If you want to build a successful online business (who doesn’t?), selling on Amazon FBA is one of the best options currently available to us entrepreneurs. Starting an Amazon FBA business is not as complicated as you think, but you must make sure you learn the basics before jumping in.
You might have heard about the people who are getting huge success by selling on Amazon – but, how does it work? What is Amazon FBA? And where can you learn how to start selling on Amazon FBA? Keep reading and you will find all the answers to all your queries along with a step-by-step guide to how to sell on Amazon FBA for beginners.
Table of Content
- What is the Amazon MarketPlace?
- FBA vs. FBM: Which is the Best for Amazon sellers?
- Why Amazon FBA?
- How Does Amazon FBA work?
- What does it cost to sell on Amazon FBA?
- What to sell on Amazon FBA?
- Why sell private label versus the other methods?
- How to Find Private Label Manufacturers?
- How to find a profitable product to sell on Amazon FBA?
- What is the best way to do Amazon FBA product research?
- What Product Category is the best for an Amazon FBA beginner?
- Will Amazon FBA still be profitable in 2020?
- How to promote your product on Amazon?
- Do you need a business plan for starting an Amazon FBA business?
- What are the best ways to improve sales ranking on Amazon?
What is the Amazon MarketPlace?
Amazon marketplace is one of the most popular eCommerce platforms for online retailers. By using the third-party seller platform, Amazon Marketplace, sellers are able to sell products at a fixed price with zero hassle.
By using the platform, any seller can get access to Amazon’s customer base. You have to set up a seller account before you start selling things on the Amazon marketplace. Once you do this, you will get two fulfillment options for products purchased: either fulfilled by the merchant (FBM) or by Amazon (FBA).
FBA vs. FBM: Which is the Best for Amazon sellers?
Fulfillment By Amazon, FBA, It is the service provided by Amazon for its third-party sellers. Product’s packaging, shipping, returns, customer service are all taken care of by them.
Amazon FBA allows third-party sellers to store their products in warehouses in exchange for a small fee. For each unit sold, you can spend time watching Netflix on the bed or traveling with your friends rather than spending time on packing and shipping people’s orders. Moreover, Amazon FBA offers full scalability so you can start small and in and gradually increase as your business grows.
Fulfillment By Merchant (FBM) is where the seller uses their own resources to control handling and shipping entirely. Here, the seller doesn’t have to pay any service fee or service inventory.
|FBA is a better idea if||FBM is a better idea if|
|The products have a fast turnover.||The products do not have a fast turnover.|
|The products are expensive, lightweight, and small.||The products are cheap, heavyweight, and big.|
|You do not have time and workforce to fulfill efficiently while still providing excellent customer service.||You have the time and workforce needed to fulfill the orders while still keeping customers happy.|
Why Amazon FBA?
Here are some of the biggest benefits of using Amazon FBA:
- Painless Logistics and Shipping- Managing your logistics requires human resources and time. The higher your sales get, the more time and money it takes to pack and ship your items. With Amazon FBA, you do not have to worry about logistics and shipping.
- World-class Customer Service- Amazon provides 24/7 customer service management, refunds, and returns to all the Amazon FBA sellers, only the return processing fee is charged in case of any return.
- Unlimited Storage Space- With FBA, you can send your products to Amazon’s warehouse for storage. There is no minimum to the number of products you can store there and whenever any customer places an order, the product is shipped from the nearest logistics.
- Quick Delivery and Free Shipping- Amazon offers same-day or two-day shipping of products to customers. With its hundreds of Amazon fulfillment centers all over the world, it provides quick delivery. Amazon also provides free shipping plans for its customers.
How Does Amazon FBA work?
Sign up for the program
First of all, in case you don’t have one already, you have to create a selling account on Amazon. When creating the account, you will find an option to add FBA. It is a very simple process and you will be done in just a few minutes.
Create the product listing and Inventory
The next step is you have to list your products on Amazon. You can either manually add one product at a time or all at once. Optimize the product’s title and description with the right keywords.
Send your products to Amazon
Before sending your products to Amazon, you should make sure that they are prepared for distribution and in perfect condition. After doing this, you must then choose your shipping carrier and send your products to the warehouse where Amazon instructed you to send them.
Amazon stores your Products
Amazon will then add the products to their inventory and store them safely. If any damage happens to the product in the process, Amazon will reimburse you. After you have sent your product, Amazon takes care of all the next steps. Whenever any customer places the order, the Amazon team packs the product and ships it to the customer’s address.
Amazon handles customer service
Amazon follows up with your customers if they have received the product and are satisfied or not. They also handle the returns.
What does it cost to sell on Amazon FBA?
Some people might suggest that you can start Amazon FBA business with a dollar or ten dollars – but we’re going to tell you the exact amount! You will need a small investment to start with Amazon FBA. If you are on a razor-thin budget, then honestly, Amazon FBA is not for you. I suggest you first work on getting some passive income streams going first, save money, and then start your Amazon business later on.
