Amazon FBA 101: What You Need to Know to Get Started
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Starting an Amazon FBA business has become one of the best business models today.
People are getting used to buying everything online. And with current events, Amazon has made it possible for shoppers to get their purchases fast.
But what does it take to start an Amazon FBA business?
Let’s find out.
What is Amazon FBA?
In simple terms, Amazon FBA means Amazon ships what you sell.
It takes away the headache of managing inventories, storage, and shipping of your products.
When you’re trying to grow a business, as they say, time is gold.
The time you saved from handling your products could turn into investing more and expanding your brand.
You will never worry about the struggles of delivery taxes, shipping fees, and 24/7 customer support.
This removes a big part of your operation and allows more time for yourself or your business.
How does Amazon FBA work?
The goal of FBA is to do most of the hard work for you, and it makes your day a whole lot easier.
Jeff Bezos started Amazon in 1994, named after the biggest river in the world. With the goal of being the biggest e-commerce brand in the world, he only started as an online bookstore.
He has the vision of selling all the products he can, hence the arrow pointing from A to Z in the logo.
As of today, Amazon is one of the most popular and biggest online shopping stores in the world. It’s great to know how it works before you jump into Amazon FBA.
First, you need to register your Amazon account for FBA. After you log in, you can either add it to your account or register for a new FBA.
If you decide on a product to sell, you can immediately ship it to one of Amazon’s fulfillment centers.
They will sort, pack, and store it in their inventory and charge you accordingly. When you get an order, Amazon will take care of the entire transaction up to your customer’s doorstep.
Amazon will also handle most of your customer service from inquiries, refunds, and returns. Getting the convenience of their 24/7 customer support is also included in your fees.
Now you know how FBA operates, you have the basic knowledge to come up with a product that fits your interest. Find out the latest trends and what’s not working in the market.
What you need is a business that shows promise and can make a couple of thousand dollars at the start. Once you have the numbers, you can analyze and look for other ways to improve your brand.
There are over 180 Amazon fulfillment centers located all around the world. Finding the right market can give you a chance to launch your products in the international market.
- Amazon FBA works best for businesses by letting Amazon handle all the packaging, shipping, and customer service.
- Other perks that go along with it are unlimited storage, 24/7 customer support, and discounted shipping rates.
- To maximize your potential earnings, getting into Amazon FBA can reach more customers globally.
Why Amazon FBA Matters
Getting into physical stores seems like a lot of work nowadays. Especially for small business owners that are affected by economic uncertainty.
Amazon is one of the most trusted and popular e-commerce stores this 2020. The FBA program is taking another step forward to start or shift your business into the digital space.
There’s a lot of effort when setting up your logistics in your business. Finding a storage space, managing orders, and making sure that shipping goes well. This will be all provided by Amazon FBA.
There is also a lot of storage available at your expense. You can store your product from a single item up to any amount you have. If you own a ton of products, just check it with your preferred fulfillment center.
Shipping is also one of Amazon’s major perks. They partner up with big product carriers for discounts that would benefit you.
Lastly, Amazon has a great track record for excellent customer service which could help you and your customer feel safe.
How to Start Selling on Amazon FBA
You’ve done the homework and you know how it works, what’s next? We’ve compiled some easy, simple steps on how to sell your products on Amazon FBA.
Here’s a list of some actionable tips to get you started.
Find a product to sell
Choosing the right product can be tricky if you don’t know what your customer’s interests are.
You can explore your options by simply searching for any type of product you want to sell on the Amazon website. Gauging what market you’re going to invest in will help you analyze how much time and money you need to be competitive.
Make sure that your products fall in the same category and interest so that you have the option to cross-sell to the same customer.
Measure how the product performs
The best way to check the competition is to search for actual products that are already selling on Amazon. We recommend installing a product research tool called Jungle Scout to help you analyze the results from Amazon.
Jungle Scout brings up all the market data on the products like the sales per month, pricing, and reviews. It also helps you determine if there is a demand for the product and if it’s enough for you to join the market.
Finding a product with good sales may depend on your market and competition. The higher the demand means higher the competition and vice versa.
Find a supplier
Once you have a product to sell, you need to contact a few different factories that can supply your product. This is where you start to negotiate the best pricing and quality that can give you an advantage in the market.
It’s important to get samples from the factories to compare and decide which one has the best overall experience.
The next step will be placing your order and starting the production.
Set up your marketing
This will include your Amazon product page, sponsored ads campaign, and action plan to help you get initial sales.
The quality and presentation of your products are going to be crucial to your sales. Customers are pretty impulsive and one look at your product will let them decide if they’re going to buy it or not.
Using Amazon sponsored ads can help you get a competitive edge in your market. All you have to do is bid the right keyword and you will get sales.
