business plan of amazon ppt

Amazon FBA Business Plan Template

Written by Dave Lavinsky

Amazon FBA Business Plan

Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their Amazon FBA businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an Amazon FBA (Fulfillment by Amazon) business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your Amazon FBA business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes target market research to support your plans.

Why You Need a Business Plan

If you’re looking to start an Amazon FBA business, or grow your established business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your Amazon FBA business in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Amazon FBA Businesses

With regards to funding, the main sources of funding for an Amazon FBA business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

Personal savings is the other most common form of funding for an Amazon FBA business. Venture capitalists will usually not fund an Amazon FBA business. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual Amazon FBA could never achieve such results.  With that said, personal savings and bank loans are the most common funding paths for Amazon FBA businesses.

How to Write a Business Plan for an Amazon FBA Business

If you want to start an Amazon FBA business or expand your current one, you need a business plan. In the following Amazon business plan template, we detail what should be included in each section of your own business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of Amazon FBA business you are operating and the status. For example, are you a startup, do you have an Amazon FBA business that you would like to grow, or are you operating multiple Amazon FBA businesses or storefronts?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the Amazon FBA industry. Discuss the type of Amazon FBA business you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of business you are operating.

For example, you might operate one of the following types of Amazon FBA businesses:

• Reseller : this type of business finds products from other businesses to resell on Amazon.
• Private Label: this type of business buys existing products and rebrands them to sell on Amazon.
• Proprietary: this type of business is where a business creates a unique product to sell on Amazon.

In addition to explaining the type of Amazon FBA business you will operate, the Company Analysis section of your Amazon FBA business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, number of positive reviews, growth in product line, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the Amazon FBA industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the Amazon FBA industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your Amazon FBA business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: Millennials, Generation X, and Baby Boomers.

As you can imagine, the customer segments you choose will have a great impact on the type of Amazon FBA business you operate. Clearly, Baby Boomers would respond to different marketing promotions than Millennials, for example.

Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, the customer segments may include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other Amazon sellers.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes traditional brick and mortar stores, branded websites, or people who make their own product at home. You need to mention such competition as well.

• What types of customers do they serve?
• What types of products do they sell?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide a broader range or higher quality product line?
• Will you provide services that your competitors don’t offer?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an Amazon FBA business, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of Amazon FBA company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to your core product line, will you provide customization, or warranties, or any other services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products or services you offer and their prices.

Place : Place refers to the location of your Amazon FBA company. Document your location and mention how the location will impact your success. For example, if you are offering a proprietary product, is your production facility located near an Amazon distribution facility, or near suppliers of the inputs needed to make the product, etc. Discuss how your location might be the ideal location to minimize order fulfillment time.

Promotions : The final part of your marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Digital Advertising
• Partnering with applicable websites
• Social media marketing
• Amazon PPC ads

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your business, including managing, tracking, and restocking inventory, and customer service.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your 1,000 th product, or when you hope to reach $X in revenue. It could also be when you expect to expand your business to a new product line.

Management Team

To demonstrate your Amazon FBA business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in supply chain management or managing Amazon FBA businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing ecommerce shops or successfully running small businesses.

Financial Plan

Your financial model should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your Amazon FBA business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key fixed and variable expenses needed in starting or growing an Amazon FBA business:

• Production facility build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your product line description or your branding portfolio.

Putting together a business plan for your Amazon FBA business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the Amazon FBA industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful Amazon FBA business.

Amazon FBA Business Plan FAQs

What is the easiest way to complete my amazon fba business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Amazon Business Plan.

How Do You Start an Amazon FBA Business?

Starting an Amazon FBA business is easy with these 13 steps:

• Choose the Name for Your Amazon FBA Business
• Create Your Amazon FBA Business Plan pdf or doc
• Choose the Legal Structure for Your Amazon FBA Business
• Secure Startup Funding for Your Amazon FBA Business (If Needed)
• Register Your Amazon FBA Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Amazon FBA Business
• Buy or Lease the Right Amazon FBA Business Equipment
• Develop Your Amazon FBA Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Amazon FBA Business
• Open for Business

Learn more about how to start an Amazon FBA business .

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Get started with amazon business., how to write a business plan, why write a business plan.

The dream that I had as a four year old of changing the world with a lemonade stand is what drove the growth of the company. But what actually provided the backbone in the foundation for that dream was the fact that we had a business plan for each stage of our company's growth. And that's one of the many reasons you want to make a business plan. A clear business plan informs other parties, whether that's your internal team, your friends and family, potential investors, or strategic partners, about your company. It also sets clear goals for the future and allows you to dream like a kid, just as I did as a four year old in Austin. A study reports that you're 42% more likely to accomplish the goals that you write down.* A business plan is essentially a way of listing your goals and backing it up with data and research. You also include your current team key factors about your business, and the industry as a whole. It establishes a roadmap for your business.

Key Reasons to Write a Business Plan

• Helps you understand key factors of business and industry
• Establishes roadmap for business
• Provides information for other parties such as potential investors, internal teams, friends & family
• Sets clear goals for the future and allows you to dream like a kid
• Make you 42 % more likely to accomplish the goals you write down*

Key Aspects of a Business Plan

• Industry overview - a general market analysis
• Company and business overview - introduces your business
• Business strategy - clarifies what your strategy is for conducting business
• Mission and vision - how your business is going to impact others in the world
• Management and key personnel
• Capitalization structure - how you fund and raise capital
• Growth and goals?
• What's next for your brand
• Risks and mitigation - potential elements that could negatively impact your business and how you will mitigate those

Company & Business

This section provides an overview and introduction to your business as a whole. Here's where you want to tell your founder's story, what's unique about your company, and what big problem your company solves. You want to list what your company structure is - are you an LLC or are you incorporated? Where are your principal offices located? Is it virtual or in person? And who are the management personnel? But not too much into the matter of personnel because there's another section for that. In this section, you want to include your business strategy, opportunities, and the target market.

• The story behind founding your company
• What's unique about your company
• The big problem your company solves.
• Company structure i.e. are you an LLC or are you incorporated?
• Location of principal offices - is a virtual is it in person?
• Management personnel - who are they? - but not too much into the matter of personnel because there's another section for that.
• Business strategy - what is the opportunity and the target market?

