FBA Prep Center Business Plan Executive Summary

Opportunity

The number of Amazon FBA seller is significantly increasing. However, as the number of customers increases and the market expand, pre-fulfillment for an FBA seller is quite involving.
Therefore, a majority of the FBA sellers are seeking the services of Prep-centers to help them in pre-fulfillment. Pre-fulfillment involves receiving packages from the manufacturer/wholesaler, sorting the products, packaging/bundling them, photographing them according to amazon
specifications, labeling the products and shipping them to Amazon FBA warehouses.

Problem

For Amazon FBA sellers, doing a pre-fulfillment is time-consuming and inefficient. FBA amazon services require significant preparation. Therefore, it leads to a lot of inventory piling up in their home or warehouse, waiting to be prepared for the Amazon’s fulfillment center. 

Solution

The business is a prep centers. It is designed to become a market leader in helping FBA sellers prep products at a nominal fee per unit prepared for the seller in the United States with a plan to expand around the world. The inspection service provided by prep-center helps FBA
sellers from the risk of selling counterfeit products, especially those sourced from China, which has been a major cause of several FBA accounts suspended or issued with a warning policy, and even getting negative reviews from customers, which hurt their business although it was not
intentional.

Opportunity

Market

The market for prep-centers is growing rapidly as the number of Amazon FBA sellers continue to increase. Some pre-centers charge reasonable rates, and work with any reasonable seller around the company, for a wide range of products such as retail arbitrage, online arbitrage products and wholesale or private labels for international shipments.

Market Growth

Since the introduction of the FBA market, prep centers have increased rapidly to the FBA sellers navigate the complexities of selling their merchandise to the Amazon FBA warehouses.
One of the major challenges has been getting the inventories prepared, and delivered to the Amazon FBA centers across the United States and the globe. This has created an opportunity for prep centers which have FBA seller to effective and correctly prep merchandise which is destined for FBA warehouses. In 2017, Amazon had 750,000 registered sellers, a significant
growth from the previous year. The increasing number of sellers joining the Amazon marketplace is an indication for the positive growth of the market. In 2016, e-commerce grow by 15%, which was a 15.8% increase from 2015. The rise in the online retail and merchants of all sizes shows a significant shift from the traditional brick and mortal business

Market Trends

In addition, as the Amazon FBA program continues to expand, the market the opportunity for the FBA prep-centers continues to expand. The business has increased efficiency for the sellers. In addition, the high number of customers who now purchase from Amazon, provide an expanding market for the FBA sellers, and in extensions, business offering prep services. Most
of the FBA sellers are outsourcing their products from China, which has increased the risk of dealing with counterfeit products, making outsourcing prep services increasingly necessary. This
as more people become aware of the quality of the products they purchase, given the Amazon
trust ratings which have increased significantly over the last five years.

SWOT Analysis

Strength

 Well experienced staff on FBA prep services.
 Low price plans that accommodates small scale FBA sellers.
 A strong ability to scale up our services with increase in sales.

Weakness:

 Being a new business, the major weakness would be establishing a reputation in the industry.
 Lack of an exit strategy, which may make it challenging for the business to windup in case the business is unsustainable.

Opportunities:

 Increasing number of FBA sellers seeking for prep services

 Rapidly growing FBA service, an indication that the market will continue to
expand.

Threats:

 Increasing competition leading to decreasing profit margins
 Changing terms and conditions by Amazon for FBA services.

Competition

Current alternatives

FBA Inspection.com- Currently, some of the established FBA prep centers include FBA Inspection. Com, located in California. The company requires a minimum order of $35 and provide a wide range of services that include product inspections and photography, as well as several others.

McKenzie Services- The other competitor is the McKenzie Services, tax free in Oregon. The company has pricing plans which start from zero, for a minimum order of $40. The company also does product photography, and inspections.

Prime Zero prep and ship- the prep center is tax free in New Hampshire, they have starter plans which start at $1.35 per piece, and monthly subscription plans. However, the plan applies to online arbitrage sourced merchandise, or wholesale/private label products. FBA Prep.com- the prop center operates in multiple locations across the United States, they offer starter plans from $0.45 per unit. Or $7.5 per carton. The plan apply for retail and online arbitrage products. Their services include de-snickering and cleanup, which are also charge $8/carton of $0.5 per unit.

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