More Amazon FBA buyers are coming on the market than ever before. Many of them with only the basic understanding that an Amazon FBA business has been established for some time and that these new business owners can step into an existing and proven algorithm.
However, it should be known that running an Amazon FBA business is a daily activity and one that requires consistent and persistent effort. Selling on Amazon is unlike any other channel in which a company might choose to sell its products. A third party marketplace created by Amazon complements their own retail business in which Amazon sources products directly from brands. The marketplace enables Amazon to collect a significant amount of data.
This means that Amazon retail can dig deeply into the data about customer preferences and then use it to identify its own sourcing strategy in future years. Because this data is collected by Amazon but is not shared with third party sellers, there is a big advantage to Amazon retail being able to determine the appropriate brands or SKUs that are already popular among customers. Amazon could take over sales of top selling items that were previously only sold by third-party sellers.
The buy box algorithm is another important component that an Amazon FBA seller can explain to an Amazon FBA buyer to give this buyer greater confidence and understanding of the Amazon platform.
This is the algorithm that determined which seller will have their products added to the customer’s cart when the customer selects the add to cart button after seeing the product. This algorithm is so critical that anyone who does not have a comprehensive understanding of how it works should not contemplate buying an Amazon FBA business. A seller could find themselves with a significant amount of inventory that will never be sold because the buy box is dominated by other sellers. Amazon wants to create a high quality and consistent experience for customers so it’s important to realize if you step into selling an Amazon FBA business, you can explain to a prospective buyer how the buy box algorithm boost works. The buy box algorithm evaluates each seller’s individual past performance, such as the likelihood of cancelled orders, the feedback rating and on time delivery. Therefore, that algorithm is more likely to favor the seller that uses the fulfillment by Amazon program. FBA enables sellers to ship products in bulk to Amazon fulfillment sellers, however, when using the FBA program, sellers must also accept Amazon’s very lax refund policy. The marketplace is a fast evolving one on Amazon FBA and the items that a seller has in his or her catalog are likely to evolve over time as the competition on specific items changes.
As you attempt to introduce a new prospective buyer to your Amazon FBA business, you need to explain more than just the basics of identifying products, shipping them to the warehouse, and managing customer service. It goes farther beyond that in terms of the research that you have done to make your Amazon efforts as successful as possible.