The Current Trend in E-Commerce: Amazon FBA and the Best Way to Hedge Your Bets

E-commerce has gone through multiple stages and seen wave after wave of trends as the world of making money online has matured along with the internet architecture behind it. In the beginning, entrepreneurial types were diving into the world of pay-per-click advertising, where the early days saw people throwing up websites and stuffing their keywords with irrelevant but popular terms (think a Google description mentioning "Britney Spears" for a page full of information on trading options). As search engines improved and this type of behavior was punished, more skill and effort was involved to craft content-oriented websites that offered true value and drew traffic and its related PPC revenue.

The next wave came in the form of affiliate marketing. Referral income from driving the sale of other people's products, particularly informational products, took off.

Eventually the trend shifted towards people selling their own inventory. Across online marketplaces like eBay and Amazon entrepreneurs looked for arbitrage opportunities and flipped garage sale finds.

Today, the focus is on the largest online marketplace in the world with 160 million active buyers, Amazon, and particularly, leveraging Amazon's FBA (Fulfillment by Amazon) service.

Benefits of Amazon

According to this recent Bloomberg piece online shoppers increasingly choose Amazon as their first stop to search for any product, bypassing search engines and ignoring the online presence of other large retailers. Digital marketing firm BloomReach conducted a survey of 2,000 American consumers and found that a full 44% start their online shopping search at Amazon first.

The benefits of selling on such a robust and top-of-mind market are obvious. By leveraging FBA, an Amazon marketplace seller can position themselves in a even more enviable position. FBA allows sellers to send their product inventory to Amazon who will then handle storage, fulfillment, customer service, returns, and so on. This also allows one's products to become prime-eligible which leads to increased sales and places products ahead of non-FBA listings in many Amazon search listings.

However, all of these benefits come at a cost.

Drawbacks of Amazon

The first major drawback to focusing your entire business around selling on Amazon, whether you are reselling another company's products or running your own private label brand, is that accidentally running afoul of Amazon's myriad policies and procedures can destroy your entire business overnight.

Too many returns or miscommunications between a seller and Amazon's customers can lead to product removals and outright account bans. It is important to emphasize that the customers are Amazon's and not the seller's. Amazon does not share customer contact information which makes creating a long lasting relationship that can lead to future sales very difficult.

The next major drawback to relying on Amazon for the entirety of one's business is how Amazon views themselves. Amazon is not content with being a marketplace for third party sellers. The true value behind allowing outsiders to sell on Amazon is the data. Every third party seller and their sales figures on Amazon are guinea pigs for Amazon to assess before rolling out their own private label products in popular categories and for trending search terms.

The Solution

The solution to countering the drawbacks of Amazon is to have a separate sales channel to bring diversity and deeper control over one's sales and business.

There are a variety of ways to go about this including setting up a store on Shopify, selling on other markets including those of Sears, eBay, and so on, and creating a website where there is full control over every aspect of the user experience by leveraging Wordpress and WooCommerce.

The best way to:
  • minimize complexity
  • while hedging against the risks of Amazon
  • and taking advantage of its many benefits
is to maintain a separate sales channel through WooCommerce while utilizing FBA for both Amazon and WooCommerce order fulfillment.
This setup means there is only one place to worry about inventory levels, and allows the business owner to focus on increasing sales instead of worrying about shipping, logistics, and certain aspects of customer service.

There are two FBA for WooCommerce plugins out there that allow this setup to work, seamlessly sending WooCommerce orders straight to Amazon for FBA to fulfill. NSFBA by Never Settle is one great option.

This plugin manages the syncing of inventory levels between the WooCommerce site and FBA, automatically sends orders to Amazon and keeps the business owner up to date with important order status notifications, and comes with responsive customer support from the plugin developers.

A summary on the functionality and benefits of this Wordpress FBA plugin can be found directly on the developer's website.

Compared to the main competitor, NSFBA has two main advantages:

  • The Amazon description of a product and the WooCommerce description of the product can be different. NSFBA only syncs inventory levels, while their main competitor plugin forces one to sync inventory levels as well as the product descriptions, rather needlessly.
  • If FBA inventory runs out, NSFBA falls back to letting the merchant fulfill the order on their own by sending out an email message. To enable this feature, leave the easy to install NSFBA plugin in its default "FillorKill" setting.

Overall, WooCommerce and NSFBA is a strong way in which to counter the several drawbacks of selling on Amazon while still being able to leverage the world's largest online marketplace to grow.