Selling on Amazon is a profitable way of making money where more and more sellers are setting up their Amazon businesses. To help with the rising demand of sellers, Amazon has developed an Amazon FBA service that allows sellers to leverage their distribution network and customer base to make their successful online business come true. Since starting your own business can be tough, the below tips will help you understand the whole process as a beginner.
What is Amazon FBA
FBA stands for Fulfillment by Amazon. Amazon FBA is a fulfillment service that Amazon offers to third-party sellers, and through the service, Amazon undertakes major business processes on behalf of sellers. It is a way for sellers to automate their order fulfillment and shipping services.
The Fulfillment by Amazon FBA processes includes shipping, storage, fulfillment and customer services. Amazon has fulfillment centers worldwide, and sellers usually store their goods in these warehouses until they are sold.
The Amazon FBA program allows a seller to sell on different channels on eBay, their e-commerce store and other market places other than Amazon.
Amazon offers many business models that fit your needs, whether you already have a product idea or not. Therefore, the first step to success as a beginner is choosing the right business model.
What are Some of the Amazon Business Models?
To choose the right Amazon business model, you should first understand all the business models. Then you should craft your business goals and find out what works the best for you.
a). Private Label
This is where you source your products directly from the suppliers, but in this case, the products will carry your packaging and brand logo.
This model involves purchasing products in bulk from manufacturers and selling on Amazon at retail prices.
c). Retail Arbitrage
This model is where you source products from online or physical retail stores, and they resell on Amazon at retail prices.
This model sources products from Amazon on behalf of its customers, and they get them to ship orders directly to the customer.
This is a model that creates customized designs. Notably, when making your own products, you will have to register with Amazon as an artisan and also, your products must be handcrafted and not mass-produced.
How does Alibaba work?
Alibaba is a global business-to-business e-commerce platform that connects brands and sellers with suppliers and manufacturers for hundreds of millions of products. In addition, Alibaba connects sellers with different suppliers worldwide to allow them to find high-quality products at super low prices even with a not-so-big product line or brand.
Amazon sellers use Alibaba because of its simplicity and a user-friendly site, and of course, the low prices. In addition, most manufacturers on the platform are based in China, where they can produce quality goods at more affordable prices than if you get the same product from Canada or the US.
Alibaba is a great option for FBA sellers looking to create their private label products unique to their own brand. In addition, the site is a great venue to locate suppliers and make your product ideas a reality if you want to have your product's custom logo and design specs.
Is it safe to source products from Alibaba to Amazon FBA?
Now that you know if you want to start selling on Amazon from Alibaba, you might wonder if it is safe. Alibaba is a popular marketplace that eliminates intermediaries or tries to since there are a lot of fraudster middlemen who are not manufacturers but resellers. Notably, there are plenty of procedures that have been put in place to safeguard for the manufacturers and the buyers, including:
- Trade Assurance where with verified suppliers, the option offers a money-back guarantee if your order is unsatisfactory in terms of quality and shipping time. In addition, to get high-quality products, look for gold suppliers.
- Suppliers that are not part of the Trade Assurance program have to undergo different levels of verification, where each supplier has a badge according to the verification level they pass. Buyers can see this on product listings to know the trustworthy ones.
- Alibaba allows you to communicate with manufacturers, so you can use this option by asking for relevant information such as business licenses, contact information and verifications. Ensure you ask as many questions as possible concerning the products and request for product samples to be sent instead of factory photographs to assess how legitimate they are.
- In addition, there are anti-fraud programs that work to prevent innocent buyers from getting scammed, and you can always report supplier problems to Alibaba, and they will deal with it properly.
How does Fulfillment by Amazon work?
Fulfillment by Amazon works with a few steps:
- Ship your inventory to Amazon, where it will be scanned and made available for sale
- With each order, Amazon will package and ship the product directly to a customer
- Amazon then collects payment from a customer and pays you the available funds every two weeks
- Amazon's team handles all the customer questions, refunds and returns.
What to Sell on Amazon FBA
Product research is among the most important aspects of an Amazon FBA business, and to know what to sell on Amazon, you will need to know how to choose the right products. If you end up choosing the wrong products, you will be at risk of losing money and in the end, you will lose money, but you will also lose time and effort. Nevertheless, there are several things to look out for before choosing the best products to sell:
a). Choose Profitable Products
When starting an Amazon FBA business, the main goal is to make a profit, so you should carry out the best market research before choosing a product. Then, to find the best profitable product category, you should choose a product there.
You can use the simple rule of 3s. To do this, divide the product cost into three, where one part goes to your landing costs, your profit and Amazon fees. Therefore, if you sell your product for $18, with this rule, it means you will make a $6 profit per sale.