Mission & Vision

I came across my vision and mission statement actually as an accident. I was four and a half years old. I got stung by two bees in one week. It was extremely painful and I was terrified of them. My parents said, ‘okay, how about you do some research?’ I learned that without the bees, our food supply would collapse. And I also learned that one out of every three bites of the food we eat comes from bee-pollinated plants. This definitely sparked an interest and I wanted to help protect them based on learning that the populations were dying at an alarming rate. So I decided, “Hey, I just got a cookbook from my great granny Helen (she wrote her favorite recipe for a flaxseed lemonade.) What if I took this recipe and add my own twist? What if I added mint? What if I sweetened it with honey, which I had just learned that bees made? And what if I donated a portion to organizations that would seem to bees?” That’s how my mission orginated. I wanted to create lemonade that tastes good and does good. I wanted to make a measurable impact on saving bee populations. While that's what it started as, it has since grown into something more. Yes, it saved bees, but it's also teaching and encouraging social entrepreneurship. Mission and vision may sound the same, but they're pretty different and they're both equally as important. Your vision statement is your reason for being. It's who you are at your core. It can be inspirational and emotional. The goal is getting others to see your vision and believe in it, to garner hearts, attention and interest. Your vision statement should attract and engage passionate individuals both within and outside of your organization.

Vision Statement

A vision statement is your reason for being - who you are at your core.

• Can be Inspirational - getting others to see your vision and BEE-lieve in it
• Can be emotional - to get hearts, attention and interest
• Should be a short statement

Mission Statement

The mission statement is where you want to clarify what the scope of your work is. What you do, how do you do it, and for whom. This is where you help people understand how you achieve the vision that you already mentioned.

Industry Overview

In the Industry Overview section, you want to list what differentiates you from your competition. State your business's economic sector on a local, regional and national level. You want to list who the current leaders and trendsetters are in your industry; you could do this through a side by side competitor analysis. You want to forecast where your industry is headed to in the future. Industry Overview Highlights

• What differentiates you from the competition?
• Local level
• Regional level
• National level
• Side-by-side competitor analysis
• Describe sectors growth
• Opportunities for your business to expand
• Overall goal is to determine your target market and what separates you

Management and Key Personnel “Your Hive”

The next section is the “Your Hive” section or Management and Key Personnel. Here's where you want to outline your business's management structure and their qualifications. This could be owners, key personnel board, etc. You don't need to have a large team. You just want to emphasize what proficiencies, personalities and skill sets your team has. So whether you're a solopreneur or you're listing people who you go to for help that as my hive. In general, you want to emphasize the capacity of your team through a variety of skill sets and identify key functions that are required to help achieve the vision for your business. One challenge that we had as a small business was that it was hard to bring on full time employees. I was the founder and CEO of Queen Bee. I brought on my parents as Chief Operating Bee and Chief Marketing Bee, but we still needed help. And so we realized that by listing what skills our current team had in our management and personnel section, we were able to understand the skills that we need to outsource. We eventually went to outsourcing specific team members such as brokers, accountants, manufacturers and just finding people who can wear multiple hats to help us run the day-to-day. The great thing about your hive is that it's not just people who work for your company. As I grew my business, there were so many people who wanted to be part of my hive.

Management and Personnel Highlights

• Key personnel
• Identify key functions required to help achieve vision for business (and timing)
• Emphasize the capacity of your team through a variety of skillsets
• Proficiency & Personality

Capitalization

The next section of your business plan is Capitalization. How are you going to fund this idea, this company, and where will that money go in the future? This is where you want to list what your initial funding will be, whether it's friends and family, angel investors, venture capitalist or your local bank. You also want to set forth the capitalization of the company on a pro forma basis. So how much capital is needed to pursue the next steps of your business strategy and what form of capital is that going to be in? Are you going to have equity based investments, loans, line of credits, etc.? One of the challenges that we had as a small business was that there were opportunities to scale, but we were unable to take advantage of them. When we looked at our capitalization structure, we realized in order to launch into these retailers or in order to go into these states, we needed freight, we needed higher manufacturing abilities, and we didn't have those items at the item. We realized we needed capitalization. We established exactly what sources we were going to get that capital from. Then, we were able to create a convincing pitch and slide deck to attract potential investors. And so that's what led us to going on That led us to Shark Tank in 2016 and landing a deal with Mr. Daymond John. Also in 2018, we got investments from around ten NFL players. Even today, where we are looking to grow the company and get more rounds of funding.

Capitalization Highlights

• Friends and family
• Angel Investors
• Venture Capitalists
• Set forth capitalization of the company on a pro forma basis

Business Strategy

In the business strategy section., you want to list how your business will earn a profit through creating a value for your customers. What are your value propositions? Is it newness? Is it brand, status. reduced cost, convenience, or customization? What needs of your customers? Is your business going to satisfy you?

Channels List your channels. How are you going to reach your customers? Which channels work best and which channels are most affordable? This is very important.

Revenue Streams List your revenue streams. There are multiple types from subscription based to renting or leasing, licensing, advertising, etc. Once you establish those revenue streams, how are you going to price your product or your service? Is it list price, negotiation based, customer dependent, value dependent, etc.?

Business Model What's your business model? How are you planning on making a profit and whom you are trying to sell to: be the be B2B business, B2C business, etc. A great example of how a business strategy was helpful to Me & the Bees was when we were shifting from just being a lemonade stand to actually being a bottled product. A local pizza shop said, “Hey, if you can find a way to bottle your product, we'll carry it.” Now that we had that opportunity, we had to figure out how our business strategy would change. It changed a lot. Instead of trying to target individual customers, we now had to shift our target to retailers in restaurants and cafes to sell the product. And then we also realized that this meant a different pricing model and different channels that we were trying to reach. Thankfully, we had a very clear business strategy section that helped us throughout that transition. Business Strategy Highlights

• Value propositions (ex: newness, brand/status, reduced cost, convenience/usability, customization)
• What customer needs are you satisfying? 
• Which channels work best?
• Which are most affordable?

Revenue Streams

• Types: subscription, renting/leasing, licensing, advertising
• Pricing: list price, customer dependent, negotiation, volume dependent

Business model  (how do you plan on making a profit?)

