistically run a website, package goods and answer inquiries via email; this is unlikely to be the case where a full time store is involved. On top of these price differences, an online store can be viewed/accessed 24 hours a day, 7 days a week, from only one location. Shoppers in China, for example, can purchase goods at the touch of a button from a UK based reseller, but would struggle to make the 10,000 mile round trip to go to the actual store!
It is becoming essential for retailers to have at least some form of internet based access, whether this is a site whereby goods/services can actually be purchased, or purely informational, so customers can preview products and gather information on the store in general (for example, their nearest retailer or company phone number/contact details) before they visit.
Search engine management
Internet resellers must realize that it is not enough to simply have an aesthetically pleasing website, which is full of product information alongside great photos and detailed product reviews; this is all well and good, but useless without sufficient knowledge of Search Engine Marketing (SEM) and Search Engine Optimization (SEO) in order to target the necessary traffic towards the site.
Even something as simple as an appropriate domain name can have a big difference on the number of people visiting your site they should be kept small and concise, preferably without a hyphen, as people tend to forget these and this could lead to them being sent directly to your competitor! Word of mouth advertising is priceless, so by using an address that sounds exactly how it is spell can work wonders for spreading positive information.
SEO and SEM practices change regularly, and there is no guarantee that any particular methods will work. The best way to ensure a good ranking on the search engines is to employ an expert to work full time at increasing the chances of traffic being directed to your website.
Whilst many web designers may claim to be adept at SEO, there a relatively little personnel currently in the UK with any real in depth knowledge of the subject, so it is worthwhile spending the extra time/money on making sure your company is well represented within the search engine rankings, and chasing that all important #1 spot.
No storage required
Except not quite: because you also have to think about things like storage and fulfillment. This is where things can become significantly more challenging. Many independent entrepreneurs for example are not going to have the funds to afford a warehouse for storage, and nor are they going to hire staff to attach labels. Therefore, it becomes their job to store all those items in their own homes, while making sure they keep track of how many items are in their inventory (and preventing things like moisture and mold from destroying your goods.
Deliver the goods
Delivery is complicated too. You’ll now need to calculate the cost of the delivery, find the best couriers for buyers in all markets (including overseas in most cases), and make sure you have a smooth process capable of handling large influxes of orders without missing deliveries! Imagine if you have a sale and you sell 250 units. Would you be able to manually package and deliver all those items?
That’s where Fulfillment By Amazon comes in. Yes, Amazon FBA does translate to Amazon Fulfillment By Amazon.
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Kind Regards Shane.