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Fulfillment by Amazon Poses a Great Option for Those Looking to Break Into Ecommerce It has never been easier to sell products on a massive, trusted platform, and get your fair share of the market.

By Thomas Smale Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

REUTERS | Rick Wilking

Amazon FBA -- "Fulfillment by Amazon" -- is fast becoming a buzzword among entrepreneurs. Over the years, there's been a lot written about Amazon affiliate marketing to help people get started, but not about FBA. What is all the fuss about? Why is there so much commotion about the FBA business model right now?

To put it simply, it could be the future for entrepreneurs. It has never been easier to sell products on a massive, trusted ecommerce platform, and get your fair share of the market. Best of all, you won't find too many business opportunities out there with this degree of scalability built right into them.

So let's take a closer look at the FBA opportunity, and how you can create an escape plan for the nine-to-five.

What is Amazon FBA?

The program allows virtually anyone to sell their goods on the Amazon platform. Fulfillment is one of the biggest challenges of any ecommerce business. With FBA, Amazon will store your products in one of its warehouses, ship them to your customers, handle all refunds and returns and provide excellent customer service.

Related: Which Country Spends the Most Online? (Infographic)

This does not mean that you don't have any responsibilities as a seller. What it does mean is that you can free up a lot of time to focus on high-level, value-generating activities such as driving traffic to your product page or optimizing your conversion rate.

Why Amazon FBA is better than an ecommerce store.

Besides the fact that fulfillment is handled by Amazon, there are several more advantages to leveraging FBA. For one, orders placed through Amazon are processed and shipped faster than those sent out from retailers. FBA can help your products gain more visibility in the marketplace, and that can translate into more sales for you.

FBA also makes your products eligible for Amazon Prime free two-day shipping, free shipping and other similar options, which customers love. Finally, one of the biggest advantages of FBA is that Amazon is a trusted brand. It has worked hard to optimize the checkout process and earn credibility with customers. You as a seller get to leverage the reputation of a trusted and well-known company.

How to get set up with FBA.

Here are the five basic steps you need to take to start building your FBA business:

  1. Create an Amazon Seller Central account. It is advisable to sign up for a professional account, which has a monthly fee associated with it.
  2. Choose a niche. Some are good, others are not worth getting into. Do your research and brainstorm product ideas.
  3. Find a supplier. Once you know what products you're going to be selling, start building a working relationship with a reliable supplier. Ask for a sample, work out the lead time and calculate what kind of margin you have on your products.
  4. Create a listing for your product. Optimize your product page with the right keywords and content.
  5. Drive traffic. Send your target audience to your product page to increase sales.

According to Josh Shogren of Passion Into Paychecks, picking the right product is the key to success with FBA businesses: "It is vital that you spend a lot of time finding the right product that will give you the best chance for success."

Related: 2015 Will Likely Be Known as the Year of Mobile Commerce (Infographic)

Shogren suggests that some of the most important factors include:

  • The price point of the product should be somewhere between $10 and $50.
  • The product should be as light as possible.
  • Check to see if any potential competitors have a 5,000 best seller rank (BSR) or lower in their primary category.
  • Make sure there aren't any brand names within the product category or niche.
  • If possible, sell a product that isn't easily broken.
  • The more reviews a product has, the greater the competition is. Fifty or fewer reviews on first page products is a good indicator that you can break into the market.
  • The cost of manufacturing should be 25 percent or less of the actual sale price.

How to be a successful FBA seller.

"Top Amazon sellers aren't like the rest," says Lauren Shepherd at Teikametrics. "The most successful sellers have adapted to the evolving ecosystem that is online retail by treating selling on Amazon like trading on the stock market."

According to Shepherd, the following six factors are crucial to your success:

  • Scaling a business is easier when fulfillment logistics are handled by Amazon.
  • Be willing to admit when you are wrong, and make adjustments accordingly.
  • Manage your inventory, risk and cash flow.
  • Focus on cash flow and access to working capital.
  • Don't try to be right -- focus on making money instead.
  • Measure your growth by quarters or years, not by weeks.

Why start a FBA business?

Have you ever thought about escaping the nine-to-five working life? Have you ever considered escaping the cubicle? With a successful FBA business, you have the opportunity to design your lifestyle and make your dreams a reality. Location and financial freedom are within your reach. FBA is the future for people who want to make money online and live a life of their choosing.

Consider the case of Spencer Haws of Niche Pursuits, who recently published a post showing how he sold $40,639 worth of physical products in 30 days.

"Amazon FBA is the real deal," he said. "It's a very real business, and I am seeing very real income for it."

Final thoughts

If you are interested in learning more about selling on Amazon, there are some great podcasts, such as Up Fuel and The Amazing Seller, that are covering the topic. FBA is quickly going mainstream, and there are more and more people talking about the freedom that is available through a business model such as this.

If that wasn't enough, it is also possible to sell an Amazon FBA business. As with any other online business, you can have an exit strategy in place and move onto new ventures and greener pastures if that's what you want to do.

For many, the FBA business model has the potential to turn their dreams of financial and location independence into reality, and is certainly looking like the way forward for entrepreneurs everywhere.

Related: The 4 Elements of a Winning Ecommerce Ad Strategy

Thomas Smale

Entrepreneur Leadership Network® Contributor

Founder of FE International

Thomas Smale co-founded FE International in 2010. He has been interviewed on podcasts, blogs and also spoken at a number of industry events on online businesses, exit strategy and selling businesses.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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