When you think of selling products on the Amazon marketplace, you might picture a business owner consistently pitching their wares to a global audience. But did you know that Amazon selling is more than just a buy-and-take transaction?
Let us look closely at the four Amazon business models and explain how each seller operates differently. Knowing these distinctions will put you in the best possible position to turn a business owner into a successful Amazon seller.
On top of our list is private label selling. This Amazon business strategy involves manufacturing products, which are subsequently sold on the market under their brand.
Amazon sellers who use private labels control their product listing, branding, and price. Since Amazon’s rules don’t limit them, they can also be more flexible with their marketing and advertising activities.
Most importantly, Amazon sellers may charge less than other firms since they don't have to cover storage or delivery expenses. This advantage allows them to offer lower prices than other businesses, making them very attractive to consumers.
Despite the independence and resilience most Amazon private label sellers have, it doesn’t mean it’s plain sailing.
Finding a rewarding niche is a problem for private label merchants, given the millions of products on Amazon. Thus, thorough product research is needed when seeking a profitable yet uncrowded niche.
Private label retailers face additional difficulties when developing high-quality Amazon products. Since the Amazon seller controls the manufacturing process, creating top-notch products is paramount to the success of Amazon’s business. This responsibility entails working with reliable suppliers and ensuring that your product meets all of Amazon’s quality standards.
Any seller under a private label manufacturer shouldn’t miss creating an effective marketing strategy. Private label products don’t have the same built-in brand recognition as well-known national brands. Therefore, Amazon sellers should be creative with digital marketing or advertising to give their products a competitive advantage.
Above all, managing customer expectations is something that sellers shouldn’t disregard. Even if we indicated the possibility of long-term connections with customers, one should still need to manage their expectations around price and value.
Amazon FBA sellers are a special breed of eCommerce entrepreneurs. They leverage Amazon’s sizable customer base and world-class fulfillment infrastructure through the Fulfillment by Amazon program.
Following the Amazon FBA business, the seller looks for high-demand products, sources them from suppliers, and ships them off to Amazon warehouses. Then, Amazon stores, packages, and ships products to the customer. The outcome is a potentially lucrative, stress-free Amazon selling experience.
Besides its primary Amazon selling strategy, Amazon FBA sellers also benefit from programs like Prime Eligibility. This program gives you access to exclusive features and benefits that can help an Amazon FBA seller attract more buyers and close more sales. This way, they can guarantee growth.
Most Amazon FBA sellers know that it’s not always viable to reach a global customer base despite the key contribution of the FBA program. Here’s why:
Inventory management is among the most strenuous areas of Amazon FBA. Sellers must carefully monitor their inventory stock levels and adjust their orders to cater to Amazon’s fulfillment. In addition, Amazon only permits a limited number of days for sellers to replenish their stock, which can lead to lost sales and unhappy customers.
Some Amazon businesses have a hard time staying compliant with Amazon’s policies and regulations. Therefore, staying up to date is something every Amazon seller should take seriously. Suspension from the marketplace is possible if you don't adhere to Amazon's fair policy.
Shipping and fulfillment don’t guarantee a trouble-free experience. First, shipping costs can easily eat your revenue if you’re not attentive. Additionally, when determining your pricing, you must account for shipping supplies, postage, and labor costs.
Retail arbitrage is another Amazon business model. This Amazon sales strategy implies locating products at a cheaper cost and selling them with interest.
Most retail arbitrage sellers are always on the lookout for deals. They are experts at finding products that are being sold for less than their online market value. Once they find a deal, they quickly purchase the product and then list it for sale on Amazon.
By constantly searching for deals, retail arbitrage sellers can maintain a large inventory of products and keep their prices competitive. Furthermore, this approach allows them to take advantage of clearance sales and other opportunities that may not be available to other sellers.
It isn’t easy to market retail arbitrage in the Amazon business. You need to find products with a good margin, have the right tools, be organized, and hustle. Let's observe each of these concerns more closely.
Arbitrage selling can be time-consuming. It requires you to travel to different stores to search for discounted products. Along with this task is listing the items on Amazon and handling customer inquiries and shipping. Such a bombarding task can take up much time for the business.
There is also the risk of finding a profitable product. A product is not necessarily profitable just because it is selling well. Your purchase costs, delivery expenses, and Amazon fees must all be considered.
Don’t forget the fierce competition of sellers looking for bargains in retail stores. Many people are looking for the same deals as you and may be willing to pay more than you for the item. So, it's crucial to approach your retail arbitrage strategically. This undertaking means dominating yourself ahead through lowered prices, better customer service, or faster shipping.
The final option for fulfilling Amazon orders is to ship the products directly to customers. This process is known as Fulfillment by Merchant or FBM.
When an FBM order is placed, Amazon will notify the seller and provide them with the customer's shipping information. The seller will then pack and ship the product to the customer using their Amazon Seller Central account.
FBM orders are typically fulfilled more quickly than Amazon FBA orders. This is because they have already stored the products in their facility and do not need to rely on Amazon's warehouses. Furthermore, FBM gives sellers more control over their products and inventory, as they are not subject to Amazon's fees and policies.
The FBM (Fulfilled by Merchant) approach is no longer effective for many Amazon sellers. There are numerous causes for this, but the four main difficulties faced by an Amazon FBM vendor are as follows:
Amazon FBM selling is labor-intensive and expensive. Amazon charges for storage and shipping, so sellers often have to pass these costs on to their customers. In addition, Amazon merchants have to pay a commission on each sale, which can further increase the price of their products.
Not to mention the possibility of item loss or damage during transportation. If you fulfill orders yourself, there is a chance that something could happen to the product in transit or that the order could get lost. This problem can also lead to unhappy customers and negative feedback on your Amazon listing.
Frauds are also on the list. Unfortunately, there have been instances of fraud where sellers have sent empty boxes to Amazon's warehouses. Other frauds also used low-quality products that did not match the Amazon listing's description. Hence, the customer's dissatisfaction.
Anyone following the eCommerce landscape knows that it is constantly in flux. What was once a fairly straightforward environment has become increasingly complex, with many different business models and strategies.
Amazon seller training courses can provide the skills and knowledge needed to succeed in this ever-changing environment. These Amazon courses can also teach you the twist and turns of Amazon seller business models, helping you to stay one step ahead of the competition.
This Amazon seller online course will also explain when and why you should change business models. This way, you won’t get stuck using an outdated and ineffective method.
The instructors are skilled experts who understand what it takes to thrive on the Amazon platform, which is the best part of the Amazon seller course. They will share their secrets with you and provide valuable tips on how to thrive uniquely.
Taking an Amazon online selling training course will ensure you have the skills and knowledge you need to succeed in this dynamic marketplace. On top of that, honing yourself with the right Amazon course can help you learn the latest trends and improve your sales rank.
Digital Academy is here if you’re looking for a marketplace superhero that can elevate your eCommerce career! Aside from Amazon seller business models, our Amazon seller training course covers the following topics:
After attending the Amazon course, you’ll be rewarded with an Amazon account management certification once you pass the exam. Adding this certification to your resume shows prospective employers that you can build success stories for a client's online business.
So, grab the Amazon learning opportunities with Digital Academy! We have a lot of massive discounts and exclusive offers just for you.