I am all about blogging, publishing and making money online. In less than two years, I’ve built a stream of income that tops $10,000 a month and keeps on growing. There’s one work from home opportunity that I haven’t tried and it might be ready to beat them all.
Amazon made $11.3 billion in cash last year and this new home-based business puts you in front for your share.
It’s called Fulfilled by Amazon, more commonly known as Amazon FBA, and it could replace traditional shopping in the future. I reached out to a friend of mine that has been successful selling on Amazon for her help in finding out more about starting an Amazon FBA store.
If you’re as excited as I am about launching a home-based business and making thousands a month…you’ll want to read on!
Amazon FBA isn’t like the old-school model of selling things on eBay where you have to ship each individual sale to customers. Not only does Amazon act as the website to sell your products but it will also handle all the shipping as well with its massive warehouse network. It charges a fee for shipping services but the time and money saved by having this huge distribution has led to a revolution in shopping and small business retailers.
We’ll get to Patrice’s tips on starting an Amazon FBA business but first let’s look at why you should consider Fulfillment by Amazon and where it’s all heading.
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Online Shopping IS the Future
I’m amazed at how much Patrice makes each month and some of the other FBA stories I hear. Patrice wanted to keep exact numbers to herself but said her average monthly deposit from Amazon approaches five-figures and has been as high as nearly $14,000 around Christmas.
And that may just be the beginning of what you can do with an Amazon FBA store.
Online shopping is still just 10% of total retail sales in the United States but is growing twice as fast as traditional shopping. Besides the convenience and options for customers, retailers can cut their own costs by selling through a digital site instead of paying for a storefront location.
The undisputed leader in all of this is Amazon. Just two decades after the company was created in Jeff Bezos’ garage, the website controls upwards of 51% of the growth in the U.S. e-commerce market. That means for every $1 in online shopping growth, about $0.51 of it is bought on Amazon.
Can you imagine what could happen when virtual reality becomes a viable household gadget? Not only will people be able to get the best price and convenience of online shopping, they’ll also be able to get the experience…and e-commerce could explode higher.
As with any new type of business, especially one online, you want to start early and build your brand before the competition heats up. That’s why I was so excited to hear that Patrice would share her story with us and how to get started on Amazon FBA.
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My Guide to Selling with Amazon FBA Stores
I started my Amazon FBA brand late in 2013 after years of trying to make an eBay store work. I did alright selling on eBay but I never felt like I was getting anywhere. I would shop the local discount stores for deals and get what I could on Craigslist for resell but it was always an individual sale type of deal.
I was at the limit of what I could handle buying, selling and shipping each month and never made the kind of money I wanted.
I worked the same crappy retail job everyone has in their early 20s and have always been a good salesperson. I won’t say where I worked but will just say there is a big GAP between how happy people are in their commercials and how miserable I was working there. I hated my retail sales job but it did teach me about promotions and inventory management.
I went to a seminar in 2013 about setting up an Amazon FBA store and was instantly hooked. It had all the benefits of my eBay business but also had a passive income potential because I wouldn’t have to worry about buying, packaging and shipping.
With Amazon FBA, you only need to source your products once and Amazon holds all your inventory. No more late nights lurking around Wal-Mart trying to find products to sell and then hoping your basem*nt doesn’t flood and ruin all your merchandise.
FBA is better than drop shipping, where you sell someone else’s brand of products, because you can build your own brand and get to keep more of the profits. Finally, Amazon spends a ton on marketing to bring people online and the two-day free shipping offer is a huge incentive.
I wanna keep it short though because this article is already going to be long enough if we’re going to walk through the secrets to starting an FBA store.
Amazon FBA Guide Table of Contents
Getting Started on Amazon FBA
What Sells on Amazon FBA
Working with Suppliers for your Amazon FBA Empire
Branding and Packaging for your Amazon FBA Products
Creating your Amazon FBA Listing
Is Amazon FBA Really Passive Income?
How to Boost Your Amazon Product Ranking
How Much Can You Make with Amazon FBA Private Labeling?
Getting Started on Amazon FBA
The registration process for Amazon FBA is pretty quick with just a few things to confirm your identity and get your account started.
