Why Amazon FBA Trumps Selling From Home Every Time
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 had next put in an order for 100 units (or thereabouts), which would get delivered to their premises. A small entrepreneur might keep the stock in their front room, while a more significant 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 significant discount, as the sellers see the value in guaranteed sales and thus can offer a low price.
This means that for every pair of jeans, blank CD, or set of dumbbells you buy for $5; you can sell them onward for $10 or $15. Sell off your entire inventory, and it is reasonable to make a substantial 100% profit or more.
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.
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 package and deliver all those items manually?
That is where Fulfillment By Amazon comes in.
(And yes, Amazon FBA does translate to Amazon Fulfillment By Amazon).