Is Amazon FBA the right choice for Sri Lankan sellers?
Ruwanika was a Sri Lankan who used to be a programmer looking for a stable passive income. She tried Amazon. It led her to earn 6 digits in sales in the first year of selling on Amazon. It is not as simple as being said to be in one sentence but still, she did manage to succeed. She had a goal and a plan and she worked for it. And that is only one of the success stories we can bring to you.
Amazon is undoubtedly the world's largest online marketplace right now. You might be familiar with the term FBA. Fulfilled by Amazon (FBA). It allows sellers to store their products in Amazon's fulfillment centers, where they handle shipping, customer service, and returns on behalf of the seller. This can be a convenient and cost-effective way for businesses to expand their reach and increase their sales.
There is FBM (Fulfilled By Merchant) option where the sellers themselves have to handle the product shipping process and the fees they have to pay.
But is Amazon FBA the right choice for Sri Lankan sellers to pick as they expand their business? To answer this question, let’s take a closer look at the e-commerce landscape in Sri Lanka and how Amazon operates in the country.
According to a report by Statista, the e-commerce market in Sri Lanka is still in its early stages, with a projected revenue of a bit over 2.7 Billion US dollars in 2023. This is a relatively small market compared to other countries, such as the United States and China, where e-commerce is more established.
Additionally, Amazon does not have a localized version for Sri Lanka. It means that Sri Lankan sellers would need to sell on Amazon's global marketplace. This can be challenging, as the competition is fierce. The sellers need to be able to compete on price, quality, and customer service.
That being said, as mentioned before, there are still opportunities for Sri Lankan sellers on Amazon. Many Sri Lankan businesses already sell on Amazon, and some have had great success. For another example, Tea Avenue, a Sri Lankan tea company, has used Amazon to expand its reach to customers in the United States and Europe.
Then there is Kapruka.com will consequently be designated as an Amazon master seller in Sri Lanka, allowing prospective local producers to sell on the website.
If you are planning on expanding your e-commerce furthermore, Amazon FBA would be a better choice.
However, before deciding whether to use Amazon FBA, Sri Lankan sellers should consider their business needs, the cost of shipping to Amazon's fulfillment centers, and the fees associated with the program. Individual and Professional are the two types of seller accounts on Amazon. For individual sellers, they have a $0.99 (Can be changed) per each sale transaction. Professional sellers have monthly subscription fees starting from $39.99.
Then if you are using an FBA service, Amazon fulfillment employees will be the ones who are handling, and shipping your goods when the orders come. For that, you have to pay an FBA fulfillment fee plus storage fees. For example, if you were selling a stainless steel mug as an FBA seller for $30, you would pay $4.50 in referral fees and $5.06 in FBA fees. You can go to the Amazon page to see the accurate fees for your product category.
Most of cases, when a business expands and the number of daily orders increases, the FBA method is more convenient and sometimes less costly than the FBM method.
It's also important to keep in mind that Amazon has strict requirements for the quality and packaging of products, and sellers who do not meet these standards risk negative reviews and a damaged reputation.
So, if you are to select the FBA option, it's important to carefully consider the costs, competition, and requirements before making a decision. With the right strategy and approach, Sri Lankan sellers can succeed in Amazon's global marketplace.
