Are you looking to make money on Amazon FBA? Whether you’re aiming for a side gig or a full-time venture, Amazon offers a golden opportunity for income generation. And guess what? The process of setting up your own Amazon store might be much simpler than you imagine, thanks to Amazon FBA!
Picture this: Amazon FBA, or Fulfillment by Amazon, opens up a whole new world of possibilities. They hand you the keys to their powerful infrastructure and abundant resources, making your selling journey smoother than ever.
So, what’s the scoop on this article? We’re here to guide you through the exciting process of making money with Amazon FBA. It’s not just about the money – it’s about using this service to give your business a turbo boost.
Table of Contents
What is Amazon FBA?
Fulfillment by Amazon (FBA) is a service offered by Amazon as a means for third-party sellers to automate their order fulfillment and shipping services. It’s a simple concept: Sellers sell, and Amazon ships.
FBA is an excellent way for many people to find their online sales and marketing niche on the Amazon Marketplace and other channels.
Everyone knows that Amazon works with third-party sellers, but many don’t know the full extent. Third-party seller products account for more than half of all units sold in Amazon stores — with 73% of Amazon sellers taking advantage of FBA.
Anyone can sell something on Amazon, provided they know where and how to do so.
How to Make Money From Amazon FBA
Step 1: Choose Your Starting Product
Picking your first product is where it all begins. It’s a crucial decision that sets the tone for your business’s success. Don’t stress too much, though – while this step can take some time, it’s all about finding the right fit.
Imagine this as the foundation of your business. If you choose a product that people want and can’t easily find elsewhere, you’re off to a great start. On the flip side, a product that lacks demand, faces fierce competition, or requires significant upfront investment might not give you the returns you’re aiming for.
To ensure success, take time to brainstorm and research. Explore different ideas and suppliers, which we’ll cover in the next step. Remember, this is a learning process, and your first product might just be the beginning of your journey. Now, let’s break down the process into simpler steps.
1. Think About What You Love
Start by considering your passions. What do you enjoy? What hobbies or interests do you have? Brainstorm product ideas related to these areas. Don’t limit yourself – think broadly at this stage. You can narrow down your ideas later.
2. Focus on Niche Markets
While “fashion” is broad, something like “men’s fashion” is more niche. Niche markets offer great opportunities. Look at your existing online presence. If you have a blog or social media following, leverage your audience’s interests to guide your choice.
3. Look Around You for Inspiration
Your own life can inspire product ideas. Do you have hobbies like gardening or DIY projects? Maybe your unique experiences can lead to exciting product concepts.
4. Research the Market
Once you have a potential product idea, it’s time to research the market. Imagine you’re considering travel backpacks. Here’s what you can do:
- Search on Amazon, eBay, and other retailers to understand prices.
- Use keyword tools to see how often people search for related keywords.
- Check Amazon’s Best Sellers Rankings (BSR) to gauge demand. Lower BSR indicates higher sales.
5. Avoid Heavy Competition
When choosing your first product, avoid competing with well-established brand names. If a product’s appeal is mostly due to its brand, you might face less competition by focusing elsewhere. Similarly, avoid categories with numerous highly-rated products; breaking in might be tough.
6. Consider Private Labeling
If you notice an opportunity to improve an existing product or enter a less competitive market, consider private labeling. This means using your brand name instead of the manufacturer’s. While it requires more investment, it helps you build a recognizable brand.
7. Flip Clearance or Bulk Items
For a hands-on approach, you can source products from clearance aisles in stores like Target or Walmart. This is known as “retail arbitrage.” Use scanning apps to compare prices on Amazon and calculate potential profits. You can also explore clearance items from the comfort of your home using Amazon’s tools.
Step 2: Find Your Product Source
Now that you’ve got your first product idea for your Amazon FBA business, let’s move on to the next step: sourcing your product. This step is crucial, so stay focused and energized.
1. Locate a Supplier
Your product’s cost plays a big role in your sourcing decision, making it a good idea to explore suppliers beyond your borders. If you’re considering domestic options in the U.S. or prefer local companies, you can explore trade magazines, online sources, or local tradeshows to connect with potential suppliers.
Whether you’re flipping through a trade magazine or navigating a tradeshows’ offerings, keep an eye out for suppliers who match your product needs.
Also, think ahead: check if these suppliers produce other items that could be valuable for your business down the line. Building a positive relationship with them from the start sets the stage for long-term success.
2. Select Your Shipping Method
Choosing how to source your product involves deciding on your shipping method: by boat, air, or train. This choice affects whether you’ll source domestically or internationally.
Shipping regulations can be complex, especially for international shipments. If you’re importing from overseas, you’ll need to consider customs procedures, taxes, and international shipping laws. While shipping by train is useful for longer distances, shipping by boat generally offers cost savings for international suppliers, helping you stretch your budget.
Greg Mercer of Jungle Scout suggests that despite paperwork and wait times, shipping by boat, compared to air, is more cost-effective and dependable. This method is particularly popular among Amazon FBA businesses looking to save money and ensure secure product delivery.
An alternate approach is shipping directly from the source country, like China, to Amazon’s warehouse. Keep in mind, though, that this method involves risks since you can’t inspect product quality before they reach Amazon. There might be fees involved if someone else checks the products. Account for Amazon’s storage and fulfillment fees to ensure a profitable venture.
3. Prepare for Fulfillment
Once you’ve secured your products from the supplier, it’s time to prep them for the Amazon Fulfillment Center. Amazon has specific guidelines for this, so make sure to follow them accurately.