Software: You are going to need software to find the perfect product and do keyword research. You can use a basic complementary version for free, or you can invest in fully-featured paid software like Ranked Record, PPC optimization tools, launching tools, etc. If you buy all these software individually, it would cost you more than 500 dollars per month. So, to save yourself some cash, I suggest you either do the research yourself or subscribe to ZONBASE and let them do it for you. Zonbase is an extremely powerful, and cost-efficient tool for Amazon sellers that has every type of software you will ever need to grow your Amazon business
Samples: Once you find your perfect product, it’s time to order your sample. You have to make sure that quality is extremely high and that it looks the way you expect it to. The budget to actually receive an individual unit of product as a sample is $150.
Inventory: Inventory is the most expensive part of the overall process. As inventory is what you will be actually selling on Amazon. The number depends on the cost of your product but the minimum budget you should budget to start is around $1500.
Barcode or UPC Code: Amazon recommends getting a barcode or Universal Product Code(UPC) from GS1. Barcode from GS1 will cost $250 per 10 barcodes. But, you will get some cheaper alternative as well, for $40 for 10 barcodes.
Shipping: You can ship your product either by sea or air. By sea, it will take 30 to 45 days but it costs 1/10 or ⅓ of what it costs by air. You have to budget $500 for shipping your products. But, you will save a significant amount of money if you are going to ship them by sea.
Giveaways/PPC: To launch your product on Amazon, you will need the help of Giveaways and PPC marketing. You have to create a strategy with these two techniques to rank on top of the Amazon page. You have to budget $250 for both giveaways and PPC.
Seller Fee: The last expense that we are going to talk about is the professional seller fee which is $39.99 per month. Creating an Amazon seller account will give access to Amazon’s seller central. It is essentially the platform that Amazon created for its independent third-party sellers.
Course (Optional): One optional expense for you might be if you decide to join an Amazon FBA course or one on one mentorship. A good online course costs around $2,000 and individual mentorship is around $25,000.
Total Budget- So the total budget you need to get started with Amazon FBA is $2,787 (excluding course budget).
What to sell on Amazon FBA?
For the Amazon FBA business, you can source products in different ways. Here we will discuss the major 3 ways-
Retail Arbitrage – Retail Arbitrage is buying and then selling products at a higher price. There are many liquidation stores that sell products at very low prices. Profit is earned by buying these products at low prices and selling it on Amazon at a much higher price. Retail arbitrage is very difficult to scale as you have to constantly find products to list on Amazon.
Online Arbitrage – Online arbitrage is similar to retail arbitrage but the difference is here you source products from online stores. Here you can get products in person or online and can sell them in different countries at varying prices.
Wholesale – Wholesale is buying bulk orders directly from the manufacturer at a discounted rate and reselling it.
Private Label – Private label is the process of getting products from the manufacturer and selling it under your brand name. The manufacturer has no right over the label or brand.
Why sell private label versus the other methods?
Following are the key benefits that you will get selling private label product over others:
- Profit margins- If you find the perfect product, then the profit margin can be extremely lucrative. To get a manufacturer and add your brand to the product might cost you more but you can sell your products at higher prices. Private laver products are usually cheaper to make as compared to national brands, so they have higher profit margins.
- Branding- You have full control over the product label and brand. This way you get to create your own value and reputation. It gives your business identity. If the buyers liked your product, they will recognize your brand and keep buying it in the future.
- Control over the Process: You control the whole process including how many products to order from the manufacturer when you want the products, etc.
How to Find Private Label Manufacturers?
You can find many manufacturers that sell quality products at low prices.
Get Help From Forums
Reddit- Many users have placed their queries on Reddit. You can search through these queries and find answers there. It is a good place to look for private label manufacturers. Warrior– Through warrior you can find a lot of advice about private label manufacturers. It is an internet marketing community and marketplace where you can get free as well as paid information.
Browse Through Marketplaces
Search through marketplaces for your product category. Once you find your product you can contact the manufacturer. Here are some popular marketplaces where you can find your product at much lower prices. Alibaba eBay American Greenhood
There are some online directories like SaleHoo where you can get data of over a thousand legitimate and low-cost manufacturers.
How to find a profitable product to sell on Amazon FBA?
The key to building a successful Amazon FBA business is to find a profitable item to sell. Keep reading if you are ready to get some out of the box ideas and techniques that will help you with your product research.
Characteristics of Good Product
Price range between $18 and $50- Low product price makes it easy to cover some costs like Amazon charges, advertising costs, etc.
Small in size and lightweight- For Amazon FBA business, you will need products that are small in size and lightweight. It will be less expensive to ship from the manufacturer and sent to Amazon’s warehouse.
Simple to Manufacture- Avoid Products that contain glass that can create problems while shipping.
Low Seasonality- Find a product that is available all year round, not just one or two seasons.
