With the adoption of e-commerce along with current trends, now is a prime time to start your own business (pun intended).
With the adoption of e-commerce along with current trends, now is a prime time (pun intended) to start your own business and start selling on Amazon FBA.
What do Airbnb, Slack, Square, Uber and all have in common? Most people would answer with “They’re all successful”. That’s correct, but what is also true is that they were also all founded during the great recession. As history shows, successful businesses can be built during dire times. The present day is no exception and if you stop to think about it for a bit, it’s kind of paradox really: unstable periods present the best opportunities to start a new business.
What is Amazon FBA?
Fulfillment by Amazon (FBA) is a service where sellers can automate and outsource the fulfillment process to Amazon. This makes it so that sellers can focus on growing and marketing their business (e.g find, source, optimize, and advertise their product listings) and the rest of the heavy lifting, Amazon will take care of for you. Selling on Amazon FBA also means that you are able to leverage Amazon’s existing warehouses and massive infrastructure across the globe for your business. To learn more about how to start selling on Amazon FBA, check out latest edition of our ebook here.
1. Post Covid: The right conditions
The recent pandemic as we all know has been a disruptive event for many industries, but e-commerce in particular has been able to capitalize on the global crisis as it closely aligns with people’s newly developed habits and values. Amazon in particular has been the go-to marketplace for people around the globe for products which propelled the company from a $876 billion pre-pandemic valuation to its current $1.82 trillion valuation. That’s a 220% market capital growth. Majority of this spike in growth comes from third party sellers which make up 2/3 of Amazon’s current profits.
Now I know what you’re thinking, “But we’re nearing the end of the pandemic, isn’t it too late?”. The answer is no, but just the contrary. The post pandemic purchasing habits and consumers new-found love for online shopping is still going to linger on for the next couple of years, if not longer. Plus, since the economy is opening back up and more jobs are being created, consumers will have more income and hence more purchasing power when it comes to shopping online. This leaves money on the table for our fellow (new) FBA sellers and entrepreneurs out there. Wouldn’t it be nice to join in and get a slice of this big delicious pie?
If those facts and statistics weren’t enough to convince you that now is the perfect time to start selling on Amazon, then here are 3 more reasons:
2. The supply chain is stabilizing
At the start of the pandemic, Amazon limited “non-essential” items into their warehouse, freezing the sales of many FBA sellers. As we near the end of the pandemic (fingers crossed!), many regulations, stay-at-home mandates, and social distancing rules have begun to become more relaxed. For a business point-of-view, since the majority of third party sellers source their products from China, this would mean that manufacturers, vendors, warehouses, and distribution centres are able to pick up their base and become more efficient overall (e.g more employees working at once, lower lead times, quicker and easier import and exports). As a seller, you would also most like experience cheaper production runs as more factories are operational and opening back up which would drive competition between suppliers and push for more innovation, lower costs, lower lead times, and better customer service. This isn’t happening to just the production side, but also the deliverance side. Since the pandemic, 50 million new Amazon users have subscribed to the prime program adding up to a total of 200 million as of Q3 2021. This means more opportunities for Fulfillment by Amazon (FBA) sellers and less delay for online shoppers. A win-win scenario.
3. Changing consumer preferences
As a wise man once said, “There is nothing permanent except change” (Heraclitus). Consumer preferences aren’t any different and are evolving at a faster pace during the pandemic. New shopping habits were bred throughout lockdown spearheading the shift from brick-and-mortar stores to digital e-commerce where consumers could browse from the comfort of their own homes. This meant that the selling opportunity of business owners was no longer defined by square feet, but rather by their online presence. This helped perpetuate the growth of the e-commerce industry where product could be listed on a website and be sold worldwide to anyone, at any time, from any where. The point is that e-commerce is thriving and Amazon alone makes up 50% of this market. Juicy.
Most product categories have also experience a 15-30% increase post-covid, especially items that fall under household supplies, personal-care products, and fitness & wellness products. Consumers are interested in a more diverse range of products making more product viable for selling. The ever-changing behaviours and working environments have also encouraged customers to become more willing to try new products, brands, and explore new passions. From a marketing perspective, this means a lower customer acquisition cost (e.g less advertisements needed to convince buyers to purchase your product). So if there is currently a best-seller in a category or niche you plan to enter, know that your new product will still have a fighting chance.
4. Less barriers to entry
Time is money. The longer you wait, the more potential revenue you forgo. You could be making a passive income of $10k per month, but waiting for the perfect moment means that you are giving this opportunity to someone else. As with in the past, governments have begun putting more and more business restrictions in place in order to make it more difficult to sell on Amazon (e.g stricter reporting on certain products, additional mandatory labeling etc). So by the time you are ready, there might already be lists of restrictions you must abide by which might hinder your business along with the processes you are putting in place.
Furthermore, competition will also become more fierce in the later times to come, but there will always be unique opportunities for sellers. It’s just up to you to give that initial “yes” and make the commitment to start your business. Besides, the earlier you venture into the Amazon space, the quicker you learn the ropes and grow an advantage over new competitors in the future.
Most product categories have also experience a 15-30% increase post-covid, especially items that fall under household supplies, personal-care products, and fitness & wellness products. Consumers are interested in a more diverse range of products making more product viable for selling. The ever-changing behaviours and working environments have also encouraged customers to become more willing to try new products, brands, and explore new passions. From a marketing perspective, this means a lower customer acquisition cost (e.g less advertisements needed to convince buyers to purchase your product). So if there is currently a best-seller in a category or niche you plan to enter, know that your new product will still have a fighting chance.
Tools to start selling on Amazon FBA
At the end of the day, investing in your own business is better than any investment. If done right, it can scale immensely and compound every year thereafter, and not just financially, but also experientially. With remote work becoming the new standard across industries, the hours stuck in traffic commuting back and further from work could be better invested into starting your own business. In fact, if you’re looking to start in the near future and you’re looking for a free and effective Amazon product research tool, you can try our platform. Start for free.