In this post I’m going to be writing about how to make money on Amazon using FBA. This is not a step by step guide but an introduction for Amazon FBA beginners. My hope is that it helps you to gain an understanding of how FBA works. I’ll go into my thought process behind choosing certain products and whether or not I think it is still worth it to sell on Amazon. Sharing as much useful information as I can without getting too much into the technicalities and complexities. Instead focusing more on strategy and perspective information that I think will be more helpful. You can then later go and find step by step guides to walk you through the process. Let’s start at the beginning shall we.
- What is Amazon FBA?
- How to Become an Amazon FBA Seller
- Amazon FBA for Beginners
- What is Amazon Retail Arbitrage?
- What is Amazon FBA Private Label?
- How to Start a Private Label on Amazon?
- How to Create an Amazon FBA Product?
- What’s a Good Product to Sell on Amazon?
- Tools to Create an Amazon FBA Product
- 5 Tips When Choosing an Amazon Product
- How to Source an Amazon Product?
- Creating an Amazon Product Listing
- Making Money on Amazon
What is Amazon FBA?
Fulfillment By Amazon is a service provided by Amazon that allows independent sellers to outsource their order fulfillment to Amazon. This means that Amazon packs and ships every product that you sell from their warehouse. This is done by shipping your bulk inventory in advance to an Amazon warehouse to be stored. Amazon will then ship your items to each customer when they make a purchase. Amazon also handles customer service, as well as returns and refunds of these products.
How to Become an Amazon FBA Seller
Anyone can become an Amazon FBA seller and there are no special business licenses or permits needed. The only restrictions for sellers would be the type of products that you sell on Amazon. This is because some brands or products or product categories are restricted to new sellers.
This means that becoming an Amazon FBA seller is as simple as signing up. You can sign up for an Individual plan for free or upgrade to a Professional plan and pay $39.99. The free plan is a good way to get started but the premium plan is most likely what you’ll need.
Amazon FBA for Beginners
When starting with Amazon FBA you can choose to sell products that already exist or create your own ‘private label’ products. I’ll go into Amazon FBA private label products in more depth in a later section in this post.
Amazon Seller Central is the website you’ll be using to using to sell your products on the Amazon marketplace. A good way to start and learn the ‘ins and outs’ of using the Amazon Seller Central interface is to sell existing products first.
This way you can learn about the listings and fees that are charged for each product based on category, size and weight. You can also acclimate yourself to the Amazon Seller Central website and its using its functions.
The process of selling existing products can be both educational and lucrative. You get to find out which products are popular and sell the most and how the fees vary across different categories. Many sellers earn a living selling existing products full time through a practice called retail arbitrage.
What is Amazon Retail Arbitrage?
Amazon retail arbitrage is the practice of buying discounted or clearance products from different stores and retailers and then selling those products on Amazon. Due to constantly increasing Amazon FBA fees it can be difficult to earn consistent income with this method, but many do it nevertheless.
The process definitely takes time and skill to search and find find great deals. Keep in mind that you would need to buy existing products at a substantial discounted price. The reason for this is that you still have to pay Amazon fees before you can make your profit.
There are countless Amazon FBA profit calculator websites and apps out there that can help you research each product to find out what the selling fees and potential profit will be.
What is Amazon FBA Private Label?
An Amazon FBA Private Label product consists of you having a third party manufacturer manufacture a product and sell it under your own private brand. Usually a seller will have a product manufactured in China and then have it their own personal brand logo placed on the product. The product can then be shipped directly to your local Amazon warehouse for fulfillment.
The process of creating a private label product on Amazon usually consists of research in different product categories to figure out which category and product is most suitable to sell. Finding a potentially profitable product is based on several factors such as product rank in a given category, as well as manufacturing costs, and the cost of FBA fees.
An Amazon FBA Private Label is a brand that you create and then have manufactured products sold under. The private label is your own personal brand that you create.
How to Start a Private Label on Amazon?
Amazon FBA private label is the method I personally use to sell on Amazon and make money.
