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So far, we have focused on how to sell on Amazon using FBA, which is a way of selling with your own inventory. On the other hand, did you know that Amazon has a sales method called "no-stock sales"? This term is familiar to cross-border EC sellers, and even those who are just starting out in cross-border EC may have heard of the term "inventory-less" selling. In this issue, we will introduce the method of selling without inventory, its merits and demerits, and the differences from FBA for those who are considering selling without inventory on Amazon.
First of all, let us introduce you to what kind of sales method is "stockless" selling. Inventory-free selling is a selling method in which you list your products on Amazon without stocking them, and purchase and ship them when you receive an order from a customer. Since you can start selling without carrying inventory, there is no need to prepare funds to purchase products and no risk of carrying inventory. For this reason, this is a popular sales method for students, housewives, and company employees starting a side business who do not have enough cash on hand. The specific process is as follows,
THIS IS THE FLOW OF SALES. AT FIRST GLANCE, THIS SALES METHOD SEEMS TO HAVE MORE ADVANTAGES THAN FBA BECAUSE IT REQUIRES LESS CASH ON HAND AND CARRIES NO INVENTORY. WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF SELLING WITHOUT INVENTORY?
Here are some of the advantages and disadvantages of selling without inventory.
No risk of holding inventory
Can be implemented without reserve funds
It takes time to get products to customers.
Risk of fluctuation in purchase price
・Risk of selling out of stocked items.
Need to do everything from packing to shipping by yourself.
AS MENTIONED ABOVE, THE BIGGEST ADVANTAGE OF INVENTORY-FREE SALES IS THAT THERE IS NO RISK OF HOLDING INVENTORY AND IT IS POSSIBLE TO CONDUCT SALES EVEN WITHOUT CASH ON HAND. IN CROSS-BORDER EC, HOLDING INVENTORY IS A MAJOR RISK. NOT ONLY DO YOU NEED TO SECURE A PLACE TO STORE YOUR PRODUCTS, BUT YOU ALSO NEED FUNDS TO PURCHASE PRODUCTS. IF THE PRODUCTS YOU PURCHASE DO NOT SELL, YOUR CASH FLOW MAY DETERIORATE. THE ABSENCE OF THESE RISKS IS THE BIGGEST ADVANTAGE OF INVENTORY-FREE SALES AND THE REASON WHY MANY SELLERS EASILY START SELLING THEIR PRODUCTS.
The disadvantage is that it takes time to deliver the product to the customer, since the product is purchased only after it has sold on Amazon. Delayed delivery of products may cause customers to complain and lower your reputation. In addition, although the inventory-free sales process involves listing items with an estimated purchase price, there is a risk that the purchase price will be higher when the items are sold. This may result in a loss, as the initially expected profit cannot be earned. In other cases, you may not be able to get to know the products because they are sold out, or you may have to do everything from packing to shipping by yourself.
In other words, it is a sales method with many advantages in terms of inventory risk and cash flow, but disadvantages in terms of customer service.
EARLIER, WE INTRODUCED THE ADVANTAGES AND DISADVANTAGES OF SELLING WITHOUT INVENTORY. SO, WHICH IS BETTER, FBA OR INVENTORY-FREE SALES, WHICH WE INTRODUCED IN THE PREVIOUS SECTION?
Improved operational efficiency and reduced workload
Short lead time
International shipping costs can be reduced.
This is an advantage that inventory-free sales do not have, and it also makes it easier to get good feedback from customers. On the other hand, it does require inventory risk and ready funds.
THE FOLLOWING TWO POINTS ARE THE ADVANTAGES OF NON-STOCK OVER FBA.
No risk of holding inventory
No reserve funds required
THIS IS AN ADVANTAGE OF SELLING WITHOUT INVENTORY. AS YOU MAY HAVE NOTICED, FBA AND STOCKLESS SALES ARE TWO CONFLICTING SALES METHODS. IT IS IMPOSSIBLE TO SAY WHICH IS BETTER, AND IT DEPENDS ON YOUR SITUATION. PLEASE CHOOSE THE SALES METHOD THAT BEST FITS YOUR SALES SITUATION AND PLAN. IF YOU ARE THINKING OF STARTING SMALL, WE RECOMMEND YOU TO USE THE STOCKLESS SALES METHOD, WHICH DOES NOT REQUIRE INVENTORY RISK AND PREPARATION FUNDS.
In this issue, we have introduced what is stockless sales, its advantages and disadvantages, and how it differs from FBA. We hope you have understood that there are advantages to selling inventory-free in terms of inventory and funding. For those who are thinking of starting out easily, we recommend Amazon's inventory-free sales. However, you should keep in mind that there is a risk of slower lead time and a risk of loss of reputation and suspension from customers.