Amazon based in Seattle, Washington is an electronic commerce or (e-commerce) and cloud computing company, which is the largest internet retailer in the world, in terms of revenue and market capitalization. It is second in terms of total sales, and just behind the other e-commerce giant Alibaba. As a company policy Amazon does not disclose their actual sales figures for reasons better known to them but marketing experts suspect that it is because of the intensive competition from others in the e-commerce industry.
The other figures that they have disclosed for the year ending 2017 are impressive to say the least and stands out as testimony to its reputation and immense standing in the e-commerce industry. The revenue for the year 2017 closed at US$ 177.8 Billion, the operating income surpassed US$ 4.1 Billion, net income for the same period exceeded US$ 3.0 Billion, and the total assets stood at US$ 131.3 Billion coupled with the company’s equity at US$ 27.7 Billion.
These are stupendous figures and with a worldwide reach if they are offering your company a chance to avail their unprecedented facilities with a promise to take your product to the world market you should, grab the opportunity without any hesitation.
You would have much to gain and with the Amazon brand name to back your product, the sky would be your limit. You would need to peruse in detail what Amazon could do for your company and its products. Ensure to stick by the rules and be ready to take optimum advantage of what is offered. There could be certain aspects that you would need to take into consideration with relation to your product. The need to read between the lines of the agreement that you would be called upon to sign would be imperative, so that you would know everything there is on the Amazon offer.
Primarily you should understand that Amazon is not running a charity to help your product get on the world market, they are in business like you to make profits. Hence they would charge a fee for their services and it would be prudent of you to know to the last cent what that would be. It is when you know what it would cost you to be on the Amazon platform that you would be able to build that cost onto your product and determine its selling price.
If you do not add the Amazon component along with the cost and the envisaged profit margin to your selling price you could be losing money rather than making money being on the Amazon fba platform. This predicament has been encountered by many and that is for no fault of Amazon but just because the seller did not work out his plusses and minuses prudently.
Amazon Offers You an Incredible Platform
Amazon offers you an incredible platform to sell your products to customers spread all over the world without much of a hassle as they take most of the operational burden from you. They offer three major advantages to those willing to sell their products on Amazon and that is by taking over storage, shipping and customer support. Of course this would come at a cost which is what you would need to add to your final sales price, to ensure you make the envisaged profit.
They have termed these three advantages that they offer you as Fulfillment by Amazon or popularly called “Amazon FBA” which encompasses the above three which would take a load off your shoulders. These three would take your product to a world online market which you would not be able to do on your own. Even if you could, it would cost you immensely and you would still not have the reach that Amazon presently enjoys.
You would also have to take into consideration that Amazon has built this e-commerce platform over more than two decades and that would be quite a herculean task for you, your company or anyone else to match. They have entrenched themselves into the world business industry and is not a brand as we would identify something of this sort, but we could call Amazon as a world phenomenon. For your product to be offered an opportunity to use the resources that Amazon has built up so painstakingly would be an advantage like none other and also comparable to none.
Prudently Fixing the Selling Price
You would need to know the intricacies of what Amazon would expect you to pay. These are classified into different sections and each of these would have a cost built it. On face value Amazon would charge you for storage, shipping and support which are the three major classifications.
In the case of storage it would be a fee determined on the dimensions of the item you would sell, after it is packed into appropriate packing with the Amazon brand name displayed on the carton. This would generally be in cubic feet. There are standard Amazon cartons which could vary slightly with yours and there could be a discrepancy in dimensions, hence in volume sometimes. You could obtain clarifications from Amazon on that.
Shipping is again determined by the volume and weight which would be given to you so that you know what it would cost to ship your item through Amazon to the final destination where the customer would take delivery.
The other cost factor would be for the marketing support that Amazon offers your company which would otherwise be borne by you. This would be for the chance to be on the Amazon platform and all the other auxiliary support extended to your product. You could be looking at an average addition of about 33% from your selling price which Amazon would charge you as a fee.
There is another important cost that you would need to take care of and that is a sort of demurrage charge on your product. If your product does not move from the Amazon warehouses within six months there would be a cost to be incurred by you and this could increase substantially thereafter.
Leaving out any minute negatives, there are tremendous advantages of your product being on the Amazon platform, so taking it there is your prerogative.
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