December 7, 2022

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The New Era of the FBA Aggregators

The Challenges and Opportunities Ahead for FBA Aggregators - Part 1: The New  Business Model - Celigo

With Amazon placing more emphasis on its own brand, the future looks uncertain for those that have built their business around aggregation.

In this article, lets discuss the current state of aggregators, amazon wholesalers and what the future may hold.

Many sellers have been building their businesses around aggregation, or “white labeling” products to sell on Amazon. This model has developed into a robust industry with hundreds of companies offering services to help you make money as an Amazon seller. The most popular form of aggregation is “Fulfilled by Amazon (FBA)” – a service that lets you store your inventory in an Amazon warehouse and ship out orders to customers through them. This service has become so popular because it allows sellers to focus on building their businesses while Amazon handles all the logistics. However, recent changes at the company may spell trouble for those who rely heavily on this method of selling products online.

A few years ago, after noticing how many people were using its FBA program to simply buy and resell existing products without adding any value to them whatsoever (a practice known as “arbitrage”), Amazon began cracking down on these sellers.

The FBA aggregator model is a relatively new, but fast-growing, business model in the ecommerce world. It involves buying products from other sellers (or even other marketplaces) and then listing those products on Amazon FBA.

So why would anyone want to do this? Simply put, the aggregator model offers three major benefits:

1)Higher profits: With the FBA aggregator model, you can target product niches with higher profit margins — products that might not be worth pursuing if you had to buy them in bulk and store them in a warehouse before selling them on Amazon.

2)More sales: Once you have found the right product, you can increase your sales by leveraging Amazon’s traffic and massive customer base.

3)Reduced risk: FBA allows you to test products without putting up much of your own capital since you don’t need to buy inventory until you’ve confirmed that it’s selling well.

In the past five years, Amazon has been on a mission to make the Fulfilled by Amazon (FBA) program more efficient and profitable for its sellers.

This efficiency has been achieved through a series of measures:

New fees introduced for storage and inventory inefficiencies.

Changes to pick, pack and ship fees.

Continued investments into robotics, which have made inventory management much faster and more accurate.

Robotics have also allowed Amazon to expand its fulfillment centers to be closer to its customers. This last point is critical because it’s brought about a new set of challenges for sellers that are using FBA as part of their fulfillment strategy.

Product research is the linchpin of success for any ecommerce business. Without extensive product research, it’s hard to determine which products will sell well and which will flop before you’ve even had a chance to get them in front of consumers.