In order to start a private label you will have to first create a private label product. You should put a lot of thought and research into the category that your product will be listed in. If you are creating a private label brand, you will probably want to create more products in the same category later on.
Of course you will have to choose a name for your private label brand and a design a logo as well. The logo part is easy, you can quickly get one done on sites such as Fiverr for a few bucks. In terms of a creating a brand name, think of something that will make sense for your brand and category.
Keep it simple and try using words in your brand name that could potentially be used as keywords. For example, say you are selling plates, forks, and bowls in the home and kitchen category. Instead of naming your brand Mike’s Awesome Store, maybe something like Dinnerware Depot is more appropriate. This way when customers search for dinnerware, you have an edge in the search results.
How to Create an Amazon FBA Product?
Chances are that you will be creating a product similar to ones that already exists. You will most likely not be inventing a new product that never existed before. You will most likely be selling a generic product under a private label or iterating an existing product.
When iterating an existing product, you want to make sure you have enough information about similar products in the category. Most importantly, you should pay special attention to the reviews of those products.
The customer reviews give you an opportunity to find out what you can improve on existing products. Customers are not shy to write about the characteristics they dislike about a product. Reviews can tell you the flaws as well as the benefits of existing products. This information can be used to inspire your own versions.
What’s a Good Product to Sell on Amazon?
An easy way to find out which products are popular to sell on Amazon is go in to the Amazon Bestsellers page. There you can search through the different categories and view the products to draw inspiration.
Take your time and search from category into sub-category, and then into those sub-categories. The more you niche down into sub-categories the more likely it is that you will find a winning product. After all, you don’t want to be in a highly competitive category where there are multiple sellers selling the same generic product.
Too much competition and a lack of innovation in a category leads to minimal profit as each seller undercuts the other until there is no profit left.
Tools to Create an Amazon FBA Product
There are many tools out there to help you with the research process when trying to develop a new Amazon product. There are several browsers and plugins out there that will allow you to extract sales information from the Amazon website. These tools give information about the quality of each listing and insight into what can be improved on existing products.
The sales information is extremely important in letting us know whether or not a potential product or category is viable. If there is not enough sales volume in a given category then it is not worthwhile to develop a product in the category.
Alternatively, even if there is tremendous sales volume in a category but too much competition, this will also not be a good product or category. It takes time and experience to figure out a good Amazon private label product. It is also just as or more important to choose the right product category. The category that you choose will enable you to create more products later on. This will help you eventually develop a full brand.
Tools I Use to Create an Amazon Product
The only paid tool that I am currently using to gather sales information and data is Junglescout. They offer a chrome browser tool that automatically populates sales information on the Amazon website. As you search for each keyword or product the Junglescout app will populate the sales data and Amazon fees. I find this specific tool to be essential in the product research process.
I also use Ubersuggest which is a free tool to analyze keywords or search terms on Google.
If you search on Google ‘Amazon FBA tools’, countless tools and resources will appear. Some of these helpful tools will be paid and some are free. These tools can give you a plethora of information but remember to try and keep it simple when researching a potential product.
Try to focus on the sales volume on a product and the amount of potential products in the category. Also focus on the reviews of each product to identify any flaws that you can improve upon on your version of the product.
Tips When Choosing an Amazon Product
- Create a List
- Niche Down
- Research Thoroughly
- Stay away from clothing
- Differentiate your product
- Choose a lightweight product
Create a List – A good starting point when thinking about possible products is first think about products that you use regularly. One easy exercise is to create a list where you write down everything that use on a daily/weekly basis. You can even go into your own Amazon account and review your order history for inspiration.
Niche Down – Take your time looking at products and their categories and subcategories because this is where the valuable gems lie. The more you can niche down from the main category into their subcategories, the more likely you are to find a product that is not oversaturatedOversaturated is saturating something to an excessive degree. When something is oversaturated it is excessive. More. I’m sure you’ve heard the phrase, ‘the riches are in the niches’. Well the more you niche down on a product, the better.
