Over the past three years, my business has generated close to 10 million dollars in sales selling everyday products on Amazon. And in 2021, I sold one of my brands for multiple 7-figures.
My name is Tom Wang, founder of FBA Masterclass, and I’m going to try my very best to teach you how to make money on Amazon FBA.
This is a step-by-step process for beginners on how I source, launch, and scale profitable products in 2022 so that you can do it too.
An Introduction to Amazon FBA
You’ve probably shopped on Amazon before. But did you know that every single time you purchase something on Amazon, you’re probably buying from someone like me.
For example, let’s say you’re buying coasters. You head to Amazon.com, type in “coasters,” then you browse pages full of search results. You click through coasters that catch your eye, reviewing the pictures and the product detail page. When you find one you like, you click Buy.
Ca-ching! Someone on the other side just got to make money from home. That person is also known as a third party seller on Amazon - like me.
Now, I don’t actually make these coasters and ship them out to customers myself. So how does this work?
Well, this process changes year by year. As Amazon is constantly improving their platform, they are also updating their rules.
This means that it’s important to not rely on outdated strategies. If you follow strategies you found from previous years, you might end up breaking Amazon’s rules. And if you break Amazon’s rules, this can result in your account getting shut down permanently.
While there are more and more people selling on Amazon, there is virtually unlimited potential. In fact, I’ve recently doubled down on scaling my own Amazon businesses because there has never been a better time.
So, let’s break down how to start Amazon FBA, step-by-step:
Step 1: Find a Product to Sell
When getting started with eCommerce, I often see new entrepreneurs make two big mistakes. Here is how to avoid them:
A) Understand how your product solves a specific need.
Shoppers buy products to solve a pain point in their life. For example, weight loss pills boost self-confidence and healthy dog food gives pet owners peace of mind.
Whatever product you choose, it is best if you can personally relate to the need that it addresses. This gives you a deep understanding for how to improve the product, set yourself apart from competition, and care about the business even if things get difficult.
B) Do market research to validate existing demand.
Just because you want a product doesn’t mean others do too. It is critical to use data that informs which product you sell on Amazon. Customer demand, market size, and level of competition will help you choose a product within your budget that will help you hit your revenue goals.
I use a tool called Viral Launch (20% off) for Amazon FBA product research, which will make your life much easier. Using this tool, you can see a variety of helpful factors like:
- Search volume: How many people are looking up this product on Amazon?
- Sales volume: How much money are existing products making per month?
- Reviews: Are existing products easy or hard to compete with?
If you’re wondering how to sell on Amazon FBA, rule #1: look for a product that is small and easy to use with high search volume, good sales all year long, and low reviews.
Step 2: Source in Bulk
The best place for you to find a manufacturer is typically in China because you get decent quality for low prices. You can use a website called Alibaba to find them.
If you type in coasters, you see a bunch of listings for manufacturers, and through this platform you can request samples, look at the price, negotiate for the best possible price and quality, and then place your order.
It’s normal to be cautious about doing business with someone across the world, especially when you’re wiring thousands of dollars for a bulk order. What if they don’t deliver?
To ensure quality and mitigate risk, you will put down only 30% of the full price when ordering the product. When the product is close to complete, you can use a third party inspection agency in China who will visit the factory and do an audit of your inventory.
Once you know that the product is in good condition and up to your standards, you will send the remaining 70% of the money.
From here, your factory will send the products directly to Amazon’s warehouses so that they can automatically fulfill your orders for you. This is the beauty of FBA (Fulfilled by Amazon); you won’t have thousands of products in your living room or garage.
Step 3: List on Amazon
Your next step is to create your own store on Amazon so that you can create a product listing aka your product’s page (we’ll keep rocking with the coasters example).
After creating a Seller Central account, you will need to decide on the following listing components so that you can upload them for shoppers to see:
- Professional Photos: Up to 7 that showcase quality, benefits, and use cases
- Copy: Include as many relevant keywords as possible to index and rank
- Price: Be competitive with other sellers in your market, especially early on
Examples of professional product photos.
Because your product is in Amazon’s warehouse and they are handling fulfillment, you will automatically receive that Prime badge, signifying to customers that they can receive your product in two days.
Amazon will charge you a referral fee (8-15% of price) and a fulfillment fee that includes shipping. If your coasters are $10, Amazon might take $3 and you might spend $3 on your manufacturing and shipping, leaving you with a $4 net profit per item.
If you sell 10, 15, or 20 coasters per day on Amazon at $4 per product, that’s $40 to $80 in pure profit without a whole bunch of logistical work to make it happen.
Step 4: Rank on Page 1
When someone goes to Amazon types in “coasters,” you want yours to be one of the very first products that they see. There are thousands of coasters on Amazon, so to get that instant visibility, it’s important to get your product on page 1 for major keywords.
Amazon ranks products through their algorithm. It’s a pretty complex system, but in short, Amazon rewards sales. If you can drive sales through your listing, Amazon will raise it to the top of search results.
There are a few ways to drive sales to a newly posted product:
- Rank & Bank: This is FBA Masterclass’ secret sauce that uses external traffic.
- Amazon PPC: Pay-per-click ads allow you to target keywords for more sales.
- Influencer Marketing: Pay social media influencers to promote your product
As you’re ranking, also focus on gathering reviews while staying compliant with Amazon’s terms of service. Common practices include follow-up emails and physical product inserts.
If you’re wondering, “How long does it take to make money on Amazon FBA?” It depends on your budget, time commitment, and product. The average person can make money within 3-4 months of starting this journey.
Build a Thriving Amazon Business
I immigrated with my family from China to Canada, and I hustled hard ever since flipping tickets, brokering bitcoin, exporting cars, and even selling tangerines. When I finally started selling on Amazon, it took me a few tries to get it right.
First I tried hoverboards, then vitamin c serum, then beauty blenders… and they all failed. Finally we discovered our winning product, a derma roller, that was making a steady $200,000 per month. We had our challenges, but I don’t regret a thing.
Since then, I’ve launched many more products, coached thousands of students on this process, seen hundreds of success stories, and sold my business to Thrasio for multiple 7-figures.
Through all of this, I’ve nailed this process down to a science. Find a promising product, set it apart from the competition, get in front of shoppers, launch more products, and eventually sell for a 3-5x multiple on your annual profit.
Here’s a truth that you need to know. Amazon FBA is front-end loaded and is semi-passive. There is a lot of hard work to be done. There is a lot of learning. Because this is a real business, people go through a lot of pain and mistakes, and your first product may not take off completely for different reasons.
But most of the hard work is done before you launch a product - after a product is launched, you can reap the benefits for a very long time while putting in maintenance work.
The best part is that if you get this right, you have a business where you don’t have to clock in or clock out. You can make money online from anywhere in the world with ZERO experience, and I truly believe it is the best side hustle.
Sound Like a Good Fit?
Hopefully you have a good, high level understanding of Amazon FBA for beginners. By the way, I do teach other people how to sell on Amazon FBA.
I reveal my entire step-by-step system to launch products on Amazon in one easy-to-read book.
If this does not seem like a good fit for you, I hope you find something that is. Life is too short, and you deserve to live an abundant life.
I would love to hear any questions or lessons learned from your entrepreneurial journey in the comments. Cheers.