Your first choice getting started is whether to sell as an individual or a professional. The professional account comes with extra features and costs $40 per month. The individual account is free but you pay $0.99 for each item sold. I have never liked upfront fees but you definitely want to get the professional account because you’ll be selling way more than 40 products a month.
[I wanted to see how easy it was to get started on Amazon FBA so I went through the registration process. You’ll need to confirm your identity with a phone number and a credit card and then fill out some tax information. The whole process took me less than five minutes and I was ready with the FBA homepage below.]
Selling on Amazon can be done one of two ways, reselling other companies’ stuff or selling your own products. There are a lot of people that do really well reselling other brands, especially around Christmas if they can find the hot seasonal toy. There are a few Apps like Profit Bandit that you can use to scan bar codes in the store to instantly tell you prices of something on Amazon and decide if you can make a resell profit. I did this on eBay for more than a year but don’t like it for two reasons.
- Profit is much lower. Even buying from discount stores and Wal-Mart, you’re not going to make much per item selling it on Amazon. Include the amount of time it takes to remove price stickers and ship, and it’s just not worth it [IMHO].
- Items sometimes get restricted on Amazon because of too many counterfeit sellers. You can usually wait it out and return to selling normally but you could miss the fad and be left with lots of unsold inventory.
[There definitely seems to be more money in private label FBA but I’ve talked to some Amazon resellers that do very well also. Reselling seems a little easier for some because you don’t have to worry about sourcing a supplier and it’s a little more like people are used to selling. We’ll follow up next week with another article on the reselling strategy on Amazon FBA]
I prefer to go the other route, branding my own products also called private label Amazon FBA. The profits are better and you can really build a following for your products. I have always enjoyed staying in shape so fitness and health products were a natural choice. I have a whole line of fitness equipment and nutrition supplements. The idea is to find generic items that already sell well on Amazon, find a manufacturer, stick your label on them and build your business.
Where years ago you would need a huge staff to run your own retail operation, Amazon FBA has changed the name of the game. Now one person can run their own company by outsourcing individual tasks and using Amazon as their sales channel. I’ll go over everything in more detail below but basically, you contract with someone to make your product and stick your label on it. The manufacturer ships your inventory to the Amazon warehouses and all you do is make sure you’ve got stuff to sell and maybe do some marketing. Amazon ships your products every time there’s a sale and puts the money in your account.
[Patrice is being intentionally vague not mentioning or linking to her product pages. One of the ways Amazon ranking works is that the site measures actions per visitor to gauge the products sellability. If a bunch of people click through to your product but don’t buy anything, Amazon sees it as a sign of a weak product and it may hurt its rank. We’ll talk more about how to get your products to rank in an upcoming article.]
The #1 ranked Amazon FBA book on Kindle, Amazon FBA Blueprint, is a great source for the complete detail on everything you need from start to finish. Details finding your niche and the perfect product to working with suppliers and driving traffic to your Amazon page.
What Sells on Amazon FBA?
Once you’ve decided whether to resell or to do private label Amazon FBA, it’s time to nail down a few product ideas. You’ll want to go with a combination of what sells well and what you enjoy. You’re going to be spending a lot of time learning and talking about the product category so you absolutely have to enjoy being in that line of work.
Start by looking at the Amazon Best Sellers’ list, a page of all the best-selling products within each category. Click through to the categories in which you think you would like to sell products.
Looking through the category, you want to pay attention to products that are light-weight and fairly generic. You don’t want anything electronic or technical or something with a lot of moving parts. With a few ideas in mind, try searching for the type of product on Amazon, i.e. search for ‘exercise bands’.
Record the price, Amazon best-sellers rank and the number of reviews for each of the five or ten top search results. Most of these are found in the product details section if you scroll down the page. The idea is to find a product where it doesn’t take a lot of reviews or sales to break into the top rankings.
- Products between $15 and $60 work best. Higher value products will be more competitive while lower price stuff might not leave enough room for profit.
- Best seller rank should be greater than 1,000 in its category (which means there are at least a thousand products ranked better). This means even the top ranking products in a specific group are not highly ranked overall and yours may be easier to rank in the group.
- Reviews of less than two or three hundred. You will start getting reviews pretty quick but it’s tough beating products with hundreds of great reviews.
