Fulfillment By Amazon Business

40 Pros & Cons Of Starting A Fulfillment By Amazon Business (2024)

Pat Walls

•

Updated: January 18th, 2023

Please note that the data provided in this article are estimates and may vary depending on various factors, and should not be considered as perfect or definitive.

Trying to understand the pros and cons of starting a fulfillment by amazon business?

Here are all of the pros and cons of selling fulfillment by amazon service online:

Pros Of A Fulfillment By Amazon Business

Pros	Description
Flexibility	You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
Ability to start your business from home	It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
Little startup costs required	The cost to start a fulfillment by amazon business costs significantly less money than most businesses, ranging anywhere from 62 to 50,909.
Rewarding work	Starting a fulfillment by amazon business can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.
Scalable	With businesses and processes changing daily, there will always be demand for new features, products and services for your business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.
Traffic to your website	A fulfillment by amazon business gives people a reason to visit your website and to keep coming back to you!
High margins	The gross margins for your fulfillment by amazon business are typically around 40%, which is considerably high and allows you to grow your business and manage costs easily.
Quick build time	The average time it takes to build your product is quick - typically around 4 months. This will allow you to bring your product to market faster.
Easy to encourage "impulse buy"	In the fulfillment by amazon business, you have a much higher chance of encouraging your customers to buy on impulse - you can easily alter the price, placement, packaging, and promotional value to influence the decision of your buyer.
Unlimited income potential	With starting a fulfillment by amazon business there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.
Amazing perks and discounts	Working in the fulfillment by amazon business comes with its perks! As a seller for these products/services, you typically also get to enjoy industry perks and discounts.
You are your own boss!	With starting a fulfillment by amazon business, you are the one to make decisions for almost all of the operations. Calling the shots can be empowering and liberating!
Higher likelihood of getting referrals	This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.
You can sell your product in various places!	There are various different markets to sell your product, which will help you reach different audiences and revenue streams.
Simple business model	A fulfillment by amazon business has the advantage of a simple business model, which makes launching and building the business more seamless.
Control your own destiny	Starting A Fulfillment By Amazon Business allows you to control every aspect of your life and make your own dreams come true every day.
You get to do something you truly love	With starting a fulfillment by amazon business, you get to put your energy into something you are truly passionate about! You'll find yourself devoting as much time and energy as possible into the business to make it successful.
You can work from anywhere!	Not only can you start your fulfillment by amazon business from home, you can also run your business from anywhere in the world. This is the entrepreneur dream.
Ecommerce retail is growing fast	Ecommerce has been grown rapidly over the years and is expected to hit a total of 4.9 trillion dollars by 2021. With running an ecommerce business, you provide your customers with alternative and more convenient shopping experience, which will ultimately drive sales.
You can promote and sell your product on Amazon	Although there are some disadvantages to consider when selling your product on Amazon, there are also a host of benefits. Mainly, Amazon is the world's largest online retailer, so you're bound to tap into new business and reach an entirely new audience.
Various different ways to make money	With starting a fulfillment by amazon business, there is not just one business model to choose from. This field is amazing in that there are various different ways to make money. Although this may complicate things, it's great to have different options and sources of revenue.
Make money while you sleep	The advantage of starting a fulfillment by amazon business is that you have the ability to have passive income and make money while you sleep. This is the dream for many entrepreneurs.
Results and revenue happen quickly!	Unlike other businesses, it can be relatively quick to start seeing results and revenue. As long as you follow all the steps to validate your idea before launch, you are likely to see quick results and ROI.

Cons Of A Fulfillment By Amazon Business

Cons	Description
Crowded Space	Competition is high when it comes to your fulfillment by amazon business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.
Finding The Right Supplier	Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.
Security Issues	With any Saas business, data loss and security issues may arise throughout your process of building your product. It's critical that you understand exactly what you're responsible for and how to avoid potential issues down the road.
Lack of benefits	With a fulfillment by amazon business, you are typically self-employed and responsible for finding your own insurance, which can be quite costly and time-consuming.
Isolation	Often times, as a fulfillment by amazon business, you typically work alone and do not have much face-to-face interaction with other team members.
Taxes	As a fulfillment by amazon business, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.
No safety net	Typically, as a fulfillment by amazon business, you do not receive a consistent pay-check and instead earn money based on your transactions each month. During the slow periods, you typically take away less since the job is based on commission. It's important to budget accordingly for the slow times.
High overhead expenses	With starting a fulfillment by amazon business, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.
You may need to charge sales tax	If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out this article
Work can be repetitive	You may find creating the same product over and over repetitive and tiresome. One way of avoiding this is to diversify product lines and revenue streams - this will keep things interesting!
Difficult to build trust with your customer	With starting a fulfillment by amazon business, there can be minimal face-to-face interaction, which means it can be a lot more difficult to establish trust with your customers. You'll need to go the extra mile with your customer to grab their attention and business.
Impatient customers	You may offer an engaging user experience for your customer, but customers expect a lot and may be impatient if they aren't pleased with your product or service.
Minimal physical activity	A big part of starting a fulfillment by amazon business is sitting at a desk for the majority of the day starting at your computer. Some may enjoy this, but others may struggle with sitting for the majority of your day without much physical activity.
Learning Curve	When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.
Equipment Breakdowns	Over the years, your equipment can get damaged, break down, and may need repairs which can be expensive. It's important you prepare for these expenses and try to avoid damages/wear & tear as much as possible.
Technical issues can be frustrating	Technical issues are common in this business. If you struggle with the technical side of things, you may want to consider outsourcing this responsibility to save yourself the time and frustration.
More challenging to earn passive income	It can be more of a challenge to make passive income in this business. Often times, the amount of revenue you bring in is limited by the amount of time you have in the day.