Many small businesses providing tangible goods struggle with how best to deliver their products to customers, especially once they reach the point of shipping large orders. The cost of packaging, insuring, and shipping can really add up. The online retail behemoth Amazon can seemingly be a way to solve shipping dilemmas, but whether it helps or harms depends on the type of retail business you engage in, so consider a few points before you get hooked with the lure of easy sales.
All Sellers Medium and Small
Let’s start with the most basic issue regarding sales quantity: Amazon accepts seller goods only by pallet delivery, so if you are not selling enough product to ship by pallet – and that means efficiently filling a 1-by-1.2-metre pallet with a stack of boxes up to 2.2 metres high – then you are not yet ready for FBA. On the other hand, Amazon offers another service called Fulfilment by Merchant, which allows you to list your products on the Amazon site and handle the packing and shipping yourself.
Another important consideration in how you should enter the world of e-commerce is the level of control you want over your branding. One of the advantages of Amazon’s fulfilment service is the sheer number of eyeballs it gives you. It’s hard, if not impossible, to drive that kind of traffic to your own e-commerce site, no matter what kind of optimising you do. But this is a double-edged sword: you might get the exposure in terms of numbers, but in this large forum customers are disconnected from sellers, so you miss out on the benefit of controlling the look and feel of your packaging, branding, and of making a positive impression on customers.
It is worth noting that there is a rising sector in Britain of fulfilment alternatives to Amazon. These companies can often provide the same service with more personalised touches, such as allowing sellers to provide their own packing materials – which is great if your overall look is important to you. And other providers won’t compete on price with you, either, which Amazon certainly does.
State Your Business, Do Your Maths
If your business consists of purchasing products at a discount and reselling them, FBA or an alternative service could be the perfect solution for you. Just imagine: sending off pallets packed to the gills and simply waiting for the money. After creating your account, you list your products, and Amazon handles everything else. You aren’t developing customer loyalty, but with the right product, volume, and pricing, you can make a lot of sales support your travel bug or finance that electric guitar you’ve been eyeing.
The most important thing to remember here is to do the maths first. Fulfilment by Amazon has a multitude of rules and regulations covering how and where they will accept goods, and you must follow these to the letter or risk having your shipment delayed or rejected. Their seller fees will add up, and can be significant – up to 25 percent of a product’s unit cost – so make sure your margins can bear the expense or you may wind up losing on the deal. The online magazine CIO.com has a comprehensive pro-con assessment of the different platforms from the perspective of small business owners, who support the assertions of thousands of FBA discussion forum members that fees can make or break your profit.
Sellers who either create or resell handmade or small-batch products are, in the end, best off creating their own e-commerce site, even for all the management it entails. But it doesn’t have to be an either-or proposition. One interviewee on CIO.com said that her clothing business started with a shop on Etsy while she built her own fully fledged site. If you’re ready to jump into online retail with both feet, a hybrid approach would be appropriate cas you could harness the exposure of an Etsy or Amazon Fulfilment by Merchant and develop the brand and customer relationship control you get from fulfilling orders yourself.