Using the Amazon Fulfilment by Amazon (FBA) service when seeking to make money from online arbitrage is a great way to increase your productivity, your profits, and to turn your arbitrage activities into whatever you want them to be, from a useful side income or lifestyle business to a full on, full time business that you make a great living from.
Let’s take a look at all the ways you can use Amazon FBA to your advantage when trying to grow your income from arbitrage.
Understanding Amazon FBA
Amazon FBA exists to make life easier for anyone who sells products on Amazon. Amazon don’t know – and likely don’t care – whether or not you’re arbitrage selling or are a seller of your own handmade products, for example.
Of course, FBA is another income stream for Amazon themselves, but what you’ll give up in terms of cash using the service, you’ll more than make up for it with what it gives you back in terms of time, money, and resources overall.
Read on to understand exactly what Amazon FBA means for your arbitrage activities, and all the benefits it will bring to you.
Do I Have to Use Amazon FBA for Arbitrage or to Sell on Amazon?
All you need in order to sell on Amazon is an Amazon Seller Account, which you can sign up for from Amazon Seller Central.
Amazon FBA is an additional, optional service and feature. If you’re a registered Amazon seller, then Amazon will likely try and “trade you up” to sign up to Amazon FBA, and we’re about to tell you about the benefits of using it and recommend you do so, but it’s entirely up to you whether you do or not.
Let’s take a look at the benefits of using Amazon FBA for your arbitrage activities.
Significantly Reduce Your Storage Costs (Or Keep Your Home Tidy!)
If Amazon is going to fulfil orders on your behalf, they need to have your stock to do it!
From a practical perspective, all you need to do to take advantage of Amazon FBA is to send your stock to Amazon when you have it. Amazon will send you a shipping label, and you send on whatever you want them to fulfil to the designated Amazon fulfilment center.
While that sounds great, the benefits go way beyond this.
The biggest one is easily the money you’ll save on storage costs. While you still pay a cost to Amazon for them storing your products, you’re not having to pay out for your own storage facility, and much like how we forget to include our own time when considering the cost of shipping, we won’t be spending hours taking products back and forth to our storage space.
Even if you don’t use an external storage solution, unless you have a garage that doesn’t get used or other dead space at home, using Amazon FBA will pay dividends in helping you to keep your house looking like a home rather than a stock warehouse!
Save Time and Money on Shipping
Whether you’re already selling on Amazon, have sold something on eBay in the past, or even have ever just sent a package via the post office or another courier service, you’ll know that shipping is one of those things that should be easy to organise but often ends up being anything but.
When we think about shipping costs, it’s so easy to fall into the trap of only thinking about the actual cost of the shipping itself.
We often don’t think about the box or the envelope, any bubble wrap or anything else we might need to use as protection within the package, or how much of our own time we’re using in going to the post office or booking a courier collection.
With Amazon FBA, you don’t need to think about these, because Amazon takes care of the shipping for you!
Amazon Deals with Your Customers!
Dealing with even one customer query can take up hours of your time.
Let’s say an item goes missing while being shipped to a customer.
The customer contacts you. You then look up that customer’s details and the shipping information. Depending on what you find, you then communicate back to the customer and to whichever organisation shipped the product. You end up having to refund the unhappy customer or sending another item out to them (using even more shipping time on one order!) while then spending your time going through a process to claim back the value of the missing item. That’s all you are likely to get back, too. The post office and courier companies don’t often show sympathy to the time you’ve wasted and invoicing them for the envelope, bubble wrap, and four hours of your time probably won’t garner a response.
When you use Amazon FBA, Amazon deals with your customer queries, returns, or anything else.
Sounds a lot better than the potential of going through the above process, doesn’t it?
Make Your Amazon Online Store More Attractive to Customers
Pretty much anyone can sell on Amazon.
If you sell things yourself and don’t use Amazon FBA, your products in your Amazon online store will show that they’re shipped when you can ship them.
Let’s say you guarantee that all orders are shipped the next day. That’s great, but even if you then send a product as next day shipping, a customer might still be waiting 48 hours from the point of order to when they receive it. Sending products via next day services will also incur a higher cost both for you and for your customers. In today’s world, where people want things as soon as they can get them and at the lowest possible cost, you’re probably not offering an attractive deal, and a better offer on the same product is almost certainly no more than a few clicks away, be that on Amazon or on another website.
On the other hand, using Amazon FBA means your products may become eligible for Free Two Day Shipping, or Free Next Day via Amazon Prime. Straight away you’re offering a better deal! A customer can potentially get what they want tomorrow rather than waiting for you to ship it tomorrow.
All this is added to your product pages on Amazon, too! Customers will see “Fulfilled by Amazon” and “Next Day Delivery” and you’ve got many of them hooked. Rightly or wrongly, many of your customers will feel much happier and secure in feeling like they’re buying from Amazon rather than from you or your business that they have probably never heard of.
Amazon FBA allows customers to feel like they’re buying from Amazon, while you get paid!
How Much Does Amazon FBA Cost?
The costs of Amazon FBA depend on what you sell. You pay for Amazon FBA on a pay as you go basis, for the orders that Amazon fulfils on your behalf and per cubic meter for the space Amazon uses at their fulfilment center to store your products. Bear the latter in mind when choosing products for arbitrage as this will influence your profit margin. While it shouldn’t have a massive impact, ideally you don’t want to be paying for storage for a large number of sizeable products that also happen to be slow sellers.
Is It Worth It?
If we refer back to all the scenarios you could find yourself dealing with that we have looked at here, and think about how much time, money, and energy you could save, then we have to say that we think using Amazon FBA to help grow your arbitrage business is a no brainer.
One final benefit: you’re not signed up for years at a time. If Amazon FBA isn’t for you, then you can stop using the service, but we think you’ll find it extremely useful like many Tactical Arbitrage users already have done in growing their own arbitrage business.