Research Thoroughly – Choosing the right product can be time intensive but also extremely profitable. The good thing is that most of the time invested is in the early stages of the product. In the early stages you will be researching and developing the product. After that you are essentially managing shipments of your inventory from overseas to the Amazon warehouse. Once it reaches the warehouse Amazon is handling the rest, the packing, shipping, and customer service.
Stay away from Clothing – Picking products in other categories than clothing such as ‘home and kitchen’ or ‘sports and outdoors’ might be a better bet. This way you can create a product that is not clothing size dependent and caters to most individuals. For clothing, you have to carry multiple sizes of the same design (S-XXL). This present a problem in the beginning since not all sizes will sell equally and you will be left with excess inventory.
Differentiate Your Product – Taking the time to differentiate your product from others and correct the problems of alternate versions will go a long way. versions the better your chances of creating a better product. The little unique touches and improvements will not only make your product sell better, but will make it more difficult to replicate by other sellers.
Choose a Lightweight Product – Another good general rule is to try and pick a product that is under 1lb and a choose a size that is not too large as shipping and fees can become costly. A small and light product is particularly important if you’re selling product $20 and below.
How to Source an Amazon FBA Product
Majority of the products that are sold on Amazon are manufactured in China. This is for the simple reason that it is cheaper to manufacture goods there than most other countries.
I currently source all of my product using the Alibaba website. Alibaba is a wholesale marketplace based in China where you can contact manufacturers to manufacture your product.
On the website you can search through the listings of manufacturers and their product catalog. You can then contact the companies you are interested in and negotiate prices. Once you settle on a price you can receive a sample of the product to make sure that it is up to standards.
All transactions are handled on Alipay which is a service of Alibaba, Through Alipay you can buy insurance which protects you from getting ripped off. If the goods you purchase or not as described you an dispute the transaction.
There are other websites that offer similar services but honestly Alibaba is the leader in this category. Through Alibaba you will receive the most options at the best available prices. You can also receive quotes from several manufacturers at one time with the click of a button.
Creating an Amazon Product Listing
The second most important part of creating a product for sale on Amazon is the product listing. A good listing should contain the description of the product and all of the keywords that a customer will search in looking for your product.
There is definitely a skill to creating a good listing and including all relevant keywords in an easy-to-read manner. A starting point is to look at similar products and find inspiration from how their listings are constructed.
Once again the goal is to seamlessly incorporate searchable keywords in your listing without it looking too spammy. Highlight the benefits of the product and how your product is different/better than your competitors.
Lastly, make sure that you are using high quality images of your product. According to Amazon guidelines your main product image has to be on a white background but only for your main image. For additional images make sure to show your product in action so that it will be more engaging for the customer.
Making Money on Amazon
Honestly, making money on Amazon with FBA is not as easy as it once was when I initially got started about 6 years ago. The Amazon FBA fees are steadily increasing and the competition with other sellers seems to get greater by the day. Still, with that said, I believe that there is still tremendous opportunity.
More and more we see physical retail locations or ‘brick and mortar’ businesses scaling back and focusing more on online sales. This is because customers are getting increasingly more comfortable shopping online and and are actually preferring it. There’s no wonder why, It’s more convenient and less time consuming, and usually cheaper to shop online.
Online Shopping is the Future
Online stores can generally offer lower prices because they do no have as much overhead expenses such as rent, staff, utilities etc. Shopping online will continue to gain popularity and eventually become the preferred method of shopping.
Even the world’s largest retailers are downsizing physical stores to increase their online presence. Anyone can create their own online store and sell products, but customers have to find your website. The advantage of Amazon FBA is that they have millions of existing customers.
Each of their customers visit the website regularly with their credit card on file with the intention to buy. All you have to do is give them what they want. Research and find the products customers want, and find ways to improve upon them. Do the extra work to find products in smaller categories that are less competitive. Put in the time and effort initially and then let Amazon do the bulk of the work through FBA.
