If you have found your way to this blog, chances are you want to learn how to become a successful Amazon seller using Fulfillment by Amazon (FBA). Whether to gain financial freedom, a scalable business, or a fun side hustle, you need to know how to do it properly for a successful Amazon business. This guide will help you learn a few things, including:
- What Amazon FBA is
- How the Amazon FBA process works
- Why it is necessary to use FBA to grow your business
- Where you can purchase your inventory from
- Some of the different Amazon business models
What is Amazon FBA?
FBA means Fulfillment by Amazon, where Amazon offers FBA to give an approachable selling option to several businesses. It is a means for thirty-party sellers to automate their order fulfillment and shipping services, and it follows a simple concept of Sellers selling and Amazon shipping.
FBA works for any potential seller low on storage or who can't process all their orders, and it makes owning a profitable ecommerce brand a realistic possibility. Amazon FBA business is a smart, cost-effective way to ship your items to many people. Even though you pay for the service, you are guaranteed excellent customer service, making your customers happy and resulting in repeat purchases.
Being a seller on Amazon FBA is perfect for you if:
- You have never tried to sell on Amazon, and you have been thinking of starting
- You want it to replace your full-time job and become a 9-5 income
- You want to build a business that will grow with you
- You have made successful sales in the past but have been stuck for a while and need tips to improve
However, being an FBA Amazon seller is not suitable for you if:
- You are not interested in doing the work
- You are looking for something to give you quick returns and overnight success
- You are interested in a hands-off business
How Does Amazon FBA Work?
The Amazon FBA business is pretty simple, and if explained basically, it lets you ship your goods to Amazon, and then they take care of everything else. So let dive in to have a better understanding of how Amazon FBA works in a few steps:
- Amazon will tell you which warehouse to send your goods to, and you should ship them there. However, you can minimize the process by working with your supplier and shipping your products directly to the Amazon Fulfillment Center.
- Once Amazon gets your products, they sort them and add them to your inventory and store them safely in the warehouse until they are ready to be shipped.
- With every order, you get, Amazon ships your goods to your customers within the two-day Amazon Prime shipping, and they also manage all the customer support, damages and returns. In addition, Amazon FBA processes the payments and also updates your inventory on a product sold.
- After two weeks, Amazon calculates your total sales, deducts the seller fees and then deposits your profits directly to your linked bank account.
Amazon introduced the Amazon Fulfillment by Amazon (FBA) program to deal with the Amazon seller's rising demands. The service allows sellers to use the Amazon distribution network and customer base to realize their goals and dreams. In addition, Amazon FBA relieves sellers from the processes and hustle related to inventory, such as packing and shipping orders, making it easy for anyone to start their business.
What are the FBA Fees?
Fulfillment by Amazon(FBA) is not free, and as much as it offers exceptional services, you will have to pay for them. Amazon charges five different types of FBA fees, and they include:
a). Fulfillment Fees
This is the cost that covers the shipping and packaging of Amazon's products, which may vary depending on the weight and dimensions of a specific product. Also, it is the cost for customer service, finding, handling and product returns.
b). Long-Term Storage Fees
These are additional monthly fees for any items pending in the fulfillment centers for over 365 days.
c). Monthly Inventory Storage Fees
These fees are based on the inventory volume you will store in the Amazon fulfillment centers.
d). Returns Processing Fees
It is the fee charged on orders where Amazon offers free return shipping
e). Removal and Disposal Fees
This is the per-item fee charged when a seller wants their inventory sent back to them or for disposal
f). Unplanned Service Fees
These are additional fees charged when Amazon receives your inventory without proper labeling or preparation.
How Much Do you Need to Start An Amazon FBA Business?
Currently, five costs are directly associated with starting your Amazon FBA business. These figures range depending on how much you are willing to invest and bootstrap some costs initially to have low startup costs. The cost of starting an Amazon FBA business will depend on many factors, but you can use as low as $500 to source products to start your business. FBA sellers are advised to start with an individual account, and then they can upgrade to a professional seller account when their sales start to grow.
