You can oversimplify and say: smaller items work with FBA, bigger ones less so. Or you can read our blog post about how to figure out if FBA is worth it for your business.
But if you’ve decided that you do want to go the FBA route, there are a couple of things you’ll need to consider.
FBA works very differently if you commingle your items. Commingled selling lets Amazon sell your items and those of other sellers interchangeably, assuming that the item is the same.
The problem with that is, you can end up with your products – which you have control over and have carefully verified – mixed up with someone else’s who hasn’t bothered checking, or is selling fake stuff on purpose. Then when an order of yours gets shipped, it’s their poor quality product that arrives – and your reputation that gets trashed.
There are benefits to this approach, but it’s risky. By and large standard practice should be, use FBA but don’t commingle.
Whether you want to use FBA name on your Amazon account
Amazon lets you use a DBA (doing business as) name on your Amazon account, basically rebranding your Amazon account as something different from your main business.
There are plenty of legitimate reasons to do this – such as, you have a specific part of your business that takes place on Amazon. If you normally sell furniture of every kind but on Amazon, you sell only wardrobes, Texas Furniture isn’t as good a name as Texas Wardrobes, for instance.
But there are also plenty of sketchy sellers on Amazon who use DBA to conceal the real identity of their company; you might have more credibility and trust if you just use your regular business name.
How Amazon’s product gating applies to what you want to sell
Amazon uses restrictions to decide who can sell things in certain categories. If the categories you want to sell are gated, you’ll need to apply for the gating process as soon as possible.
Check if your products are on the gated list here.
3. Prepare your business plan
Decide your business plan in advance. Don’t try to wing it.
You don’t have to like Ike for this one to resonate. Your answers to these questions might change, even in your first month as an Amazon seller. But by planning out your first month, you force yourself to ask the questions. At the very least, ask yourself:
Are you going to sell the same products or change it up?
If you’re going to sell more opportunistically, or from a large range, this isn’t so much of an issue. But if you’re selling the same products all the time, it’s smart to take advantage of Seller Central’s replenishment alert.
How will you identify stale inventory?
However you’re selling, keeping track of inventory age is an important part of handling your supply chain. If products are sitting on the shelf for three months, that tells you something about what you need to order.
More urgently, if you’re using FBA, it’s vital to identify stale inventory so you don’t get caught in Amazon’s 180-day inventory sweeps and charged a much higher storage fee. Don’t wait 179 days and then wonder how much of your inventory is now costing you money instead of making you money.
You can find Amazon’s inventory report under Reports > Fulfillment > Manage FBA Inventory if you’re using FBA. There, you’ll find a full real-time inventory report containing numerical values for a range of inventory data – SKU, product condition and so on.
How will you source your products?
Inventory is a major issue on Amazon. Sellers who aspire to the buy box already know: you won’t get in if your product’s out of stock. You also need to avoid periods when you’re out of stock and not selling – and thus not making any money.
Only you know the most appropriate sources of inventory for your business, but make sure you have fallbacks if it’s possible so you don’t get caught out.
Who is already selling the same products as you on Amazon?
It’s pretty common for new sellers to jump in with products that are already so popular, in such crowded markets, that there’s no real chance of successfully selling them. So it’s really vital to check that you’re selling something where you have a chance at actually making a business work.
The biggest competitor on Amazon is Amazon itself – check your intended catalog against Amazon and if the company itself is selling your products, rethink your approach.
When you’re checking what’s selling on Amazon already, whether it’s being retailed by Amazon or not, look out for price points too. You’re unlikely to make a lot of headway if you’re significantly more expensive than the competition, so ask yourself whether you can make an acceptable margin, based on your overheads. (Ryan Grant says you should be looking for products you can sell for triple what you paid for them, and a 100% margin is a floor, not a ceiling.)