There’s a lot of misinformation about selling on Amazon floating around the net – that’s the price we pay for today’s advancement of the technology – everyone has an opportunity to say something about anything. And it’s all good. I wouldn’t be where I am now without the Internet.
The problem, however, is that often, such “free speech” opportunity creates a lot of NOISE, a lot of misleading information, wrong facts or misconceptions. eCommerce is no exception, and Amazon businesses are the hottest topic right now on YouTube where every man and his dog is trying to sell you something to make your Amazon business a success.
One of the MOST damaging misconceptions Amazon “gurus” portray and use is that Amazon FBA business EQUALS importing commodity products from China and branding them with your brand.
First of all, the term itself, Amazon FBA, is wrongly used – we all know what Amazon is but the FBA part is NOT an acronym for Amazon Business or Sell on Amazon, no! FBA stands for Fulfilment by Amazon. So if you read out the Amazon FBA phrase, it is: Amazon Fulfilment by Amazon
Which doesn’t make any sense?
But ok, it is what it is – everyone is using the term to describe “Business that sells on Amazon using FBA”. I also have adapted and now use the Amazon FBA term only because it’s what everyone has been taught to understand.
A much bigger misconception of the term Amazon FBA is that most people think that Amazon FBA business EQUALS importing cheap stuff from China, putting your logo on it and selling at 5x to 10x markup. This is what 99% of 18-year-old YouTube Amazon experts will teach you.
Amazon FBA is just a retail channel – a good one, but still – it’s just a marketplace with the added feature of using a hands-free fulfilment operation.
It does NOT DEFINE your business!!!
You are NOT limited to importing from China to sell on Amazon. You are NOT obligated to white label everyday products, just like everyone else is doing. This is a big misunderstanding and something that limits the possibilities of what Amazon offers.
Importing white label products from China also works, BUT it is getting more difficult to make a profit as everyone else is doing the same thing – using the same tools to find products, contacting same suppliers and so on. The market is becoming more and more saturated – we can see that many niches on the Amazon US site are already super competitive and PPC costs are through the roof!
Luckily for us, Amazon UK and Amazon EU sites are still full of untapped opportunities and simple importing works just fine. Still, it may be a couple more years until it happens, but it will happen, just like it did in the US.
The more people get into the business, the more competitive and less profitable it all becomes. Just look at what happened to eBay UK….so why not prepare for it in advance and create a FUTURE PROOF business?
In the long term, you have to drop the “simple importing from China” model where you look for that next product with a small competition and put in a fancy box for a quick profit.
What you need to do is start thinking from a BRAND owner perspective which means – you are the manufacturer, you create products, you create trends and you drive the demand.
And no, this doesn’t mean you have to manufacture your products, not at all! You can and in most cases should outsource the manufacturing process to China, India, Poland, Germany or whatever country you need to! But this time YOU will be the one that creates a product or at least creates a distinctively unique version of a product.
I firmly believe that in long-term, this is THE ONLY WAY to survive. You need to create a strong brand; you need to create unique products and promote your brand on and off Amazon to build a real business that can’t be quickly taken away from you by increased competition.
There’s just no other way – in 3 or 5 years, Chinese manufacturers will become so good at branding that THEY will be doing the work 99% of Amazon FBA sellers do right now. At much cheaper cost and then Amazon will become just like eBay – low price paradise! The difference between eBay and Amazon will be that on Amazon customers will get GOOD QUALITY products at manufacturer prices taking into account how Amazon operates.
Like it or not, that’s what’s going to happen. It is already happening, and you can already see many Chinese manufacturers developing excellent brands and sell directly to customers at a fraction of the cost. The middleman is no longer needed. Don’t be one.
There are many people online who are very angry about this, and they spend their time on Amazon seller forums, blogs and news sites commenting on how their old-school wholesale businesses are slowly dying. Well, what can I say – if you’re not prepared to change, there’s no place for you in business in the year 2019. You either adapt or leave the scene. There’s nothing more to say about it. Complaining all day about how the World is changing won’t stop it from happening.
And I’m not talking about the tax evasion situation here – that’s an entirely different topic, and of course, I wholeheartedly agree that it needs to be sorted. But, again, don’t think that it changes anything – middleman is no longer needed as the internet is taking its place. It’s just a question of time when the majority of the trade online will happen directly from brand owners to customers.
So that you know – I’m not portraying a doom and gloom scenario here. I have never been one of those complainers! I look at every situation from a perspective of what I need to do to make this work?!
Luckily for me, I have always been a BIG believer in the power of BRANDING, and basically, I don’t even have to change anything in my business model. I will just put DOUBLE effort and enthusiasm into the process and continue growing my business in 2019 and beyond!
If you have any questions about starting or growing an Amazon business, feel free to leave your questions down below, and I will personally reply to all of them within 24 hours!