Fulfilment by Amazon is a service that allows third-party sellers to use and automate their order fulfilment and shipping services. In Amazon’s words ‘You sell it, we ship it.’ Amazon works with third-party sellers and in 2020, approximately half of Amazon’s sales came from them and not Amazon directly. Within this group, an estimated two thirds of these sellers are using the ‘Fulfilment by Amazon’ (FBA) platform.
While already a huge presence in the global culture, Amazon has become an even bigger mainstay of our lives as a result of the pandemic and it shows no sign of slowing down any time soon. Apart from a handful of exceptions, almost everything we could ever need can be sourced, purchased and shipped within a literal couple of clicks.
Fulfilment by Amazon for retailers
Retailers can use all the sophisticated might of Amazon’s highly developed fulfilment networks. They can store their products in Amazon’s fulfilment centres, and they pick, pack, ship and provide customer service for these products. The sellers pay storage and fulfilment fees for the service.
Amazon markets FBA to retailers on the basis that it can help them scale their business and reach more customers. This message seems to be coming through loud and clear as it’s estimated that currently, globally, more than two million are retailing this way.
We have recently undertaken some work for a highly successful entrepreneur who have scaled up his businesses right the way from scratch to sale in the FBA space, supporting him all the way through the sale process and getting him the exit he wanted.
We spoke to him about the insights he gleaned and the experience he gathered in going through this process.
Frankie Thorogood launched sportswear business TCA in 2012 from his bedroom in Hackney, East London. Having recently graduated from university and been rejected from multiple job applications, his goal was to make a small profit while he worked out what he wanted to with his life. Frankie sold his business in May of this year.
“It all started for me in a freezing cold winter, when I wanted to wear a snood for Sunday league football. The big-name sports retailers at the time didn’t have any. So I sourced some from China. I spent £100 of my savings on buying as many snoods as I could as I figured that if I wanted one then other people were likely to want them too.
“My aim was to turn this £100 into £300. I did this pretty quickly and then I spent that £300 on more snoods to sell. I walked the length of Oxford Street in London literally pitching and selling them to the clothing retailers there. I started developing and designing more sports clothing products and moved on to selling on eBay first, which over time led to Amazon. That was in 2012 and by the end of 2014 I was doing £1m in revenue.
“I didn’t set up specifically to become a Fulfilled by Amazon business, it just developed over time, but I would say there are three big advantages of working in the FBA space. First is that you are potentially being delivered millions of customers every day. If this constant stream of customers likes the product then you will get sales. The second is the fulfilment services they provide. They pick up the products for free and ship them to customers. Thirdly, it’s about trust. People trust Amazon with their card details. This seems small but it makes a huge difference to the buyer experience and of course, the sellers.
“You hear of some people trying to second-guess products that people need and provide supply to meet this demand and make big money fast but this was never my approach. I always invested time and effort and hard work into making the product the best I could”.