Some additional costs you may incur include outsourcing things such as logo design, photography but they are not a must as some of these things a seller can do without spending any money. Some costs may include buying your stock and shipping the products to Amazon, and this you can start as large or as small as you may be able to or want. However, to reduce losses and risks, start small to see how your potential stock moves. Therefore the cost of starting an FBA Amazon business may vary where you can save money in some ways.
How to Sell on Amazon for Beginners Using FBA (Fulfillment by Amazon)
Now that you have understood what Amazon FBA is and how you can benefit from it, below are the exact steps on how to get started:
1. Determine your Products and Range
This is the first step if you want to make informed business decisions later on, and you should take your time on product selection. Then, try and look at the existing products from other sellers and ensure you stand a good chance of selling your products profitably. We have written in-depth about how to select the right product below.
2. Calculate Amazon Revenue
Calculating the revenue would require a seller to initially estimate their average monthly sales volume for their Amazon products. This is based on the product's sales rank and the current pricing. Then, to get the total revenue and potential profit figures, you can also add your cost price, shipping cost, and other fees discussed below. This helps an Amazon seller to know whether a product is worth pursuing and then if it is, places an order with a supplier.
3. Find a Supplier
Unless you are the manufacturer of the products, you will need to find a supplier to supply or make your products. There are several supplier directories you can look for but ensure you do your due diligence with any supplier you find. Alternatively, you could reach out to sellers you admire on Amazon or other sites and ask for recommendations.
4. Sign Up as an Amazon Seller
Create an Amazon account if you don't have one, and then you can register your new Amazon account as a seller account. Notably, ensure you read the "Before Your Register" section on their webpage as it provides you with information about the two types of Amazon seller accounts: Professional and Individual. If you don't know which account to choose, check the number of items you intend to sell. If your plan for selling on Amazon includes over 40 items, go for the Professional account. If selling a few items less than 40, the Individual account is the best option.
If you wonder why 40 items are the cut-off, it's simple. Amazon charges you $0.99 per item when selling on an Individual account, so if you are selling 40 items a month, you might as well pay for the $40 a month professional account. Once you choose the account type, create an account with your preferred email, provide your business name, mobile or telephone number, tax information, and billing method, and verify identity through a text message or a phone call. Your account is now created.
5. List your Products on Amazon
Product listings are one of the most critical aspects of your Amazon Store, and, unfortunately, some people ignore them. However, you should observe things for each listing, such as product title, images, product reviews, ratings, product category, features, and descriptions.
6. Create an FBA shipping plan
Ensure all your products are in good condition before you move them to Amazon's hands and do this following all the Amazon FBA guidelines. When it comes to shipping costs, the products you will be selling on Amazon are more impactful than trying to keep shipping costs as low as possible. Therefore, choosing the right products is essential at the first step.
Notably, all shipping costs should be reasonable and based on factors such as item weight and delivery time. Therefore, a heavy item, being express-shipped, will be more costly than a standard letter.
7. Generate your First Sale
Now that you are up and running, check on the products selling well and which ones are doing terribly to refine what you will be offering with time. Finally, ensure all your products are what the Amazon customers want, and you can know this by checking what customers shop the most.
What are the Amazon Business Models?
With an already created Amazon seller account, the next step is to find the right products to sell on Amazon FBA. There are five main ways people find inventory to use while selling on Amazon. They include:
a). Private Label
Private Label products are where you create, modify and customize your products or brand to sell online. The private label items will sometimes have your logo design, including Amazon.
This business model supports Amazon sellers who purchase in bulk or wholesale directly from their distributors or brand to sell on Amazon.
c). Reselling/ Arbitrage
This is a model where third-party sellers purchase discounted products online or from some retailers and sell them on Amazon.
This is purchasing products straight from the manufacturer who will fulfill your order and ship directly to your customer.
This model is where the Amazon seller creates their own products and sells them on Amazon.
How to Find the Best Product to Sell on Amazon
Before you decide to set up your Amazon seller account, you need to decide what you will be selling, which means picking the correct item. This step is essential since the products you decide to sell usually impact how you set up your store and generally conduct your business to achieve your revenue mark. To decide on what you will be selling on Amazon, they are a few things you should check on. They include:
a). The Market
One of the best ways to get a competitive advantage is finding and operating a niche market. With such a market, you will get a space with a customer base already with third-party sellers interested in buying your product. More often, you have a better chance of selling as an FBA seller than operating in the competitive market against big-time sellers while still meeting your customer's demands and standing out.