A tool you can use:  Strategyzer.com

Growth & Goals

The growth and goals section is where you can dream like a kid and can be fearless in the possibilities of where your business can go in the future. How are you going to expand your position? This could be increasing velocity at current locations or selling new products or new variations of your current products. Another example - what promotions, marketing or social media campaigns are you going to do? When I started Me & the Bees, all we offered was one flavor. As we grew, based on the growth and goal section, I decided I wanted different flavors. So we have ginger, prickly pear, and black cherry now. I also established that I wanted different products, such as lip balm, skin care, snacks, etc. After growing the company and after getting that lemonade to a nationally distributed point, I decided I want to start a nonprofit so that I can save the bees through research, education and protection. I wanted to publish a book so that I can help inspire the next generation of changemakers. I also wanted to connect with current changemakers around the world, whether it's in Singapore or Cape Town, and figure out how we can make a difference when it comes to saving pollinators, when it comes to increasing the amount of social businesses in the world, and helping inspire others.

Growth & Goals Section Highlights

• Expand where you are – increase velocity at current locations
• Future Promos, marketing, social media
• Sell current products at new locations
• Offer new variations of current product

A Word of Encouragement for Small Business Owners

Dreaming like a kid is where a lot of the passion and excitement for growing my brand originated from. And that passion made it so much easier to overcome many of the challenges that every small business faces. For example, managing and navigating the COVID 19 pandemic, balancing being a student and being an entrepreneur at the same time, and so much more. And so in general, it was the dream of, “Hey, this is where I want my business to go in the future.” And yes, it was the backbone and foundation of that dream through business plan, but it was also the resiliency and the grit that all entrepreneurs have. And so this quote is one that I came up with during one of those times of challenges. And I think that this is applicable to being a small business owner, so entrepreneur, but also so many other parts of life in general. There's going to be things, there's going to be challenges. But I think the most powerful point is when you actually get back up, when you're able to face those challenges and overcome them and then tell stories about it, inspire others in the future.

“Don't be discouraged by life's little stings, get back up and spread your wings.“

— Mikaila Ulmer, Founder & CEO, Me & the Bees

And I think that this is applicable to being a small business owner, so entrepreneur, but also so many other parts of life in general. There's going to be things, there's going to be challenges. But I think the most powerful point is when you actually get back up, when you're able to face those challenges and overcome them and then tell stories about it, inspire others in the future.

About Mikaila Ulmer

Mikaila Ulmer is founder and CEO of Me & the Bees Lemonade. Using her Great Granny Helen’s flaxseed honey lemonade recipe, Mikaila launched her business in 2009, at a youth entrepreneurial event and then sold her lemonade at a stand in front of her home in Austin, Texas. Today, the award-winning lemonade is buzzing off the shelves at retailers in all 50 states. In 2018, Mikaila launched the Healthy Hive Foundation non-profit where a percentage of net profits from the sale of her lemonade goes to saving the bees. Mikaila’s first book, Bee Fearless: Dream Like a Kid , was released by Penguin Random House in 2020.

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Home Collections Strategy / Business Plan SWOT Amazon PowerPoint Slide Template

Amazon PowerPoint Slide Template and Google Slides

• Amazon Themed
• Amazon Prime
• Amazon SWOT
• Amazon Web Services
• Google Slides

Illustrate About Amazon Through SWOT Method:

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Amazon business plan

Term paper, 2013, 45 pages, grade: a, kelvin cherry (author).

Executive summary Keys to success Objectives Potential risks

Company background Company summary Mission Company vision Stakeholders’ analysis Organizational structure Start-up summary

The product The process of dehumidification Brief product description Competitive comparison Brief product description Technology Marketing research Competitor analysis Market share analysis Gap analysis Market trend analysis Market segmentation Consumer analysis Marketing strategies Marketing mix

Project plan Gantt chart WBS Set budget SWOT analysis Porters’ model

Financial analysis Financial assumptions Break-even analysis Projected profit and loss The expected Cash flows

Conclusions

Recommendations

Executive summary

Due to the dynamics of customers’ needs, competition among different organization is ever growing. Consequently, organizations are coming up with strategies of sharpening their competitive advantage. Many of these strategies are either geared towards minimizing the cost of production, maximizing the net profit, minimizing the customers waiting time or even improving the quality of products produced. Product differentiation and integration are some of the ways many organizations have been using to meet their organizational goals.

Amazon, a multinational corporation dealing with e-commerce is one of the organizations facing hard times due to global competition. As a result, it wants to venture into making dehumidifiers so as to boost its cash-flows in the positive direction. This assignment is all about a business plan developed to determine the viability of venturing into making dehumidifiers.

A dehumidifier is a device that reduces the amount of humidity in the air. By doing so, it reduces the chances of survival of moths, cockroaches, termites and fleas. Thus, it helps a lot in preventing the diseases that can be transmitted by these pests. Previous studies have shown that by use of a dehumidifier, the chances of transmission of diseases are reduced by 75%. Another advantage of a dehumidifier is that it increases conformability by reducing sweating.

This product will be safe for use and will meet all the current regulations. The advantages of this product over those existing in the market are less consumption of power and automatic defrost. Other key features of this dehumidifier are Automatic Humidistat Control, Automatic Bucket Full Shut-Off, washable air filters and Removable Water Tank. Unlike the product offered by competitors, the noise level of this proposed product is less than 49dB (A). It also has caster wheels for easy movement.

The initial capital will be used to patent, approve, test, produce, and market as well as providing the initial working capital during the inception year.

To achieve the desired growth, the following strategies will be used by Amazon:

i. Use differentiation strategy to meet the ever growing customer needs ii. Develop a first-to-the-market strategy so that many customers can be attracted and retained during the inception years iii. Develop an effective branding campaign to build positive perception and awareness within the target markets iv. Use cost strategy to attract more customers v. Responding to customers’ complaints and needs within the shortest time possible

Basing on the financial projections and analysis, Amazon will require a funding of $3,002,000. When all factors are kept constant, it is expected that by the end of the third year, Amazon will have sales of more than $850,000. The IRR is expected to be 69% and the dividends over the next five years expected to be 13%. Figure 1 below shows the expected sales, gross profit and net profit for the next three years.

illustration not visible in this excerpt

Figure 1: expected returns

Keys to success

Amazon will use the following as the main keys to their success:

i. Use customization and personalization strategy to meet the ever changing customer needs. This will ensure that every customer gets what he wants. To achieve this, Amazon will form a department called DCD (Dehumidifiers Customized Department) to deal with the changing customers’ needs ii. Our cost strategy is in such a way that we will offer higher quality dehumidifiers at an affordable price. As compared to the price offered by LG, our prices are 27% cheaper. This will be a key element in attracting and retaining customers iii. Use innovation and renovation pillars to meet customers’ requirements iv. A first mover branding campaign to develop awareness to the target market within a very short time v. Patent protection to prevent the product concept from the competitors vi. Complementary relationship with other organizations that directly affect the production and hence the success of this organization vii. Complementary relationship with suppliers and customers

The objectives of Amazon are:

i. Design, fabricate and Develop a prototype by the end of April in year ii. Test and launch the product by the end of June in year iii. Became the customers’ choice in the united kingdom by the end of year iv. Launch distribution channels all over the world by the start of year v. Hit a sales margin of 850,000 by the end of year vi. Invest heavily in R&D so that by the end of the 5th year, the sales will be more than five million US dollars

Potential risks

In any project, risks are inherent. Therefore, effective risk management measures should be put in place. The table below shows the types of risks expected to be met by Amazon during the execution of this project.

