Fulfillment by Amazon (FBA) as a Business Opportunity

I recently began looking into Fulfillment by Amazon (FBA) as a business opportunity. It sounds like a good way for someone to start a home-based online business while utilizing Amazon’s large customer base and distribution network.

How does it work? One would first choose a product to sell. It should be something you have familiarity or expertise with. If you’re unsure of what to sell, you can look at Amazon bestsellers in a category of your choice. From what I’ve heard, products costing $10 to $50 tend to be ideal choices. Think about what you’d buy online versus what you’d buy at a local store. Lightweight, simple products seem to be a better choice. If you try to sell something high-tech or expensive, it could prove to be more difficult in terms of customer service & satisfaction.

After deciding what you want to sell, you have to find a supplier that can make the product on your behalf with your own branding. One option for finding suppliers is to use a site like alibaba.com and look for Verified/Gold suppliers.

Suppose you want to sell gourmet coffee. You can do a Google search for “private label coffee supplier” or something similar. After interviewing suppliers and choosing one, you’d have to acquire their label template file and design your brand label (or hire someone to design it using a website like fiverr.com). The supplier would then produce the product with your label and ship it directly to Amazon.

Then you need to set up a seller account on Amazon, which does have a monthly fee. Plus, there’s a fee for storing the items in inventory. Amazon would store the product in its warehouse, and ship to customers after they purchase online. Amazon takes care of the grunt work, essentially. For their work, Amazon takes a commission, or cut of the profits. Thus, the product must be priced to account for your cost of manufacturing + Amazon’s profits + your costs for having a seller account.

To market your brand and product, you can use social media and offer free samples to people. You can’t explicitly ask for product reviews in exchange for free samples, but product reviews will help with visibility and ranking on Amazon’s site, and it helps build credibility for your product. Also, be sure to have high-quality photos of your product on Amazon’s selling page, and verbiage that specifies what benefits the customer will receive by purchasing your product.

I have not personally tried Amazon FBA. However, it sounds interesting and I’d like to look into it further. This is just a primer of what it is and what it entails. You can learn more at this link. If you have experience with it, please share your thoughts.

If you’d like to learn about other money-making opportunities and how to invest and build wealth in a halal way, check out my book: Open the Door to a Wealthier Life. It’s available on Amazon and Barnes & Noble.

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Halal vs. Haram Investment Choices

Muslims should strive to have earnings that are pure. This means that the money one earns comes from halal sources, without gambling, and without cheating or scamming anyone. Money can’t be earned by working for, or running, a company that provides a forbidden product or service. This would include, for example, alcohol, pornography, and pork, among other things. Additionally, interest, or usury, is prohibited in Islam, so earnings can’t come from giving out loans or interest-based investments.

As far as investing, let’s first look at some examples of what is not considered halal. Bank products are typically not allowed. For example, savings accounts, money market accounts, and certificates of deposit are all interest-based. In short, each of these investment options involves the individual giving money to the bank which the bank turns around and loans out to others. The bank earns its own interest, and gives a small cut of the profits to the individual.

Bonds are not allowed either. This includes both Treasury bonds and corporate bonds. Bonds are basically loans that the investor makes to the government or to a company, and that entity makes an interest, or coupon, payment to the investor.

So what is allowed? Trading stocks is permissible, but you do have to be careful. It’s not allowed to buy stocks for companies that produce products or services forbidden in Islam. Plus, you have to review the company’s leverage, or how much debt it has, as well as the company’s level of liquidity, or how much cash and cash equivalents it holds.

Real estate is also allowed. This can be either as a house that is purchased, fixed up, and sold at a profit; or, a home that is purchased and rented out to others for an income stream.

Sukuk, or Islamic bonds, are another option. I have a separate post that explains what sukuk are.

Additional options include venture capital, or investing in other companies, jewelry and precious metals, as well as fine art and collectibles. If & when those things go up in value, the investor can sell.

A couple of investment choices that I consider gray areas are commodities and foreign exchange. The problem with commodities is that they’re a speculative investment and might take advantage of others’ economic hardships. Also, commodities investing is often done via futures contracts, which I consider to be like gambling. As for foreign currency (or FOREX) trading, it’s not forbidden, but it’s typically done via leverage, or money that’s loaned to the investor by the broker.

This was a very brief overview of investment choices, but to find out more detail, check out my book: Open the Door to a Wealthier Life. It’s available on Amazon in paperback and Kindle format. Thanks for reading.

Conventional Bonds vs. Islamic Bonds (Sukuk)

Conventional bonds include corporate bonds sold by corporations and Treasury bonds sold by the government. These are considered debt investments.

Basically, the investor is making a loan to a corporation or the government. The investor will receive a principal payment after the bond matures, or expires, but will also receive regular interest payments during the life of the bond. Because of these interest payments, or coupon payments, conventional bonds are not considered halal, or permissible, investments according to Islam.

There is another option for Muslims, though, called sukuk. Sukuk are sometimes called Islamic bonds. Sukuk are typically sold by foreign governments or companies. As with conventional bonds, these governments and companies sell sukuk to raise capital, promising to pay back the principal amount, but they also pay out small distributions during the life of the sukuk. These aren’t fixed or guaranteed amounts, so technically it’s not an interest payment.

Sukuk are completely asset-backed, and those assets are being used to generate the income that allows for the distribution payments. Additionally, there is shared risk between the entity selling the sukuk and the investor.

Sukuk are considered a capital preservation investment. Sukuk provide a great way to diversify one’s portfolio so you have money invested in something other than the stock market. They won’t have high returns, but are relatively safe and definitely a better option than letting your money sit in the bank and lose value because of inflation. If you are setting aside money for a down payment on something or a college education, sukuk might be the right choice for you.

To learn more about sukuk and how to invest in them, check out my book, Open the Door to a Wealthier Life, available on Amazon in paperback and Kindle format. Thanks for reading.

Open the Door to a Wealthier Life

As-salaam-alaikum and welcome to my blog.

As Muslims, we have restrictions on how we can earn and invest money. It may seem like we are limited in our options, but in reality, the purpose of prohibitions is to keep us from harm. Plus, it actually simplifies things.

If you are looking for halal ways to make money and halal investing opportunities, you’ve come to the right place. I recently completed my book, Open the Door to a Wealthier Life. I not only explain how to get started in investing based on Islamic and ethical principles, but so much more.

What you will learn:

  • How to enhance your skill-set
  • How to maximize your income
  • How to minimize your expenses
  • What investment choices are available
  • Why to even bother investing your money
  • The difference between various investments
  • Which investments are considered halal and which are not
  • How to get started in investing on your own with minimal cash
  • How to finance a home without paying interest
  • How to prepare for retirement

A wealth of information awaits. Are you ready to open the door?

My book is available on Amazon in paperback or Kindle format.

Click here to purchase the paperback version.

Click here to purchase the Kindle version.