As an Amazon FBA seller, one of the most important questions to ask yourself is whether customers want the product. While operating your business in a niche market is superb, you also need to ensure that the product you are selling has a demand. Avoid selling products that are saturated in the market and sold with all the big companies.
Sales is a crucial metric to determine demand from FBA Amazon, but you can also evaluate demand by performing a Google search for products you want to sell on Amazon FBA. You can check the product listings or use a search volume tool like SEMrush to check how many people search for the product in any month.
For your price, strive to achieve a balance and avoid any products that may be too expensive to give you fair returns on investment. Even though some sellers thrive on purchasing expensive products to sell on Amazon, it may be a bit difficult to use this strategy successfully when selling on Amazon FBA.
To calculate potential profits, you will need to assess all potential costs for each product and some of these costs include:
i). Amazon FBA fees
Some of the Amazon FBA fees to be aware of before you start selling include:
- A referral fee is Amazon's commission for each item sold on Amazon. Its a percentage of the selling price depending on the product category and closing fees
- Storage fees where sellers pay for a monthly storage fee depending on how much inventory they have or the long-term storage fees
- Selling fees of $39.99 for professional FBA sellers and $0.99 charge per sales transaction
- Fulfillment fees to cover the packaging and shipping of Amazon's products depend on the product's weight and dimensions.
- Labeling where Amazon puts barcode labels on a per-item fee
- Repackaging fee when Amazon FBA repackaged your return items for reselling
- Long-term inventory storage fees for when products stay in Amazon warehouses for over 365 days
ii). Landed Costs
These costs are the collective costs for the production and transportation of your goods to Amazon warehouses, and they may include:
- Shipping fees
- Inspection and preparation fees
- Inventory storage fees
- Duties fees
After all, profit is made, and a seller deducts all the revenue costs. Therefore, it's advisable to sell products between $20 and $50 to allow healthy profit margins because selling above $50 may not be worth it. In addition, most Amazon customers don't like spending a lot of money on unfamiliar products.
As a new Amazon seller, one of the biggest costs you will incur are shipping costs and therefore, when choosing a product, think about the potential shipping fees. During your product research process, try to opt for products with affordable shipping costs and those that can be packaged quickly. Some other product research practices that can be helpful as a new Amazon FBA seller include:
- Picking products according to the data and not according to your liking as data can prove how Amazon products are currently performing
- Use any necessary tools that can mine Amazon data to find the perfect product in terms of profitability, low competition and also high demand
- Analyze a successful business by taking your time in the process
Competition is most of the time directly related to the market and demand, and it's a good way of determining how many similar products there are in Amazon and the opportunities for any potential Amazon FBA sellers. To determine the level of competition in Amazon, check quality reviews and ratings and the number of products.
How to Source Products for FBA?
After your product research, you have product ideas and have decided on the product to sell. Then, it's time to find yourself a supplier, and this might sound challenging and intimidating, especially to newbies. However, technology has made the process more friendly than ever and finding suppliers of any item is a simple process with some steps.
There are three steps to source and find the best products for your FBA Amazon business, and they include:
1. Research and Compare Relevant Suppliers
Since there are thousands of manufacturers globally, it can be changing for anyone selling on Amazon to secure the best suppliers for their Amazon FBA business. Some places you can find reliable and relevant potential suppliers include platforms such as Jungle Scout's Supplier Database or Alibaba.com. However, there is also a way to use sourcing agents to connect you to some of the best suppliers at the best quality and price. Notably, when sourcing for these agents online, always do your due diligence because as much as there are reputable sourcing agents, some are not genuine.
2. Contact the Suppliers for a Quote
Try to find about five suppliers and compare them in terms of quality, communication, price, and experience. You can start with an email list and send the initial email to potential suppliers to get a quote. Then, to make it easy on the same product, send to multiple suppliers through Alibaba using broad request for quotation (RFQ). After finding potential suppliers, vet them according to their responses and narrow them to the three best suppliers.