Table 1: The table showing the different types of risks

Intellectual property risks are common in the manufacturing sector. They involve risks that can be attributed to the unauthorized use of the technology. As a result, this product will be patented (Borodzicz, 2005).

Competitor risks are risks that are encountered as a result of the competitor company gaining more customers.

In the manufacturing line, quality risks are risks that are encountered when the produced goods do not meet customers’ satisfaction.

Schedule risk measures the variance between the expected time of completion of the project and the actual time the project is completed.

The process of risk management will take place in three stages (Morgan, 1992):

i. Risk identification ii. Risk analysis iii. Risk evaluation and mitigation iv. Risk monitoring

Company background

Company summary.

Amazon is a multinational organization with headquarters in Washington in the United States. In terms of the revenue generation, Amazon is the largest online retailer in the world. Since its inception in 1994, the company has diversified into many products such as DVDs, CDs, MP3 players, softwares, furniture, jewelry, food and video games. The company also produces kindles. As of 2012, the company had revenues of US$ 61.09 billion and an operating income of US$ 0676 million. The company has employed 88,400 people across the world.

In the last six years, business process re-engineering has been witnessed by this organization. This has led to an increase in net sales. Figure 2 below shows the net sales of the organization for the last five years.

Figure 2: The net sales for Amazon for the last five years

Consequently, the asset base of Amazon has been growing steadily for the last five years. Figure 3 below shows the net assets of this organization for the last five years.

Figure 3: Trend of net sales

The mission of the wing that will deal with the manufacture of dehumidifiers is to meet the ever changing customers’ needs through continuous improvement of the designs of dehumidifiers. We intend to make maximum profit in the next couple of years so that we can maximize the investors’ return-on-investment.

Company vision

To manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, the local community and all other business partners.

Stakeholders’ analysis

Different stakeholders will have different expectations from Amazon. The different expectations are as summarized in the table below.

Table 2: Stakeholders of ABC

Organizational structure

The figure below shows the expected organizational structure of ABC.

Figure 4: The organizational structure of Amazon

The roles for the production manager will be:

i. Ensure effective utilization of resources in the production department ii. Forecasting and scheduling the requirements within the production department iii. Minimizing quality loss costs and material handling costs

The role of the marketing manager will be: Planning, controlling and execution of activities and the budget within the marketing department

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• What is Amazon FBA? 

How do you write an Amazon FBA business plan?

Amazon fba development tips for startup growth, download your free amazon fba business plan pdf, free amazon fba business plan pdf [2023 template + sample plan].

Anthony St. Clair

12 min. read

Updated November 1, 2023

When figuring out how to turn eCommerce into your side hustle or primary business, Amazon FBA can be your ticket to starting a small business on Amazon . With over 200,000 new third-party sellers in 2020 alone, Amazon’s marketplace for online sellers is growing, competitive, and full of opportunity .

In order to take full advantage of everything Amazon’s ecosystem has to offer your business, you should create an Amazon FBA business plan . Your Amazon business plan can help you think through your vision, understand the competition, identify opportunities, and foresee challenges. The better your plan, the better your chance at success as an Amazon FBA merchant.

What is Amazon FBA? 

When your business sells products to a customer online, those orders go through a fulfillment process, such as:

• Secure payment processing
• Selection and packing of the correct item or items in the order
• Package labeling
• Shipment and delivery of orders to customers
• Customer service throughout all steps of the process

A business can manage this on its own. On a small business or solopreneur scale though, that can mean figuring out logistical steps that take up a lot of time. For example, where will you store the products you sell? Warehouse space can be costly—and there’s only so much room in your apartment or garage.

Plus, once you have the products ready to go, they need to be securely packaged, including padding to protect during bumps and drops during shipping. You’ll have to figure out how the order gets on its way to the customer. Do you schedule regular pickups from UPS or FedEx? Are you making lots of trips to the post office, waiting in line, or setting up the customer’s shipping address and shipping options to generate labels?

Or, Amazon can do it all for you. The “FBA” in Amazon FBA is short for “Fulfillment by Amazon.” Instead of you taking care of the fulfillment steps above, you can pay a fee to Amazon , typically a flat monthly fee plus a per-order fee. Instead of managing orders, you can focus on sales strategy, suppliers, marketing, and the nitty-gritty of building, expanding, and profiting from your Amazon FBA eCommerce store .

As you develop your business plan, you can review Amazon’s FBA program , see how it fits your business goals, and evaluate the program’s costs and opportunities in your planning.

Free Download:  Sample Amazon FBA Business Plan Template

For starters, focus overall on your business. Amazon FBA is a way to solve a problem and fulfill a need in your business, but it isn’t the entirety of your business. As you start working on your Amazon FBA business plan , think through what sort of business you are building. Amazon FBA can have a role, but so might other sales and distribution channels. Here are five things to keep in mind as you write your Amazon FBA business plan.

1. Determine what kind of Amazon seller you’ll be

Your business will be selling products online. So, what products will you be selling—and what sort of seller will you be? Depending on the types of products you want to sell, you’ll make different decisions about choices such as product sourcing and your overall business model. Here are three models to consider : Reseller, Private Label, or Proprietary.

A reseller sources products from other companies and then sells them to customers on Amazon. Being a reseller can be the easiest and cheapest way to get started in Amazon FBA. Startup costs can be as low as $500, depending on the products you are purchasing for reselling.

