Pros and Cons of Amazon Business models: New Updates

Amazon is an e-commerce-based platform established on 5th July 1994. the founder of Amazon is Jeff Bozos. the CEO of Amazon is Andy Jassy. It has a stock price value of US$127.19 +0.37 (+0.29%). It is a platform where someone can buy products online. Amazon has recently banned IP addresses of two cities in Pakistan and also seller central accounts of more than 13000 people. Let us know about the business models of Amazon, the method of working on these models, and the most important reason why amazon bans seller central accounts of sellers.

coming to the main point there are some models by which sellers can sell their products to buyers. These models are;

1. FBM Model

2. FBA Model

3. PL Model

4. Drop shipping Model and etc.

1. FBM Model:

The first model is FBM which stands for fulfillment by the merchant. Now what is the meaning of that model well, its simple meaning is that you have a product and you have to sell this product by yourself, you have to manage your inventory, product packaging, order fulfillment, and account management, etc. the good think of that working model is that you have not pay to Amazon any fee opposite to the FBA model in which seller has to pay Amazon about which we will talk in the next section. Now if we talk about the total earning or net earning of FBM model, you can earn

2. FBA Model:

This is a model which most people like and choose for generating huge profits. FBA stands for fulfillment by Amazon. this means that here you just send your inventory to Amazon and here your job is done and all remaining jobs like packaging, order processing, order shipment, account management, etc all things are done by Amazon itself. But Amazon charges for all these services. on each order, amazon cuts its charges. But the best thing about this model is that it does not cause harm to your seller's central account health opposite, unlike the drop-shipping model which always put your account in danger.

3. Private Label or PL Model:

private label model provides the seller opportunity to earn as much as he or she can. in the PL model, your seller launches its own brand product and advertises it by running campaigns, etc. for this model seller should have an investment. once a seller will become successful in making their product a brand then no power can stop him to become a millionaire or billionaire. the drawback of that model is that you should have an early investment in product manufacturing and advertisement.

4. Drop-shipping model:

drop-sipping model is the last model of our today's discussion. Drop shipping is the model which most sellers follow or do. the basic reason behind this fact is that it does not demand any investment irrespective of previously discussed models. In this model, the seller lists a product on its seller central of Amazon and ships this product from another selling platform like Walmart, eBay, Alibaba, etc. the price of listed products are less on these sites than on Amazon.

if we talk about the cons of the drop-shipping model first dawn is that it always keeps the seller's account in danger, by affecting its health. mostly it is seen that seller central accounts of Amazon become banned due to drop-shipping. the second flaw of that model is that the shipped product does not contain an amazon package which creates a lack of trust in the buyer's mind. So due to these issues this model is not a recommended one for business on amazon.

The detail of these models is beyond the scope of that article. I will write the detail of each model separately in my next articles.