- A small product, less than a few pounds each, that can be shipped in bulk quantities.
- Look at the general quality of the listings for the top ranked products. Is it amateur hour or will it be tough to beat their professional-looking pages?
Selling successfully on Amazon FBA is a combination of having a good product in a category that isn’t very competitive. Don’t feel like you have to sell a certain product in your category. It’s much better to look around Amazon for a while and end up finding a product you can dominate rather than fail because you jumped at the first product idea.
The perfect product would be one where you can get on the first page of Amazon within its category. This means somewhere on that page currently is a competitor’s product that has less than 100 reviews (many of which might not be favorable) and has a best seller’s rank above 2,000 for the category or above 10,000 overall. The product category should be generic with no one or two huge brands dominating the space.
One last comment, try steering clear of products that are easily breakable. They will break in shipping and the buyer will always blame you, and will leave a bad review on your page.
Working with Suppliers for your Amazon FBA Empire
I’m American red, white and blue but it is harder than crap to find an American supplier for your Amazon products. Just a minute, rephrase, it’s harder than crap to find an American supplier that will manufacture your products inexpensively enough to make a profit for Amazon FBA.
I’ve tried. I’ve spent days trying to source my fitness and health products here and it just isn’t going to happen.
Save yourself the time and check out Alibaba. It’s the online shopping giant of China but they also have a huge business in wholesale supply. You search for the product you want to sell and will find thousands of suppliers offering bulk ordering. Check out a few suppliers for their required minimum order quantity (MOQ), manufacturing time, prices and different options.
I know it sounds really weird to thing that you are going to be producing and shipping internationally. It was a little intimidating at first and I didn’t think I was ready for that kind of business. Put it all behind you. The Amazon FBA process has been done so many times by so many people that its worked out pretty smoothly by the suppliers and is as easy as ordering anything online.
Emailing suppliers, you have to get beyond any squeamishness you may have for bargaining and negotiating! You can negotiate on everything, especially for your first test order.
Many won’t want to do it but they will provide you a sample for you to check before you commit to a large order. Suppliers will list their free on board (FOB) price which is an estimate of the price per unit but this will change once you start negotiating.
I usually only work with suppliers that have Alibaba’s ‘gold supplier’ status. This means they are verified as legitimate by Alibaba and pay a yearly fee. There’s still a chance you’ll find a bad supplier in the bunch but it gets rid of the scammers.
I would say put together a list of at least ten suppliers and narrow it down to three. Get a free sample sent from these three suppliers to make your final decision.
Branding and Packaging for your Amazon FBA Products
You don’t have to be a marketing whiz or a design expert to successfully build your own Amazon FBA brand. Like most steps in the process, success means finding the right people rather than doing everything yourself.
You’re going to need a logo and packaging design at minimum. Doing your product research on Amazon, you should have a few ideas on these already. Brainstorm a few ideas with friends and be as creative as possible, unique packaging can be that one thing that sets you apart and leads to higher sales.
Once you have a rough idea, head over to Fiverr.com
to hire a freelancer. I’ve used Upwork to find freelancers and designers as well but I like starting on Fiverr. The projects on the site start for just $5 which means you can hire a couple of different designers and get a few logo or packaging ideas on a really low budget. Even if you decide to pay a little more to have the final logo design finished, it will save you a lot of money and you’ll get more ideas for the price.
Your supplier will take the logo and other design files and will do the rest. They will attach your labels and individually package your products for bulk shipping to one of Amazon’s distribution centers.
Creating your Amazon FBA Listing
It can sometimes take as much as four weeks for shipping your product to Amazon for warehousing. Use this time to craft a really remarkable listing. Again, check out the top ten or so products in your category on Amazon to get a feel for what’s there and what’s missing.
- Use quality images from your supplier. Get a few photo shoot pictures with happy customers using your product.
- Focus on feelings and the needs your product satisfies in the description. Explain exactly how it works.
- Be sure to describe why your Amazon FBA product is better than the competition.
You can use some bolded text and html language in your description. Spend a little time to really make an outstanding listing so your product stands apart from the rest on Amazon.
Is Amazon FBA Really Passive Income?