However, the downside is that other companies can just as easily follow the same model (and sometimes Amazon itself sources or creates products that may be the same as yours). It may also be challenging to figure out how to stand out in the market. If focusing on a reseller model in your Amazon business plan, examine competitors, similar products currently on the market, and what sort of marketing and promotional strategies can help you build sales and a customer base.

Private Label

If your focus is on building a recognized product brand and growing customer loyalty, while primarily sourcing pre-made products you can resell, a private label Amazon business model could be a good fit for your business. Manufacturers worldwide specialize in creating unbranded products that other companies can brand and sell. Also known as a “white label” product, building your business around private label sourcing can help you develop a distinctive product brand that customers look for.

Consider focusing your business plan around the characteristics you want your brand to embody. That can help you identify white label products that are a good fit. A private label Amazon FBA business model may also require more capital, for investing in labeling, packaging, brand development, and marketing.

Proprietary

For the Amazon seller who wants to go all-in on business, marketing, product development, and commerce on Amazon and beyond, developing and selling your own proprietary products can have both the most work and investment, but also the best chance to stand out and profit in the market.

Developing your own product will require the most up-front investment and capital. Your business plan can discuss the risks and challenges your business might face during product development and getting products to market, and how you are prepared to meet those challenges.

Creating your own product also opens up opportunities to patent that product. Plus, it can be easier to sell your product in other stores or channels beyond Amazon.

Different business models have different impacts on your value proposition as an Amazon seller

As you make your business plan, examine each type of seller and its impact on your value proposition. How can you use a seller type to offer value to the customer and win sales? What problem will you be solving in the market, and how will one model help you more than another

2. Conduct market research and solidify your brand position

Between Amazon and its third-party sellers, combined Amazon carries over 353 million products . In 2018 alone, Amazon sales accounted for 49.1% of all US online retail spending, and over 20 million people visited the site each month.

While being an Amazon FBA seller can be an easy way to get your eCommerce business underway, it is also extremely competitive. As you develop your business plan, examine:

• Understand the needs and wants your product can fulfill.
• Who will want to buy your product, and for what reasons?
• Who might your competitors be, what sort of marketing tactics do they use, and where are there opportunities for your brand to perform better?
• How will you brand your business on Amazon and beyond? Figuring out your business’s branding can help build the customer base that will buy from you on Amazon and other platforms where you sell your products.

Key to your business plan and your chances for success are figuring out a certain sweet spot of what products you can sell that will make you the right amount of profit. When evaluating products to offer, also take a look at how much that product is searched on Amazon , how much competition there is for it or similar products, how easy it is to source your products from suppliers, and the right price point.

3. Sales and marketing strategy

Inside Amazon FBA, you can estimate the fees Amazon will charge you, but there will be other costs to account for in your business plan too. From social media to paid advertising, there are many ways to get the word out about your products. Your business can pay for keyword-based advertising on Google and Amazon. You can also work on posting to social media, as well as advertising or paying for influencer content creation on platforms such as Facebook, Instagram, TikTok, and Pinterest.

As you develop and implement an ads strategy, keep an eye on your average cost of sale (ACOS): Aim to keep it low enough to preserve profits, usually with an ACOS of 10% or less.

Also consider your overall sales strategy not just for Amazon, but beyond. What other retailers would be a good fit for your product? Will you have your own in-house eCommerce store on your business’s website? Having multiple sales channels can make your business more durable and help your operation weather ups, downs, competition, or other problems.

Another part of your sales strategy is sourcing. Many Amazon FBA sellers source products from other countries, such as China. Understanding your suppliers and the cost to acquire your products can help you make out your business’s costs, revenues, and financial forecasts.

4. Startup costs and financial projections

Depending on factors such as your business model, startup capital, and what products you plan to sell, you can then use your business plan to understand the financial path your business can take. As you develop the financials portion of your plan, try to find good estimates for costs such as:

• Supply and sourcing

Combined with an understanding of your profit margins and product costs, you can map out realistic financial projections as you start the business and begin operating it day in and day out. Running the numbers in your business plan can help you determine if your Amazon FBA business could be financially profitable. It can also help you evaluate if you need to take a fresh look at your idea to see what you need to change to make the business more viable.

5. Milestones and partners

You’ll need to consider sales and fulfillment milestones that help ensure that you are appropriately anticipating demand and not overspending or overestimating need. Outlining who you’ll be partnering with (vendors/3rd party fulfillment and quality assurance providers) will also be necessary here.

Succeeding in your Amazon FBA business also depends on knowing what goals you want to meet, and who you will be working with. Some of those milestones might be quantitative, such as an amount of gross revenue achieved or an overall number of sales.

Other milestones can speak to factors that can help you optimize your Amazon business. For example, if your business increases sales to a specified level, you might be able to reduce your unit costs by ordering more products at a time. Those volume discounts can add up quickly to significant additional net revenue on your bottom line.

Your overall business decisions throughout the year also depend on understanding market conditions, supply chain pressures, upcoming trends, and more. The key is to figure out how to best estimate demand, stock levels, pricing, and other costs, while overspending on inventory or advertising, and also not overestimating the market’s need or desire for your products.

Along with Amazon, your business will also rely on other stakeholders or third parties. If you are running the business with partners, or if you have employees or work with independent contractors, you’ll need to take into account their costs, compensation, and expectations. Noting your partners, such as suppliers, quality assurance providers, retail partners (in addition to Amazon FBA), and other service providers such as attorneys and accountants in your business plan helps keep those relationships top of mind.

As you work on your business plan and get your startup off the ground, there will be other questions to answer, challenges to meet, and opportunities to evaluate. Here are a few Amazon FBA tips that can help you get more out of your business and your Amazon business plan.

Build an audience outside of Amazon

Amazon is a powerful retail channel, but they are not the only game. Plus, having only one sales channel makes your entire operation dependent on only one company, which can put your profits or business at risk. Amazon can be a vital part of your eCommerce strategy. You can better weather business ups and downs, and potentially draw on more revenue streams, by having sales and marketing channels outside of Amazon. Develop active social media presences, partner with other retailers, and also look at selling directly through your own website. When you diversify your sales channels, you can spread risks and potentially grow sales more than with Amazon alone.

