Amazon FBA is offering a number of selling models to the sellers who are registered with Amazon. For most of the marketplaces, the models are having the same features and thus the outcomes for the sellers in the case of a specific model remain the same. Below is a brief discussion which reveals the pros and cons of each model. If you are going to start Amazon FBA Business in 2022, you should read this.
Private Label Business Model
Pros of Private Label Business Model
The private label model has had a number of benefits since form the very start of the business. The main benefits are as below:
- A product or brand which is owned by the seller
- Growing his own business and name
- Pre-defined products to sell on Amazon
- Huge income stream
Cons of Private Label Business Model
- Need to have a number of products in case if sales go down for one or a few products
- It may require a huge investment
- Inventory cost high so need to cut other costs like marketing
- May get into competition with another brand
Customized Business Model
Pros of Customized Business Model
- You can protect yourself from selling your winning product to others
- You can take benefits on the basis of your product features
- Your products can be manufactured by any manufacturer and can also provide packaging
- A customized logo or tag, which you can convert to your private label once get enough money
Cons of Customized Business Model
- Need to search for a manufacturer which can provide you with customized products
- If the manufacturer stops providing customized products, they cannot sell any more at Amazon
- Need more money a MOQs are usually high in case of customization
- Your competitor can get with the same product along with a minor feature addition which cannot affect the product design and image at all
Retail Arbitrage Business Model
Pros of Retail Arbitrage Business Model
- Can make selling with small and limited investment
- No need to work on sourcing and shipping or even custom payments
- No need for listing promotion as well
Cons of Retail Arbitrage Business Model
- Need to keep an eye on local sales and discounts
- Need to get reselling letters in a short period of time
- Amazon may limit the seller account if listed any product by a brand at Amazon and is offering the discount
Wholesale Business Model
Pros of wholesale Business Model
- Can make money with selling other products
- No investment in manufacturing
- No wastage of time for production
- No need to make expenses to get registered with a brand name
- Can grow with time
Cons of Wholesale Business Model
- Profit margins are between 10% to 30%
- The brands may be selling the same product at Amazon at a low cost
- The brands may be offering FBM which can affect your profits
- Hunting the right product for Amazon wholesale might be tough
Merch by Amazon Business Model
Pros of Merch by Amazon Business Model
- Can create an income stream if right soft assets are chosen
- No hustle of inventory as soft files is transferred through emails and messages
- Minimum cost involved
Cons of Merch by Amazon Business Model
- Invitations are required to sell
- Merch designs are easier to get copied by other Merch sellers
- Need to make expenses for making professional designs