So this doesn’t sound like easy money or passive income so far, does it? Most of the work to this point has been setting up your FBA business and will only be a one-time thing. Once you’ve sourced your supplier and set everything up, the rest of the process for selling on Amazon is much more passive.
You’ll get a feel for how many items you sell on a weekly or monthly basis and how often you need to reorder from your supplier. Remember that stuff happens and your best shipping time won’t always be the average time. It’s best to refill your inventory at the Amazon warehouse a week or two before running out.
Beyond deciding whether you want to offer new products, the rest of the process is just marketing your Amazon FBA business and trying to boost your product ranking.
How to Boost Your Product Ranking
Your product launch is very important because it can help you get that initial boost that will put you higher in the product category on Amazon. If this happens, you’ll start getting purchases from the 80+ million people that use Amazon each month and you won’t have to do as much advertising.
- Try discounting your price a little for your first week or two
- Get as many friends, family and social connections to buy and review your product
- Consider a launch service like Zonblast or Viral Launch for an initial boost to sales and reviews
- Amazon advertising to get your product to show higher on the category page
It can take years for a traditional retail business to become profitable. It won’t take that long to be profitable on your Amazon FBA business but you may have to sell some of your initial order at a small loss to get those first sales and reviews.
Something that is working really well for me, and this is something that most Amazon FBA sellers are not doing yet, is running a blog related to my product category. I post to my fitness blog just once a week and get about 7,500 visitors a month. I use my own products when I exercise or to supplement my diet and actively talk about them in posts. I also have a product page that links to the individual Amazon page for each product.
Talking with other FBA sellers, I save a lot of money advertising because I have that natural audience that comes to my blog from Google search. Other FBA business owners have to pay for that kind of traffic through Google Adwords or some other advertising.
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How Much Can You Make with Amazon FBA Private Labeling?
How much does Ralph Lauren make? How much does Apple make? Ok, while you probably won’t reach that scale…you’re starting your own brand of products and can make a lot of money.
Products even in top thousand or so of their category can make hundreds of dollars in sales every day. If you make $5 on each sale and move just 10 products each day, that’s $1,500 a month in profit. That’s just on one product…now imagine you have four or five products!
There will be some up-front costs and this is what scares most people away. For my first product, a set of resistance bands, I paid $950 for 500 sets including shipping for a per unit cost of $1.90 each. It cost another $180 to design my logo and packaging but that will last forever so I don’t include it in my per item costs.
It cost another $2.85 per unit for Amazon to pick and ship the product for each sale so I was up to $4.75 on a per unit cost. I sold my sets for $8.95 each which was lower than I should have but I wanted to get some orders in to prove to my husband that we weren’t just throwing money down the drain.
Amazon also takes 15% of the selling price as its commission. Even on this discounted price, I made $2.86 off each set and just over $1,400 on that initial order.
Being successful on Amazon FBA will involve a little bit of math on your part. You need to understand the price you can get for something and then work back into your profit by talking with suppliers. I got lucky on my first product and they sold pretty quickly but I do have to do some advertising in addition to the blog.
I like to aim for a profit of at least 35% on my products, meaning my price on Amazon is about half again as much as the total costs including production and Amazon FBA costs. This leaves some room for advertising and I still make a profit. Doing just a little advertising through Amazon or by building up your own blog can send enough customers to your Amazon page to get your products to rank and get natural traffic on the site to do the rest.
Ok, I had planned on just a quick guide to start Amazon FBA but got a little carried away. There is more to it than just the basics but that will get you started and we’ll follow-up with other topics later.
Until then, you might try reading a few books on the Amazon FBA process to get further into the detail before you jump in with your own FBA business.
Another book called the Amazon Selling Blueprint, has more than 222 customer reviews and a five-star ranking. Promises to help you find and launch your first Amazon private label product within 90 days or less. Includes launch tricks and a six-step plan to keep a steady flow of sales on Amazon.
I want to thank Patrice again for an excellent guide to starting on Amazon FBA. She’s agreed to help out with a few more posts on the Amazon FBA process and how to make money selling online. I’m excited about the new online shopping opportunity and eager to hear your ideas and feedback on Amazon FBA.
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