Huge Demand and Low Competition: The profitable product is the one that has huge demand in the market but has low competition.
What is the best way to do Amazon FBA product research?
Amazon product research is the process of analyzing the market and current trends to find the perfect product. The product that you can get at a low price and would generate high sales by selling at competitive prices. There can be two ways to do product research: Manual and Automated Tools. But the best way to do Amazon FBA product research is through using automated tools as it will save you a lot of time and at the same time gives you accurate results. Here are some best Amazon product research tools:
Jungle Scout: Jungle Scout is one of the most popular product research tools for Amazon sellers. It is available either as a web app or chrome extension and allows sellers to quickly search through thousands of products. It even has free webinars, ebooks and case studies to help sellers.
AMZ Scout: AMZ Scout is a great alternative for Jungle Scout and provides a competitive way of finding products and keeping track of sales. If you’re unsure and want to try out the product before you buy, you can try it for free for 7 days.
Unicorn Smasher: With the help of comprehensive data and accurate sales estimates, this tool will give you the list of right products.
Zonbase: Zonbase has every single tool that you are going to need to be successful on Amazon. You will also get exclusive training on how to use those tools inside the platform. If you haven’t already done so, go ahead and take advantage of the FREE trial today and see if you like it or not.
What Product Category is the best for an Amazon FBA beginner?
Books: Books are one of the best selling Amazon products and their demand is not going down anytime soon. Whether it’s hardcopy, paperback or Kindle edition, books are more popular than ever, and they come with a huge profit margin.
Baby Products: As new babies are born there will be increased demand for baby products. These items are a great option because baby products are inexpensive, small in size, lightweight, durable and always in demand.
Jewelry: Jewellery products are always hot-selling items on Amazon. Yes, the market is saturated, but you have to be pro at marketing to make it profitable. The profit margin for this product can be 50%+.
Gym and SportsWear: People of all ages are want to be healthy and, for that, they need workout wear. It is another top-selling product on Amazon with a good profit margin. These are 4 popular product categories that can be best for you to start your Amazon FBA business as a beginner. Of course, there can be more product categories, you just have to use the right way to find what is best for you.
Will Amazon FBA still be profitable in 2020?
You might be wondering is it too late to start an Amazon FBA business? Is it too saturated? Is it worth it? The answer is it is never too late to start selling on Amazon and earn profit as long as you have the right product with you.
Amazon has become the world’s largest online retailer and will continue to dominate the market in the coming years. Amazon FBA is a profitable business to start in 2020. The stronger you will enter Amazon with your product and strategy, the better you will do there.
Fascinating Amazon Statistics Sellers Need To Know in 2020
Here are some interesting Amazon statistics that might interest you:
- Amazon is visited by 206 million people every month.
- 89% of online buyers agree they prefer Amazon over other Online eCommerce sites.
- In 2019, 103 million people have Amazon Prime membership in the U.S.
- More than 50% of Amazon sales come from third-party sellers.
- On March 31, 2019, Amazon’s revenue was $241.545 billion which was a 25.03% increase from last year.
- 82% of the total Amazon sells go through the Buy Box, which makes is essential for Amazon sellers to get eligible for it.
How to promote your product on Amazon?
The first step towards building a successful Amazon selling business is being a proactive seller. You have to market your products right for the sale to start coming.
Create a good product listing and optimize it., By adding a great product picture, a catchy title, and a detailed description. you will convert more and more views into sales.
Make sure you also include the right keywords in your product description and title to increase their ranking on search engines like Google. If you don’t know how to do this, there are several online SEO tools available to find popular short and long keywords.
The photos of your product on Amazon plays an important part in the selling. Either hire a professional photographer to do the job or, are running on a low budget, try editing the photos yourself using software like Photoshop.
Finally, be sure to market your business on social media and/or on your blog. You can also create PPC campaigns and send emails to your contact list to get maximum brand exposure and start generating interest from customers.
Do you need a business plan for starting an Amazon FBA business?
Like any other business, yes Amazon FBA business also needs some planning and a business model before launching the product and also after it. You start planning by finding the right product that is going to bring you profit and make your business successful. Other parts of planning include finding the right manufacturer and creating marketing strategies.
What are the best ways to improve sales ranking on Amazon?
When you first launch your product, Amazon has no idea what it is since no one has bought it. Amazon doesn’t know that it is going to be a successful product but there are two ways to improve sales ranking on Amazon: Giveaways and PPC.
Giveaway is giving out products with discounts or offers to make it sell more than the products that are on page one.
PPC is marketing on Amazon, it stands for pay-per-click. It allows you to actually advertise your specific product, every time somebody searches the keyword garlic press. You can actually advertise it on the top.
If you combine giveaway and PPC you are going to rank on top in no time. You can use both to launch your product to page one for the keyword that you actually want to rank for.
By optimizing the product listing with the right keywords will also help your product to appear on the Amazon search result.