Grow your business
Remember that this is a real business, the more you invest in time and money will determine how much you will grow.
Amazon FBA is a pretty straightforward business. Getting the right approach and practices will take time on your own.
It might be wise to get someone who can guide and give you feedback to reduce your losses. Less risk will mean more opportunities for you and your business.
- Find a product that best suits an interest and build your products around it.
- Find a supplier that gives the superior quality, deal, and experience.
- Marketing can make or break your product. Make sure that your customers will see your product at the right time and place.
How to choose what to sell on Amazon FBA
Amazon will handle all the work for you, but you need a product to get them going. Choosing a product might not be the easiest decision, but it’s the first step of your FBA business.
Here are tips on how to choose what product to sell in Amazon FBA:
- Find an interest.
First, you need to have an idea of what interest your product caters to. We suggest that you search Amazon for ideas of what product to focus on.
When you have a product in mind, you have to choose how you can get it.
You can get it wholesale for discounted rates, or simply buying a product then selling it
But other businesses make their own product. This works best depending on what market you serve.
- Search for a similar product on Amazon.
Researching your product can give you an idea of your customer’s interest and demand.
You can search a keyword in Amazon to check the listings and find out if there’s a great opportunity to jump in. Give more in-depth research by checking their price, reviews, and typical customers to measure if this is a great investment.
Make sure that the market is competitive enough to get selling but not so much that it’s saturated.
- Find a supplier.
For products that you can buy for a cheaper price, most people use Alibaba. They have a wide array of products you can review and possibly get a quotation.
When searching a product, find at least 20 results and get the average price to know how much the cost per item is.
The goal is to arrive at a competitive price that you can work with including all the fees for the process.
- Estimate costs.
Get estimated costs of the product from the supplier before you place an order. You can do this by using Alibaba live chat and ask a representative to give you a quote for shipping and cost per unit.
Also, consider how many units you will order. An ideal amount is enough to last 3-4 months. This is important when calculating your overall costs.
You can start by getting the average costs of buying and shipping your product to Amazon.
After that, the cost of storage and fulfillment fees should come after. This ensures your product is well taken care of by Amazon.
Some other fees will include a 15% cut from Amazon, branding fees, and marketing.
Estimating the cost might look hard at the start, but it’s simple once you get to do it a few times.
- Make sure you have a spare budget.
There are always unforeseen circumstances when running a business. For example, your initial sales might take time to return and you need another set of purchases to process.
Situations like these need immediate attention and it might fail if you can’t take action.
- Choosing a product takes a lot of process from researching, market competition, and practicality.
- Make sure to get the best deal as possible when choosing a long-term supplier.
- Anticipate that there will be some drawbacks and be prepared to take action
Things to consider before starting an Amazon business
Considering all these benefits can help you determine if Amazon FBA is the right move for you. At the same time, you have to consider the realities of selling on Amazon.
Here are some things to consider before you dive into Amazon FBA:
- It will cost you money
Starting an FBA business requires capital and sometimes the cost will depend on your market.
Also, Amazon charges for your storage and fulfillment fees, not considering other unplanned fees that pop up now and then.
Some of the unplanned fees are overdue storage, removal orders, returns, and other unplanned services.
Consider planning your budget and have contingency plans for emergencies.
- There is competition
Amazon FBA has been around for a while now. Getting into the trend is not new and it will take time to build up your product.
The good thing is you can research and see your competitors. You can check how they build up their brand and investigate if you can go against them.
One example is searching a main keyword and if there are more than 5 sellers with a thousand monthly sales on page 1, it might be hard to compete with them.
While if you have 1 to 3 sellers on page 1 with the same monthly sales, we recommend that you explore this product. This is where we usually find a sweet spot.
- Marketing your brand
Lastly, marketing will be the most crucial part of your FBA venture. Some business owners fall short of their marketing efforts and eventually fail the business.
Your presentation of the product from writing, images, and price can make or break your sale. You need to make sure that your products have a good listing that attracts your ideal customers.
When you set up your listing, the next step is to promote your products on and off Amazon. You can do this virtually anywhere but our best advice is to focus on Amazon sponsored ads.
This is where your customer is already in buying mode.
Once you put your product in the right place at the right time, it gives you a better chance than others.
- Set SMART goals and milestones when you start planning for your Amazon business.
- Prepare a good amount of money when you’re starting out. And make sure you learn the right strategies, especially with marketing and product launches.
- It also requires the dedication of your time and money to determine your growth. Learn the ins and outs of the business so you’d know what to look for when outsourcing tasks.
There is a lot to consider when starting an Amazon FBA business. But when all things are said and done, it boils down to how much time and effort you’re willing to invest to build a successful business.
Get access to our free step-by-step guide on how you can get your Amazon business started here.