If you lack the space or time to package products efficiently, consider outsourcing this task. Virtual Assistants or third-party services can handle quality control and packaging, allowing you to maximize your FBA business’s potential.
Step 3: Promote Your Product and Boost Sales
Congratulations! You’ve chosen your product and sorted out your sourcing. Now it’s time to amp up your product’s visibility and get it selling like hotcakes on Amazon.
Even though Amazon’s platform will give your product some exposure, there’s still work to be done in crafting a compelling product description and effectively marketing it.
1. Perfect Your Product Description
Your product is amazing, but you need to make sure potential customers know just how awesome it is. Start by optimizing your product’s title using Search Engine Optimization (SEO) techniques. Identify keywords that people commonly search for, and include them in your title to boost discoverability.
Remember, visuals matter too. Professional product photos are a must. People want to see what they’re buying, so invest in high-quality images that showcase your product from all angles.
Craft concise, error-free bullet points that highlight your product’s key features. Be clear about what sets your item apart. For instance, if durability is a selling point, explain how your product is built to last.
2. Develop Engaging Descriptions
Your product description is an opportunity to showcase your product’s features while adding a touch of personality. Paint a picture of how customers can use your product and where it might come in handy. This personal touch helps build trust and engagement.
3. Leverage SEO-Friendly Title and Images
Your product title should incorporate your main keywords and essential product information.
High-quality images of your product from various angles will help customers visualize what they’re buying.
4. Optimize Using Split Testing
To fine-tune your product listing, try split testing. Platforms like Splitly run tests on your listings, analyzing factors like price, images, and text to maximize sales potential. Optimize your listing based on their insights.
5. Utilize Pay-Per-Click (PPC) Advertising
Consider using PPC campaigns to expand your audience. Amazon’s PPC program can place your product on the first page of search results. This helps customers discover your product among the multitude of options.
Facebook is another platform for advertising. Create PPC ads or tailor advertising campaigns to fit your budget and target a specific audience.
6. Cultivate Positive Product Reviews
Product reviews are gold when it comes to marketing. Encourage satisfied customers to leave reviews.
Consider reaching out to bloggers or influencers who align with your product’s vibe for endorsements. Positive reviews can do wonders for your product’s reputation.
7. Delay Creating a New Website or Blog
While content marketing is effective, hold off on creating a blog or website if you’re just starting out. Content marketing requires consistent effort and might not provide immediate returns for new FBA businesses.
Focus on Amazon’s platform until your product gains traction. Once you see steady sales, consider expanding your brand with a website or blog. This move can open up new opportunities and elevate your business beyond Amazon’s marketplace.
Tips for Selling on Amazon FBA
So, you’ve got your Amazon store up and running, but if you’re aiming to really boost your profits using Amazon FBA, these extra tips are definitely worth noting:
1. General Liability Insurance
If you’re serious about growing your Amazon business, consider getting general liability insurance. It might cost around $800 to $1000 annually.
Once your monthly earnings cross $10,000, Amazon will require you to have this insurance. Even if you’re not making that much yet, having general liability insurance can protect your business from a range of risks.
2. Accounting Software
While it’s possible to handle your own number crunching, using accounting software is a smart move. It’s especially helpful in avoiding accounting mistakes. Having accurate records will also save you a headache in case the IRS comes knocking for an audit.
3. Product Research Tools
Tools like Helium 10 are your allies in finding profitable products. They help you identify items with potential for success and allow you to compare your business with competitors. These tools also help with keyword research, which is vital for effective marketing.
4. Continuous Learning
Consider boosting your knowledge with some additional education. A night course or online class in business basics could be incredibly beneficial.
While your first year of being in business is a great teacher, having a foundational understanding of business principles can make that initial year smoother.
How Much Money Can You Make Selling on Amazon?
Selling on Amazon is a popular way to start a business, and Amazon’s Fulfillment-by-Amazon (FBA) program is the go-to choice for many sellers.
Amazon FBA streamlines the selling process. You pick a product, send it to Amazon’s warehouses, set up your listing, and Amazon handles the rest. It’s easy and efficient, allowing you to focus on growing your sales and profits.
Let’s break down what you can expect in terms of earnings:
Based on data from Jungle Scout, here’s what Amazon sellers typically earn:
- Most sellers make at least $1,000 per month in sales.
- Some top-performing sellers bring in over $100,000 per month in sales.
- 45% of sellers earn $1,000 to $25,000 per month (between $12,000 and $300,000 annually).
- 25% earn $25,000 to $250,000 per month (between $300,000 and $3,000,000 annually).
- 17% of sellers make less than $500 per month in sales.
While many Amazon sellers are relatively new, their sales are impressive:
- 46% of small and medium-sized Amazon sellers have reached over $100,000 in lifetime sales.
- These sales milestones include ranges from under $25,000 to over $50,000,000.
Sales are important, but profits tell the whole story. Here’s a look at profit margins:
- More than half of sellers (52%) enjoy profit margins above 10%.
- An impressive 27% see profit margins exceeding 20%.
- 14% are working on becoming profitable, while 8% are unsure about their profit situation.
Remember, profit numbers can vary due to sales volume and business expenses. But Amazon SMB (small and medium-sized business) sellers generally report healthy profit margins.
Anthony Smith is an internet entrepreneur. He created the Side Hustle Ideas Database to help people find side hustles for making extra money, with the potential of turning into a full-time income.
After graduating from the University of Pennsylvania with a business degree, he gained business experience at a consulting firm. At the same time, he tried various side hustles including freelance writing, blogging, and eCommerce. He managed to turn his side hustles into a full-time business, earning over $3 million. Now, he enjoys financial freedom and travels around the world as a digital nomad.