The above picture says many things. If you want to make money like this, then you must have to read a complete article. It may be lengthy but worth reading. It is a guide to “How to start Amazon FBA business?”
For the last many years, I have been doing Amazon FBA business. I learn a lot of things while doing this business. I am just sharing my complete experience here in easy words.
Selling on Amazon has become one of the most profitable ways to make money. It has been proven that people who have been doing Amazon FBA business for a long time increase their earnings day by day.
In this article, we will discuss How to start Amazon FBA business in very easy and simple steps.
Amazon FBA is one of the most profitable ways to sell products online. The reason is that Amazon takes care of absolutely everything in the sales process, which is a great saving of time and money for your business.
Starting as a new Amazon seller is a fantastic opportunity.
This step-by-step guide will guide you through the entire process of Amazon FBA and clear all doubts on “How to start Amazon FBA business”.
If you follow the steps in this guide, you will be set to make your first sale on Amazon.
I recommend that you take these steps right away. Trying to sell on Amazon is not a risk, but if you never try, you will miss out on a fantastic opportunity.
Table of Content
- What is Amazon FBA?
- Why is it worthwhile to start an Amazon business?
- How much money do you need to start Amazon FBA business?
- Which documents Required to Open an Amazon Store?
- How to start Amazon FBA business? Step By Step.
- How to choose a profitable product to sell on Amazon FBA?
- The most profitable sites of suppliers and manufacturers.
- How to communicate with manufacturers?
- How to source products?
- How Much Does Amazon FBA Fee?
- How to increase sales on Amazon FBA?
- What is a Buy Box in Amazon?
- How to get a Buy Box on Amazon?
- How does an Amazon ranking system work?
- Amazon Store Tax Process
- Amazon Store Billing
- Amazon FBA Advantages
- Amazon FBA Disadvantages
- Products cannot be sold on Amazon – Prohibited items
- Frequently asked questions on Amazon FBA
What is Amazon FBA?
Amazon FBA stands for “Fulfillment By Amazon”.
Amazon FBA is an e-commerce program in which Amazon performs many tasks on your behalf while selling your products. You can sell online with just your computer and no need for a warehouse, shop, or store.
Today, over 3 million people use this method to sell on Amazon. Amazon FBA is used by 70% of Amazon’s top 10,000 best-selling sellers. As of now, more than 25,000 FBA sellers can generate one-million-dollar annual sales volume.
With FBA, Amazon has opened a new era of commerce and retail sales.
Owning a store on a digital platform with Amazon FBA provides a lot of benefits in today’s rapidly changing world and economic system. Let’s take a closer look at Amazon FBA.
Amazon FBA is a cutting-edge e-commerce platform. Amazon handles the product stocking, shipping, customer service, and return process for you in the Amazon FBA program.
You only need to select the products to sell, set their prices, and manage your e-commerce strategies.
Why is it worthwhile to start an Amazon business?
The marketplace attracts over 300 million customers from all over the world due to well-managed logistics, high-quality service, and quick delivery. When most people in the United States need to buy something, they go to Amazon first.
For buyers, Amazon is a great brand that ensures the quality and speed of delivery of the product.
For sellers, it is a trading platform with a large number of users who came solely to buy goods.
Furthermore, their customer service is extremely responsive. Amazon’s global presence enables different communication channels, such as 24-hour chat, email, and phone, in a wide range of languages, facilitating contact with them and accelerating problem resolution.
How much money do you need to start Amazon FBA business?
You can begin selling on Amazon with any amount – even less than $100. You can start with just one or two items and reinvest 100% of your profits to grow this small startup into a full-fledged business.
Profit can be used as capital. The more money you have, the more inventory you can purchase. More inventory equates to more leads, and more leads equate to more potential earnings.
So not having money shouldn’t stop you from getting started. It is recommended to start with a few hundred dollars for inventory and $39.99 for a professional seller account. Hence getting started immediately is good rather than waiting.
Which documents Required to Open an Amazon Store?
To open an Amazon seller account, you must have the following information and documents.
Credit card details – When the seller account balance is insufficient, it is used to collect Amazon sales fees.
Contact information – Phone number is required for communication.
Company registration information – To register your company, you must first select the type of business, then enter your company registration number, company tax number, and company address information.
Personal information – The primary contact person’s identity, date and place of birth, and mobile phone number are all required.
Bank account information – Bank account must be entered to deposit the income from sales.
How to start Amazon FBA business? Step By Step.