Optimize your Amazon product listings

Just like online content can be optimized for search engines such as Google, your Amazon product listings can be optimized to better fit customer expectations and Amazon’s own algorithms:

• Display multiple photos, including product images from various angles as well as in-use photos
• Make a simple introduction video, less than one minute, that talks about the product and shows the customer how it works and some of its key features
• Examine Amazon for search terms, or keywords, that customers will be using to find products like yours. Incorporate those terms throughout your product headings and text.
• Speaking of text, good product copy gets across not only what the product does and what it is, but how it fills the customer’s need or want.
• Add product FAQ to draw in more keywords and discuss other aspects of the product that customers want to know more about.

Get customer reviews

In your packaging and online correspondence, ask customers to leave an honest review about your products. You can learn a lot about how your product is or is not meeting their expectations. Plus, customer reviews can be gold mines for other product features or benefits to include in your Amazon description.

Leverage Amazon features

From Amazon Ads to enhanced A+ content , Amazon has a diverse range of features that sellers like you can put to work for your business. As part of your business planning, estimate a budget for advertising on Amazon, and also for creating visual and text content that can be incorporated into your product page’s A+ content. These are just a few of the many features that can help your Amazon FBA business sell more . Also check out Amazon’s global selling , multi-channel fulfillment , FBA customer service .

Our free Amazon FBA business plan PDF can give you the template you need to start setting up your Amazon FBA business—and start building sales and customers around the world. This Amazon business plan is just one of hundreds of free sample plans that have been time-tested by our team and by thousands of entrepreneurs all over the world.

Amazon is a competitive marketplace used by hundreds of thousands of sellers around the world. However, barriers to entry are low, and there is an opportunity for new sellers to find their niche in this market as well. Your Amazon FBA business plan can help you think through the challenges and opportunities that you’ll face in today’s eCommerce environment. You’ll also be able to identify potential business challenges—as well as milestones and opportunities that can help you both monitor your business’s progress and see where you can grow.

Whatever you want to sell on Amazon, get going: Get your free Amazon FBA business plan today .

Anthony St. Clair is a business copywriter, author of the Rucksack Universe travel fantasy series, and a craft beer writer specializing in Oregon. Learn more at anthonystclair.com.

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How To Start An Amazon FBA Business Action Plan

Apr 26, 2022

390 likes | 431 Views

Amazon launched a program in 2006 u201cAmazon FBA Businessu201d. It allows you to manage your eCommerce business efficiently. You source a product and send the inventory to Amazon. They keep your inventory in the warehouse and manage it for you.

Presentation Transcript

Amazon launched a program in 2006 “Amazon FBA Business”. It allows you to manage eCommerce business efficiently. You source a product and sends the inventory to Amazon. They keep your inventory in the warehouse and manage it for you. Once you start receiving the orders, they will pack the ordered unit and deliver it to your customer. Assured shipping, prime delivery, and time saving are the best pros of doing FBA business. Check Fulfillment by Amazon business model below.

FBA Business Model Step-1 Make an account on Seller Central. List your product on Amazon as FBA. Step-2 Make shipment labels for the products and get them labeled to the inventory.

Step-3 Forward the inventory to the mentioned Amazon warehouse. Step-4 Once your inventory reached the Warehouse, Amazon makes your listing active. Step-5 When you receive the order, Amazon will process them.

Amazon FBA Business With Plan Sign Up To Seller Central The first step to start the Amazon FBA business involves Seller Central registration. Fill all the input fields and provide necessary documents. They will moderate and activate your account. Start With Product And Niche Research A super hit movie demands super star cast and a great story plot. The same things applies to Amazon. Here, your product is a super star and story is a niche.

Few things to consider while doing product research for FBA:

Lightweight And Durable Product A seller sends his inventory to Amazon warehouse to start FBA business. Like other shipping careers, Amazon charge FBA fees to customer for order processing. The shipping fees depends on product weight. So, target a lightweight product and a durable product for FBA. It costs less Amazon FBA fees that will contribute to more profit. Try finding a product weighs between 1-5 pounds. A small, compact, and lightweight model costs less for product.

Competition And Demand The second thing to look for is competition and demand of the product. Shoes, garments, and grocery are good demand categories. But, you will find thousands of sellers competing to each other. So, it is a good idea to go for it? No, it is not a good idea to stat a new venture in this categories. See the above image. 1,00,000 sellers are competing on Amazon. It is in great demand though. Sellers have good reviews and ratings as well. But, think of competition, much higher.

So, it is better to look for a product having less sellers and demand is moderate and high. Do market research and Amazon research.

Jungle scout and Helium 10 would be an ideal option to find winning products for your business. Search products with advanced filters and get product ideas instantly.

FBA Fees As Amazon do shipment of your orders, so obviously they will quote you shipping fee. That fee is the FBA fee. The FBA comprises of shipping charges and referral fees (15% of the total sales amount). So, when you researching a product on Amazon and going to a conclusion, do check the FBA fees Amazon is charging for that product. Install Amzscout chrome extension to calculate approximate FBA and storage fees. Make an excel sheet and prepare a record of all products.

Avoid Category Approval Products You can sell anything on Amazon that fits their selling guidelines. But, Amazon does not approve selling all products without certifications and legal licenses. There are categories that needs approval to sell on Amazon. Grocery and Gourmet, Hazardous items etc needs certain certifications to get approval. If you are a retailer and selling a branded product (e.g. Nike shoes), you need to prove yourself as a legitimate retailer in order to start selling on Amazon.

Product Sourcing (Find the right supplier) Prepare a list of products you think are the best for launching on Amazon. The second phase is sourcing the products. To start with sourcing, you need to understand your FBA business model. Do you want to start with low stock inventory or want to give a moderate or huge start. Based on your planning and budget, i have drafted three best models to start FBA business for sourcing your product.

You will find an option in the seller central to scan the product’s barcode, scan the product at Walmart store and compare the price.

Amazon FBA has three models: • online arbitrage • Buy wholesale and sale retail • Private label / Wholesale An Arbitrage business refers to a trick of purchasing products at low and discounted prices from local stores, shopping malls, and stock clearance sites and list them on Amazon at higher prices. Suppose, you went to Walmart and found a product selling at 30 USD. Scan and check the product’s selling price on Amazon.

List it on Amazon in a single click, make an FBA plan and you are all set to sell it on Amazon. • Pros: • You can buy stock as required. • less investment • Easy delivery to home. • Cons: • You need to involve into product packing and labelling. • You need to forward inventory to Amazon warehouse. Less stock more shipping fees.