Landing costs will cover shipping and production costs, whereas Amazon fees are the fees that Amazon will charge its sellers. However, don't forget to include packaging and advertising expenses. Your share of every sale will depend on two things:
- The fees you incur on the way
- How much you charge per product
For a successful FBA business, you should keep your profit margin between $20 and $70.
b). Market Demand
The profitability of your Amazon FBA business will depend on how much demand it will have. Therefore, in your market research process, ensure you enquire about the product demand.
Check how much people are interested in your product and how much a product can solve a problem. In addition, check how many sales the product category made in the past and identify how many products are similar to yours.
Check if there are opportunities for new sellers and check the brands in your product category. This is because competition is determined by the number of products and the quality of the reviews.
Apart from these above factors, you should also consider:
- Availability of the product and how easy it is to source
- Product weight and size. It's advisable to choose lightweight products
- Avoid seasonal products
How to Sell on Amazon FBA
1. Decide on what you will sell
To make informed decisions, you need to conduct product research to research the market then choose a profitable niche. Look for the best-selling products and check the metrics of some competitors. You can also use Amazon seller tools to find the best products for your store, and these tools usually use search results and sales data to bring your product suggestions.
2. Get your Figures Right
The first step should be to estimate your monthly sales volume, and you can do this based on the product sales rank and the current pricing. You can also include your shipping cost and the cost price, and when you do so, you can estimate your profit potential and revenue. Afterward, you can decide if a potential product is worth investing in.
3. Source Your Products
Sourcing the products is usually the most challenging since you need genuine suppliers willing to supply your products at a great price. Before you decide to purchase from a manufacturer, ensure you confirm the quality of your products.
Opt for sellers who offer plenty of options to purchase from and those with good return policies. Amazon software has tools that can help you research the supplier, and when you handle quality control, you automatically maximize your business potential.
4. Create An Account
Once you carry out the above steps, you must create an account. The first step is setting up an Amazon seller account then you will sign up for FBA. There are a few things you will enjoy as an Amazon FBA seller, including:
- Shipping from the supplier directly to Amazon
- Two-day free shipping using Amazon Prime
- 24-hour customer service
- Amazon FBA handles refunds and returns on your behalf
Notably, some Amazon sellers may prefer to fulfill independently, which has its benefits. There are a few things you require to register as an Amazon seller:
- Bank account number
- Bank routing number
- Credit Card
- Government-issued ID
- Tax information
- Phone number
5. Create and Optimize your Listings
When selling high-quality products on Amazon, your listings usually determine how far you get. This is because the product details are where the customers find all the relevant information about a particular product.
Product listings are considered secret weapons of A-players in the game, and to optimize them, and a product listing will include:
a). Product Title
The title should encompass the importance of the product, and it should draw the attention of a customer from their Amazon search to your product. You can do this by using unique yet clear identifying information to attract customers to your products. In addition, don't forget to include one keyword in your product title and understand Search Engine Optimization (SEO). Finally, you can perfect your product title by filling it with highly-searched keywords.
b). Product Descriptions
You should explain in detail how your customers will benefit from using your products and ensure you include relevant keywords in your descriptions. It should be easy and concise but ensure you add size, weight, product dimension, colors, warranty information and installation guides. If possible, try to use Call-to-Action phrases or words to increase conversions and boost sales.
Search terms and keywords help buyers find your product, especially if another seller already offers the same product. Your product will match an existing product listing which means some details may already exist, such as a product identifier. However, if you are the first seller or a new product on Amazon, you will create a new product listing.
c). Product Images
You should include high-quality and attractive product images on your Amazon seller account. Use more than one product image on your product listing to emphasize the importance. In addition, to sell a high-quality photo and communicate your product's features appropriately, you can hire a professional photographer.
d). UPC Code
Amazon requires every seller to have a universal product code (UPC barcode) to create their product listing in Seller Central. This is the barcode you see on all packaging. These UPC barcodes can be purchased directly from GS1, the global organization standardizing the codes. Then, you add the UPC under product ID in your product listing in your Amazon Seller account.
e). Product Reviews
Include product reviews from satisfied customers, which will help you convince new buyers. Ensure you are familiar with the right ways to get quality reviews and avoid policy violations.
These are the main features of optimized listings, whereas others may include using bullet points, buy box, which is the featured offer on a detail page, and maintaining your product ratings.
6. Ship Your Products Properly
Check the products you want to sell on Amazon before sending them to a warehouse and ensuring they are high quality and you package them well. Amazon sellers have guidelines they should follow to help in correctly shipping the products, and all sellers should follow the guidelines.