3. Evaluate and Modify all the Potential Amazon FBA product samples
Once you narrow the supplier list to the top best, order some samples, and this may cost up to $100, and shipping products will come via air. Once you have your samples, check how each supplier has satisfied all your product requirements, and if your items are working the way they should choose the best supplier. In addition, if you want branded packaging for Amazon stores, you can tell the supplier your exact dimensions before making your bulk product order.
4. Order and Ship your Amazon Products
Once you have decided on the supplier and worked out all the fine order details, it's time to get your items to Amazon FBA warehouses and start product sales. First, ensure you correctly price your items and determine the pricing terms and methods, and before paying your invoice, inspect your items before shipping them to Amazon warehouses. Once you decide on the shipping methods, wait for a maximum of six weeks for your products to be manufactured.
How to List a Product on Amazon
Image Source: Unsplash
1. Research relevant keywords for your Amazon FBA Product listing
The first step is to use the right research keywords for your listing, and this will position your product to appear among the top products before ready-to-buy customers. You can find these keywords by searching in Amazon for the top competitors in the search results and inserting their ASIN codes in the keyword Scout to sell all keywords used in the products. Then, go ahead and add them to your Amazon product listing.
2. Draft your Amazon FBA listing Title
When drafting the title, include the most relevant keywords for your product, which means these are the most used terms by Amazon customers. Ensure your Amazon FBA listing flows and is easy to read. In addition, ensure you use high-volume keywords for your competitors or sponsored brands to stand a chance to rank highly.
3. Use Bullet Points to Draft your Listing
Bullet points help inform your FBA customer of the product's main features and uses and do this by clearly explaining your product's selling points. Ensure your tone on the product detail page reflects the Amazon item you will start selling.
4. Draft your Description
Your description should include keywords and details that could fit your Amazon product listing in the bullet section.
5. Purchase a UPC barcode for your product
For you to be an FBA Amazon seller, Amazon requires you to have a universal product code (UPC code), and this is usually on the seller's packaging and is used to create their seller central list.
6. Find quality images for your Amazon FBA listing
Ensure you use high-quality and informative pictures when marketing your Amazon product which you can capture yourself and upload in the Seller Central. Alternatively, you can use a professional photographer to help you present better products to your potential customers on the product detail page.
7. Create your Listing in your Seller Central Account
As you have already prepared all your Amazon product listing elements, create the product listing in Seller Central. To create the product listing, you should add your item in the relevant product category and add a UPC under the product ID and then product title and own brand name. As you continue filling your listing to start selling, more sections will pop up and give different variations such as colors and sizes. Once you complete filling, click save, and your product listing will appear in Seller Central under the "Manage Inventory" section.
Pros and Cons of FBA
Amazon's FBA business is like a dream come true, and over the years, the Amazon FBA program has gathered an army of loyal customers to facilitate business growth. Therefore, you can make more online sales with a single seller account thanks to the already established market selling high-quality products. To help you decide if Amazon FBA is worth it, you need to know about its pros and cons:
a). Discounted Shipping Rates
Generally, Amazon usually has reasonable discounts for sellers and buyers when shipping products and their costs. The discounts may arise from the contracts between Amazon, their leading shipping carriers, allowing Amazon sellers to get great discount rates.
In addition, customers find benefits such as Free Super Saver Shipping because many orders will attract discounted shipping fees. Also, Amazon Prime Members will get free two-day shipping on all FBA products, which is a significant influence that may result in higher sales and better account health.
b). Unlimited Storage Space
If you arent using Amazon FBA, how much inventory can you manage to store realistically? If you don't have a warehouse, this will mean renting one and also, can you comfortably move and handle inventory on such a large scale?