Buy Wholesale And Sell Retail No big companies sell their stock directly to retailers. It is because all retailers do not have a big space or warehouse to keep products and budget to pay for it in a single go. There is a distribution channel where companies or factories source their products to wholesalers. These wholesalers buy big quantities from them and allow retailers to buy limited quantities from them. . Once you have prepared the list of selected items to start selling on Amazon, start your hunt to find wholesalers.

Pros: • Moderate MOQ. • Easy shipping to Amazon warehouse directly by the supplier. • Good discount • Cons: • No branding, you are selling a retail merchandise of other brand. • Listing hijacking A Private label business is one of the best launching businesses for Amazon FBA. It gives your product an unique identity and a unique selling preposition to compete with the competitors.

Supplier finding sites such as Alibaba, Aliexpress, DHgate, and 1688 are best in the online industry to find such suppliers quickly and easily. You will get all that done with a decent MOQ sometimes for under 500 units as well. • Pros: • Packing, packaging, designing, and labelling from manufacturer. • Product stocking at much affordable quote • Wide opportunity to establish your private label name as a brand in the industry. • Cons: • High/moderate MOQ • High investment

Calculate Profits (Free Profit calculator sheet) You get the quotations from suppliers and manufacturers. Now, it is time to check whether a product worth a launch or not. Add MOQ, supplier price, shipping fees, Tax and other details to sheet. Check how much profit a product is leaving on every unit. Go for a product giving at least 100-150% ROI or $10+.

Call A Sample To Your Address And Test It Think like your customers. Will you believe on images and description available on supplier’s listing? Is it a genuine supplier, I am dealing with? Better not to keep a single loop hole that can risk your investment. Ask the supplier to send a sample product to your home address. Once you receive the product, test the product and its durability. Take suggestions from family members and friends. It will help you launch a better product.

Negotiate And Make A Shipment Plan Once you made a decision, it’s time to do a final discussion with the supplier. Negotiate with supplier for price and MOQ. Ask the supplier regarding the shipment plan. They will tell you the box size, cartoon size, freight forwarder details, and shipping carrier information. All this information would be required for making labels in seller central.

Product Inspection A visit to another country for product inspection is not everyone’s cup of tea. But, one can afford to spend on inspection company in the hometown of the supplier. Research an inspection company either on Google or Freelance marketplaces and get your inventory inspected for quality assurance.

Get Your Inventory Shipped To The Amazon Warehouse Once you have finalised the discussion with the vendor, open seller central and make a new Amazon FBA product listing. Once, you made the listing prepare label, download of barcodes and labels. Supply it to the supplier, they will dispatch it to the cartoons and unit boxes.

Optimize The Listing The shipment from supplier to Amazon takes between 7-30 days. So, this is the time to improve Amazon store. Do Amazon listing optimization, and prepare a good product launch strategy. Start with keyword research for Amazon product. Add relevant keywords to product description, bullet point, and title. Also, add partial match words to back end terms. It will help you gain more visibility on Amazon searches.

Product images keeps equal value in listing optimization. Add 5-7 relevant product pictures to the listing. You can ask supplier to provide it. Use Helium 10 chrome extension. It analyze and show listing optimization score.

Prepare Email Templates There should be a communication between a seller and a buyer. Amazon limits the FBA seller and customer communication to seller central only. But, it is enough to establish a communication channel. Prepare Amazon email templates to interact with your customers. When you get an order, shoot an order confirmation template to the customer within 24 hours.

Start Promoting And Selling Once your shipment reached the warehouse, your listing will become active. It is time to start promoting your listing and sell it to a wide Amazon audience. Amazon has various tools for you to grow your business. Run Amazon sponsored ads, throw sweet deals and discounts to your customers during product launch.

Amazon PPC Amazon had in-built PPC services for sellers and brands. You can make a campaign and get your listing visible on search pages. Target keywords that your customers searches on Amazon. Optimize your PPC campaign and get them land on your listing page. • Social Media Influencers You can take help of influencers in your industry. Find good social media profiles with good and engaging follower base covering relevant content. Make a deal and do paid partnership with them.

Social Media Hire a VA or start social media channels for your business. Do post content regularly and build a follower base for your business. Put catchy deals with discount codes to attract users. Make social media ad campaigns and run regularly. • Join Groups And Communities Facebook and Reddit are treasure to FBA sellers. Join FBA Reddit communities and Facebook groups. You will get access to Q/A sessions, case studies, and new marketing strategies.

Strategy To Get Initial 5 Reviews ERP The ERP stands for Early review Program. Amazon helps new sellers in getting initial reviews. Amazon appeals to genuine customers to buy and review it. It costs $60 for up to 5 initial Reviews. There is no guarantee of the program that you will get all 5-star reviews. If you are sure, your product is of the highest standard and good quality, then enroll for ERP.

Other Way To Start FBA Business Buy Pre-Owned Amazon FBA Seller Central Account You can start selling on Amazon without above methods. If you have good budget, you can buy existing Amazon businesses. Flippa, Empire flippers etc are best sites to source Amazon FBA business for sale. Discuss with sellers, audit their statistics and get the deal done. This way you can get a good selling product in hand with supplier details.

FOR MORE INFORMATION VISIT SITE www.fbafbm.com THANK YOU!

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Content development, content specialists, product examples, content management, web media print readers, readers of print, web strategy case studies.

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Web Strategy Case Studies:Amazon.com & RealNetworks

Preparing Content for the Web

There are consumption pattern differences among readers of print and Web media

Print readers tend to read in a linear fashion Web surfers may interact with an article and

read elements out of order Non-linear “Branching”

Design Issues

Some content specialists argue that vital information should remain “above the scroll” on all pages

Thus, some suggest that you write in “chunks” delivered one page at a time

“Chunks” Strategy

Repurpose print materials into “chunks” that each have a unique page

Add graphics and interactivity Each “chunk” is usually fewer than 150 words Text can be viewed on the screen without

having to scroll This is only one strategy – many sites do not

Examples of “Chunk” Style

McDonalds Nike Keebler

Web Writing Tips

More casual than print Use bullet-point lists Minimize use of hypertext links All links should be relevant Provide feedback option for readers

Building the Site

Ideally, the Web site team consists of: Copywriter/editor Graphic artist Web programmer

A public relations professional who can do all three increases their odds of getting hired

Usability Tests

Before publicly launching your site, it is not uncommon to conduct “usability tests” with a test audience to determine if the site is easy to navigate