If you don't follow the guidelines when shipping products, you will incur extra costs and lose customers. Avoid incurring too many additional costs and avoid shipping costs to eat into your profit margin. Also, ensure you know all the rules and hidden fees that come with international shipping.
7. Manage Inventory
You can use Amazon Inventory Management Tools to track and maintain your inventory levels. The tool allows a seller to view data on their products, download their report and view the sellers' fees for every product. When you know your product's inventory levels, you can easily decide your items where it's good to determine the inventory turnover rate and inventory forecasting.
Thr inventory turnover rate is how fast your products are selling on Amazon. You can easily estimate how much inventory you need to maintain your business when you know this. On the other hand, inventory forecasting allows you to predict how much inventory you need as you wouldn't want to overstock your items. Some factors to consider will include seasons, sales trends and the delivery period.
What is Seller Central?
Once you register for an Amazon seller account, you will have access to your Seller Central Account, and you can think of Seller Central as a resource for selling on Amazon. The Seller Central is a portal for your Amazon business and a one-stop-shop to manage your selling account, make inventory updates, add product information, review account health and manage payments.
Seller Central allows you to do several things, including:
- Keeping track of your inventory and updating your product listings from the Inventory Tab
- Downloading custom business reports and bookmarking templates you use often
- Use customer metric Amazon tools to monitor your seller performance
- Contacting Selling Partner Support and opening help tickets using Case Log
- Keep track of your daily FBA sales for all the products you sell on Amazon.
How Much Money Do You Need To Start An Amazon FBA Business
How much money you need will depend on many factors, but even with a small amount of about $500, you can source some products and start an Amazon FBA Business. First, you will need to choose your selling plan with two options: Individual and Professional.
a). Individual Plan
This plan charges $0.99 per sale no matter how many items you sell. Also, you will not get access to advanced programs or selling tools.
b). Professional Plan
This professional plan has a $39.99 a month selling fee. In addition, the plan will give you access to advances selling reports, APIs and additional seller programs such as Handmade and Launchpad.
You shouldn't worry about which plan you choose as you can always change plans later. However, if you are starting and don't plan to be selling more than 40 items a month, you should choose the individual plan. This is because it will allow you to get acclimated to the Amazon Seller Marketplace with no overhead.
Apart from the plan's subscription fees, you will also have other fees, including:
a). Fulfillment fees
The fulfillment fee covers the cost of packing, shipping orders and customer service. The fees vary depending on the dimensions and weight of your product.
b). Inventory storage fees
These selling fees are charges for storing your goods at an Amazon Fulfillment Center. These are monthly and long-term storage fees.
Monthly fees are charged between the 7th and 15th day of the month after you incur the charges. Therefore, if you incur the fees this month, the fee is deducted on the 7th and 15th days of the following month.
On the other hand, long-term fees are charged on items that have been in the storage space in Amazon's warehouse for over 365 days.
Other Selling Fees
There are miscellaneous FBA fees, including disposal and removal order fees and returning processing fees. The unplanned service fee also falls in this category. Still, you will also have to pay selling plan fees, referral fees (a percentage of the selling price which varies depending on the product categories) and others.
In addition, there are restricted product categories such as automotive products and certain grocery that Amazon may need additional fees, performance checks and other qualifications. This list of items within the restricted product categories may attract some selling fees to allow a seller to sell certain brands, and you can request approval through the Seller Central.
How Do I Advertise on Amazon?
Amazon has advertising solutions that create new ways of reaching and engaging shoppers whether they are comparing products or ready to make purchases. These ads will show where customers will see them, like on product detail pages or the first page of search results.
Amazon offers three advertising solutions, and all of them can be accessed through your Seller Central Account:
a). Sponsored Products
Sponsored Products are ads for individual product listing on Amazon, and they help drive a product's visibility and product sales. They appear in product detail and search result pages.
b). Sponsored Brands
Sponsored brands help in showcasing your brand and product portfolio. They are search-result ads that include your brand logo, a custom headline and up to three of your products.
c). Amazon Stores
These stores are custom multipage shopping destinations for specific brands that allow sellers to share their brand story and product offerings. You don't need any experience or website to use them.
Is Amazon Right for my Business?
Yes! Large household brands sell on Amazon, and emerging brands to soon pop on your radar. On Amazon, both small and medium-sized businesses thrive, and they account for more than half the units sold in Amazon stores worldwide. Whatever your business is, no matter how big or small, Amazon will help you grow and reach more customers, so start selling on Amazon.
Meta Description: Are you wondering how to sell on Amazon for beginners, and you don't know where to start? This article will help you navigate the process.
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