The Amazon platform offers a fairly simple way to start an e-commerce business and sell products to customers worldwide. Moreover, Amazon’s Fulfilment Network makes the process of packaging and shipping products to end consumers easy as can be. But for real entrepreneurs, this is often not enough. They want to scale. Scaling will increase not only your revenue and profit but also your market power and brand recognition. How to scale, you ask? In the following article, we offer five tips on scaling an Amazon FBA business in 2022.
Expand Your Portfolio
The first tip for scaling your Amazon FBA business is straightforward—sell more products! Or rather—sell different products. Amazon FBA makes it easy to sell various products without high investments in storage and inventory, and it’s time to take advantage of that.
When adding more products to your portfolio, you can add items to your storefront related to your existing product spectrum, introduce new types of products, or expand into different Amazon product categories. For example, if you sell sneakers on Amazon, you could also choose to sell shoe inserts and laces, introduce a different shoe model, or even start selling activewear.
Subscribe to our newsletter
Adding more products usually means increasing your number of views, sales, and revenue. However, it is best to cater to the client base you already have and understand. To add additional products that work best, you should look at the items your existing customers are interested in.
Find some inspiration by researching Amazon subcategories, the “sponsored products related to this item” and “customers who bought this item also bought” listings on your product page and your competitors’ product spectrum. Then consider supply and demand and choose between products with a high value and high-profit margins, of which you only need to sell a few (e.g., a new type of brand sneaker) or products with a low-profit margin, of which you need to sell many (e.g., trendy shoelaces).
Dropship for Other Brands
The next tip for scaling an Amazon FBA business in 2022 is relative to the first one—start dropshipping. You will also add new products to your portfolio when dropshipping, but they will not necessarily be yours.
Dropshipping is a business model in which you list products on a selling platform and purchase and order them from a wholesaler or supplier only once a customer has ordered them from you. This way of doing business is also possible on Amazon—though with some changes.
Usually, the wholesaler or supplier would ship the packages directly to the end consumer without involving the dropshipper. Depending on the wholesaler’s location, this would cause long delivery times. However, customers on Amazon are accustomed to fast deliveries. Furthermore, selling via FBA means that products are stored in Amazon Fulfilment centers around Europe.
But the method of dropshipping can be adapted for FBA sellers. You can buy products from your supplier and have them shipped to the warehouses and negotiate deals in which you continue to pay your supplier once a customer buys products from you.
Sell in More Markets
If you are happy with your current product spectrum but still looking to scale your business, you might want to consider geographical expansion. Amazon offers opportunities in a variety of European countries and beyond.
With just one European Amazon Seller account, you can sell products in Germany, France, Italy, the Netherlands, Spain, Sweden, and even the UK. This is supported by the Fulfilled-by-Amazon network, which enables you to not only sell but also swiftly ship products to customers in these countries and beyond. Without much investment, your Amazon product listings can reach a whole different demographic, and you can scale your business.
The only difficulty lies with fulfilling the resulting tax obligations. When selling to private consumers on Amazon who are residents in different countries, you need to follow differing VAT regulations and rates. You might also need to register for VAT and submit VAT returns and other documents in countries where your customers are residents.
This is where VAT service provider hellotax steps in. They specialize in Amazon e-commerce and offer software that automates the compiling of your VAT returns in all countries in which an Amazon FBA seller might need to submit them. Their team of local VAT accountants also registers you for VAT, submits your tax documents, and communicates with the authorities.
Optimize Amazon Product Listings
Not yet ready to expand geographically or increase your product spectrum but still looking for ways to scale your Amazon FBA business? Then optimizing Amazon product listings is the way to go. This is the perfect method to maximize your assets before taking further steps.
Amazon listings contain not only a title and images but also a description of features, the pricing, and the backend keywords. Usually, changing the pricing is the easiest way to scale your business, but not always the way to increase your profits.
Lowering your prices might increase your turnover, but it might also reduce your revenue. It’s crucial to match competitors’ prices and the customers’ willingness to pay. To increase their readiness to pay, you should improve your storefront.
Sell on Other Platforms
If you have already expanded, increased your product portfolio, and optimized your Amazon listings, and still want to scale your business, it might be time to branch out to other platforms. Just because you are an Amazon FBA seller doesn’t mean that’s all you need to be.
Platforms like eBay offer you a whole new target market. True, some customers are active on both Amazon and eBay, but some prefer eBay for its differing pricing model.
Another option is to invest in your own store. With store-building platforms like Shopify, it is now easier than ever to create a website and store and start building a customer base.
You need to keep in mind that once you expand beyond Amazon, you’ll also expand beyond Amazon’s FBA. You will have to take care of the delivery of products to end consumers by yourself or hire a Fulfilment provider. Moreover, you will need to find new ways to market your shop and products beyond Amazon’s built-in marketing options. But that doesn’t mean it isn’t worth it!
Ready to scale your Amazon FBA business? We recommend taking advantage of all the possibilities that Amazon and its Fulfilment Network have to offer by expanding both your product spectrum and increasing your target market.
This way, you are not only sure to scale but also to increase your revenue and profit. Up for a little more risk? Invest your profits into your own online store! You’ll be able to sell the same products to different target groups—Amazon shoppers and those looking for branded products.
About the author
Antonia Klatt works as a content specialist at hellotax. She dedicates her time to VAT and e-commerce topics with a special focus on Amazon FBA and intra-European mail order business.