Overview of Web Strategies

Success Story at Amazon.com Evolution of a Design Personalization and Automation

Failure at RealNetworks Communication is Content Development Rolling Stone Radio project

Success Story

Amazon.com is the world’s largest e-commerce site

During the dot-com “boom,” they hired aggressively as investor cash came in

“Bloated” and inefficient site infrastructure The site needed to streamline its content

development strategy This included a shift from an editor-created to a

user-generated content model

Has over 35 e-commerce main product categories and hundreds of sub-categories Each category has at least one full-time editor

Some have several editors Each editor is responsible for maintaining front

page of each “store” and sub-pages, including product detail pages

Amazon.com Content Management

With millions of products, Amazon.com needs help from the public to keep the pages up-to-date and filled with useful information

“User-generated Content”

Amazon.com Content Features

Reviews Listmania “How-to” and Buying Guides Product manuals Customer Images Ref-tags Discussion Forums Wikis

Listmania! Examples

Customers create their own lists to share with others Each item in the list is linkable to a product

Examples: Top 15 Movies of 2005 by fattyjoe37 The Best Albums of 2006 by volantsolo “Awesome Books” by fantasyrules

Guide Examples

Customers create their own guides to share their expertise with others

Examples: How to set up a wireless home network Taking a better picture with your digital camera

Visitor Experience

Customers indicate that they enjoy the “community” aspect of shopping

They trust the collective opinions of other shoppers more than the manufacturers

The “Amazon Review” has become a very powerful force in the industry Buying decisions are made for purchases both

off- and on-line

Customer Reviews

Amazon.com has thousands of unpaid writers voluntarily submit their reviews Top reviewer Harriet

Klausner has written over 12,000 reviews without pay for the site

Personalization at Amazon.com

Amazon.com developed an infrastructure where each visitor page is personalized

The homepage displays items that Amazon.com thinks you are likely to buy

Visitors indicate that they like the personalization

Amazon.com Personalization

Personalization technologies are also easy to manage and popular with visitors Previous purchase data collected Cross-referenced with other sales data A “personalized” store homepage suggests

products based on like-minded customers Includes “recommendations” embedded into page

Automation at Amazon.com

Data is king at Amazon Many examples of data driven automation

Channel management Web site real estate management system Automated e-mail measurement and optimization

Merchandising Customers who bought X also bought… Recommendations New releases, top sellers Purchase Circles

Advertising Automatic ad generation and bidding

Example: The Amazon.com Homepage Amazon’s home page is prime real-estate

The past: Every category VP wanted top-center Friday meetings about placements for next week were

getting too long, too loud, and lacked performance data Today: automation replaces intuitions

Home page is made up of slots Anyone can submit content for a slot Content is chosen based on real-time

experimentation

E-Commerce Staff Structure

Organized for execution How it used to be

This works rather better Small, cross-functional teams Able to execute end-to-end Self directed Established group goals and measure progress

TechnologyPeople

BusinessPeople

“Dumb idea!”

Electronic Media and E-Commerce

What makes the site attractive to consumers? Strong reputation for good customer service Secure from “hackers” Large selection of products Easy navigation

Clean Web design that maximizes click-throughs and/or sales

Amazon.com Design Evolution

Started with a few “tabs” representing each store But Amazon.com was expanding… More products = More “tabs” Should the “tabs” go?

A new design was needed

Lack of action could mean a mountain of “tabs” NOT A GOOD

Design Evolution

Initial redesigns focused on an index directory in the style of Yahoo!

This resulted in reduced sales

More redesigns in the index style

Sales still declined Customers wanted

the “tabs” back

Return of the “Tabs” Now only three tabs

“See all 35 Product Categories” Roll-over with mouse

brings up the index of all stores

“Your Store” Personalized store with

recommendations Logo tab

Default to front page

Lessons Learned

Use focus groups and user surveys to test out a design before it launches widely

Design can play a key role in how a site is perceived by its public

“Above the scroll” real estate is valuable so don’t waste it! A user should be able to navigate successfully

through the site without having the scroll the screen

Be aware of the bandwidth of your average user U.S. has shifted from a dial-up to broadband

environment Multimedia-intensive designs and sites are only now

gaining traction Your design strategy will depend on who your typical

visitor is Consider how minimal Google.com is Compare this to YouTube.com

Cost Efficiency

Advertise your site using viral and cheap techniques Amazon.com has stopped buying ads on

mainstream TV, radio and print in favor on online referral programs

Media advertising did not bring in enough revenue to justify the cost

The site uses promotions with other sites and “street” advertising to get word on in the influential communities

Communication is Critical

If there is a dependency on technology developers, then the content experts must communicate early…and often

A good project can fail due to poor communication

Anatomy of a Failed Project

Example: RealNetworks’ Rolling Stone Radio

Goal was to promote new “G2” technology A new version of

RealPlayer with optimized streaming media playback

RealNetworks

RealNetworks asked me to create a G2-exclusive Internet radio service

A business deal with Rolling Stone magazine was created

Rolling Stone Radio was born

Content Development

My background is in editorial development and the music industry

I led the creative team Design of the player Partnerships with music industry

Another team was responsible for the technical infrastructure and development of the software code

Rolling Stone Radio

Rolling Stone Radio was the first “mainstream” Internet music service

Introduced in 1999 Co-owned by RealNetworks

and Rolling Stone Multiple channels of music Interactive voting

Featured celebrity deejays David Bowie had his own 24-hour channel

Lots of “hype” from the media

So Why Failure?

Rolling Stone Radio had all the ingredients for success…yet it failed.

Communication Crunch

There was too little communication in the production team

The decision-making process was too decentralized Internal disagreements and chaos Technology team and content team clashed New technology changes were implemented without

informing the content team

Media blitz preceded the actual launch Several delays in the launch Release was late, product was ‘buggy’

Business Model, Anyone?

“Too much, too soon” Broadband wasn’t widely available yet Bandwidth was expensive

Customers enjoyed the site, but the cost of hosting the streaming media increased as more people “tuned in”

The project did not make money Streaming media is bandwidth-intensive Who is paying for the media servers?

Advertising revenue was not large enough to support the costs

Solid business model is necessary “Cutting edge” = “Bleeding edge”

Being first may not translate to success Key stakeholders in the content development

teams must meet and agree to “milestones” Each “milestone” is a mutually-agreed

“deliverable” in the product development cycle Deviation from the agreed-upon development is

discouraged

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