Fulfillment by Amazon program wins when it comes to unlimited storage space because, for a cost, you get access to unlimited storage all over the country. Also, it doesn't have minimums, and you can even send a single product.
c). Effortless and Effective Shipping & Logistics
Amazon does everything for a seller, and therefore all a seller needs to do is keep track of their listings and ensure they are stocked on all products. Amazon FBA takes care of fulfillment from start to finish, and since this can be a challenge and take up a lot of time, it's a steal. Just for some Amazon fees, the burden will be off your shoulders.
d). Inventory Management
Amazon FBA takes care of your inventory, reverse logistics, return shipping labels, and manages customer inquiries. Even though they charge a fee to perform these activities for you, the amount of work lifted from your shoulder makes it worth it.
e). Customer Service Management
Amazon offers 24/7 customer support for all sellers through emails, chat or phone calls. In addition, you can use the FBA Amazon platform to take care of your own customer service needs and route all your service through one platform for easy management.
f). Timely and Quick Delivery
FBA products automatically get the Prime badge and therefore are eligible for Prime free shipping and shipping times. Also, you will not have to charge premium shipping rates for that since it's included in the service. Furthermore, with the many fulfillment centers worldwide, you're guaranteed reliable and timely deliveries as after an order is placed, the closest fulfillment center to the customer will ship their order.
g). Omnichannel Fulfillment
Apart from selling to targeted customers through Amazon, FBA Amazon allows sellers to access new multi-channel fulfillment solutions. For example, MCF service (or Amazon Multi-Channel Fulfillment) allows the seller to sell their products in different channels and platforms such as eBay or BigCommerce and still have Amazon fulfill them.
1. Long-Term Fees
Some of these fees like storage, fulfillment and long-term storage costs can pile, and they may eventually be a lot, especially with slow-moving products.
2. Precise Guidelines
FBA Amazon business usually has specific conditions for particular products such as bubble wrapping and poly bagging to guarantee the products will arrive at Amazon's fulfillment centers in the best condition. FBA Amazon sellers can alternatively allow Amazon fulfillment centers to prepare their products at a per-item fee.
How to Sell on Amazon FBA Like a Pro
One of the best things about Amazon's business is that you can test the waters and just go out there to try and figure it out on your own. But, unfortunately, you will find many videos online that tell you to wing it until you build your own brand.
However, if you would like to cut your learning time in half and minimize the costly mistakes along the way, there is a perfect way for you!
Enroll in FBA Masterclass
FBA Masterclass is a private program for qualified individuals who want to earn meaningful income on Amazon. The modules are designed for total beginners. You will learn to do everything through direct crystal instructions, from finding suppliers to launching products to scaling your business and everything in between.
When you join the FBA Masterclass, and you get approved, you get instant access to:
- 200 modules of easy-to-follow Amazon training
- Live expert coaching and mentorship calls from Monday to Thursday with Tom and team
- Private coaching from other 7-8 figure Amazon sellers
- Direct access to Tom in the FBA Masterclass Private Facebook Community
- New modules with updated strategies & advanced tactics added regularly
- Direct access to VIP guests such as 8-figure sellers and private equity investors
- Direct access to VIP guests such as 8-figure sellers and private equity investors
- Exclusive invitation to Level 2: a secret super-seller group
- Done-for-you templates and systems worth thousands - all included
- First-in-line access to partnership invitations and funding opportunities
Sign up for our free Amazon FBA Masterclass to gain the competitive advantage you lack to succeed on Amazon.
Frequently Asked Questions on How to Sell on Amazon FBA
1. What is the alternative to FBA?
The best alternative to FBA is Amazon Fulfillment by Merchant (FBM), and this is where your handle the order fulfillment yourself. This means you will be responsible for labeling, packaging, shipping, and safely ensuring delivery of all orders. You will also have to sort any returns or exchanges, and even though you will end up keeping more profit, it can be pretty exhausting compared to how much FBA costs.
2. What is the difference between an individual Amazon seller account and a professional seller account?
Individual Amazon seller plans are meant for sellers who will sell 40 units or less of the same product every month. In comparison, professional Amazon seller plans are meant for sellers planning to sell more than 40 units every month. A professional account will cost you $39.99 a month + selling fees.
3. What does an Amazon fulfillment center do?
Fulfillment by Amazon (FBA) allows sellers to store their products in Amazon's warehouses, and these centers pack, deliver the orders to customers, handle returns, and provide customer service. All you will need to do is ship your products to the centers, and once they receive them, they will store your stock in Amazon's fulfillment center.
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