Fulfillment By Amazon

July 19th, 2011

Fulfillment By Amazon (FBA) is a bigger program than I ever expected. In this program, a seller ships his or her inventory to Amazon.com’s warehouse. You pay a UPS shipping fee, and a storage fee. But when you sell something, you notify Amazon, and they do the shipping for you. You don’t have to box, label, or haul to the post office. And shipping takes place 24/7. These are not the best things about the program. The biggest benefits are:

1. Items stored in the FBA program are eligible for Free Super Saver Shipping, Amazon Prime, or other discounted shipping rates. Thus, people are more likely to choose them. And, items with discounted shipping go to the top in search results when they are tied with competing products that aren’t FBA.

2. Because of the free shipping, you can raise your price to match your competition. Even if you have the same price as someone who is not using FBA, you get at the top of the search results. And when you sell, your profit is dramatically higher.

3. You can use FBA with marketplaces other than Amazon.com. It’s a multi-channel selling tool.

E-commerce is about margin, not volume. If you make $3 on 10 sales you’re doing better than someone who makes $1 margin on 25 sales. FBA not only has a big convenience factor but it raises sellers’ margin considerably.

I just wrote an article for ECommerceBytes about FBA and talked to Chris Green about FBAPower, his FBA software site. The next few posts will be about this subject.

My article for AuctionBytes on Business Implications of Google+ has just gone online. Now I can mention it on my blog, I can tweet about it, I can post on Facebook, and of course, I could mention Google+. Wow, I need something like HootSuite to help me do all this at once.

Google has a lot of cards in its hand, if it decides to put them altogether, the company’s social networking service Google+ can make substantial inroads in Facebook’s market share. Suppose Google+ enables businesses to set up profile pages. Suppose content posted on Google+ is included in the algorithms and data used to present search results. Suppose Picasa can be turned into a sort of visual sales catalog linked to Google Checkout and Google Product Search. (A PC World article speculates that many of these services could be interlinked in the near future.) Suddenly, all those SMBs knocking themselves out to get into Google’s search results have an inside track. And it’s all free. If Google can seize this opportunity, they can provide serious competition for Facebook, which is a seriously good thing.

I’m testing out Google+ and preparing some articles about it. I hope to focus on a subject I haven’t heard a thing about: Google+ for e-commerce and marketing. I think there’s a lot of potential for businesspeople, especially since you can divide Circles of acquaintances into friends, family, customers, business colleagues, coworkers, suppliers, or any categories you want to invent. Anna Maria Virzi, of ClickZ, got more information than I did from Google about business profiles in her own article. Businesses are being discouraged from setting them up right now, but they will be coming down the road.

Digital goods: That’s the opinion of Scott Silverman, former executive with Shop.org and now a co-founder of Ifeelgoods.com, a company that functions as a “digital incentives provider.” Ifeelgoods.com is currently focusing on Facebook Credits, the virtual unit of currency on Facebook. But they are also testing the use of Skype credits as incentives to make discount purchases, sign up for newsletters, download apps, or other activities. All of these things connect potential customers with businesses and increase the chances that they’ll eventually be converted into purchasers.

“For me, personally, I had been with Shop.org for 11 years, and gave me a vantage point shere I saw lot of trends developing like search and social media,” he commented in a recent interview. What gets me so excited every day about this opportunity and compelled me to leave a job that I loved was how large a market digital goods is right now and how little activity there has been to date on the part of marketers and brands taking advantage of this as a marketing vehicle.” he cites the example of Zynga the company that developed Farmville. Most people haven’t heard of Zynga. But their IPO is expected to bring in as much as 1 billion “When you actually play these games, you see how powerful they really are,” he says.

Find out more in my article about Ifeelgoods on AuctionBytes.