4 Mistakes That Destroy FBA Business Models
Do you want to start an e-commerce business from your home? Fulfillment by Amazon (FBA) is an excellent business model to consider. According to Quiet Light Brokerage, FBA sales are growing by 65% a year. Benefits of this program include:
- You don’t need to create your own product.
- You can choose from thousands of different vendors that suit your niche.
- You can rely on Amazon’s drop-shipping services rather than dealing with the hassle of shipping yourself.
If you had trouble creating a business selling products on eBay or developing your own products, FBA may be the way to go. However, there are a number of common mistakes that cause FBA businesses to fail. Here are some that you need to be aware of.
Providing Incentives for Reviews
Getting good reviews is essential if you want to run a successful FBA business. Unfortunately, you need to earn them the hard way – organically.
Alexander, the Editor of Cash Flow Diaries talked about the problems with his FBA business. He gave away a number of free products in exchange for reviews. While he didn’t ask the recipients to lie for him, they were still tempted to provide favorable feedback to express their gratitude for the free gifts. Amazon felt the reviews were not sincere and deleted them.
He had earned a number of organic reviews, but spent a lot of money on inventory that he gave away for incentivized reviews without anything to show for it.
Choosing the Wrong Partners
For any intermediary business model, choosing the right partners is essential. Whether you are running an affiliate marketing business, referral-based marketing company or FBA firm, you need to vet your partners very carefully.
Customers will leave negative reviews if products don’t work well or are shipped in bad condition. Even though you aren’t the manufacturer, you are running a private label business and your brand will suffer for any issues.
Failing to Build a Strong Brand
Retailers often rely on the strength of the brand of their suppliers. If you are selling Nike or Nintendo products, you may be able to get away with having a weak brand image. You don’t have that luxury when you are running an FBA business. Steve Chou, editor of My Wife Quit Her Job, discusses the importance of building a branded website instead of relying solely on the Amazon platform.
You are running a private label business. Your customers will make purchases based on their perception of your brand. If you don’t make a convincing reason for customers to purchase from you, they will take their business elsewhere.
Here are some tips to build a strong brand for your FBA business:
- Find a specific niche that other competitors haven’t targeted. You won’t stand out by creating a business that focuses on selling beauty products. Starting a business that focuses on natural anti-aging cremes would work better, because you will have less competition and can more easily brand yourself as an expert in your niche.
- Choose the right platform for your online store. Shopify is one of the best.
- Get a professional logo and website design. Your online image will make or break your FBA business. The experts at 99 Designs warn against trying to hack a website or logo together on your own.
- Make a convincing argument that you are the expert in your field. Come up with a great sales pitch and angle that competitors haven’t pursued.
Building a strong brand will make the difference between struggling to make more than two sales a day and generating $20,000 a month from your FBA business. Take it seriously.
Thinking That If You Build It, Customers Will Come
Since the dawn of the Internet, entrepreneurs believed that they could setup a website and wait for the money to start rolling in. This approach simply doesn’t work and never has. You can create a passive income business from FBA, but you need to really invest in your marketing. Running paid search campaigns is usually your best way to get consistent traffic and test your sales funnel.