At this stage, if you are convinced to start an Amazon FBA business but need step by step process on How to start Amazon FBA business?
Below are very simple and easy steps to start the Amazon FBA business.
You just have to follow these steps –
1 – Sign up for Amazon sellers Account
The first step will be to register on the Amazon marketplace platform. You may already have an account and will only have to convert it into a seller account.
It is a very simple and easy process so I will not waste time here to explain it.
You just have to sign up at Amazon Seller central and follow the guidelines.
2 – Start a listing of products in the Amazon store.
You can start publishing products in your Amazon store once your seller account has been created. The important thing to remember here is to always select “Fulfillment by Amazon” when uploading a product.
The platform will guide you through the entire setup procedure.
The product card is the main selling tool on the platform. It must be carefully planned and executed.
To start a sale, add a photo of the product, a title and description, a price, and keywords that will be used to search for the product.
Keyword research – The product will be indexed only by keywords specified in the description. Always do proper keyword research before listing products in the store. The sonar-tool.com, merchantwords.com, and keywordinspector.com will help you to track the keywords used by competitors and allow you to track the volume of traffic on the page.
Title and description – Product information should never be copied from competitors.
3 – Set the Price of the products.
Set the price of the product slightly less than competitors to attract buyers. As the reputation increases, the cost can gradually increase.
4 – Send all your products to the Amazon fulfillment center
Amazon also offers a guide so that you can easily ship your products to the most convenient fulfillment center for your business.
This can be done by choosing your own freight forwarder, or by selecting Amazon’s “Associated Carrier Program”. We recommend that you should choose Amazon’s Associated Carrier Program to ship your products to Amazon Store.
When your products arrive at the Amazon Store, they are sorted, scanned, and stored for shipment.
Amazon will stock and barcode your products for you in its warehouses. This is one of the most significant advantages of Amazon FBA. It allocates a section to you in Amazon warehouses and makes it inventory without you even needing to see the product.
It also includes insurance in case of your product damage in their warehouses.
5 – Amazon Sell your products with the “Prime” badge.
With Amazon FBA it is much easier to sell your products. The “Prime” means, in most cases, free shipping. Therefore, users tend to purchase them preferentially.
6 – Shipping your product
Amazon prepares the packages and sends them to your customers.
When you make a sale through Amazon, the platform will take care of its packaging from the logistics warehouse and its shipment on the same day.
Amazon ensures customer satisfaction by following the process from the cargo stage to the delivery of the product to the customer.
In the same way, once the delivery is made, Amazon will take care of the follow-up to verify customer satisfaction. If the user decides to return the product, they will also take care of the entire refund process and update the stock.
7 – Get payment from Amazon
During this entire sales process, you do not have to take any extra action. Every two weeks, Amazon will transfer all the profits from your sales to your account after deducting all its fees.
How to choose a profitable product to sell on Amazon FBA?
Ideally, you want to sell products with high demand and low supply.
Here are some guidelines for choosing products with good sales and revenue potential.
Do proper market research before choosing products to sell, then contact manufacturers and suppliers to find out the cost of goods. Then, compare the average price of products on the site to the purchase price.
Use a third-party product research tool to identify potentially profitable products that sell. Third-party product tools for amazon sellers are Helium 10, SellerApp, AMZScout, Jungle Scout, etc.
Choose a simple product.
Avoid products having a large number of details and technical complexity. It increases the risk of defects, which can negatively affect the rating.
Technically complex products should be avoided.
Try to choose products with low competition.
To do this, you need to search your desired products and look at the leading products in the rating. If the first product in the search results has less than 100 reviews will be good.
Avoid seasonal and out-of-trend products.
Choose products that you can sell above $ 20 and have a minimum profit margin of 40 percent. Otherwise, packaging, storage, and shipping costs or Amazon fees are likely to consume a significant portion of your profits.
Avoid products with a lot of competitors.
Look for products with poorly developed product information, such as poor product images or terrible product descriptions.
Avoid product categories dominated by one or just a few brands.
Choose small, compact products that weigh up to a few pounds to minimize storage, packaging, and shipping costs.
Choose products that are commonly searched on Amazon. You’ll find plenty of third-party product research tools to help.
The most profitable sites of suppliers and manufacturers.
Alibaba.com – It is the leader in wholesale. The site contains over 100 million products. Many wholesalers customize their own products and ask manufacturers to make products.
Made-in-china.com – Here you can buy goods in bulk or order the production of individual products. The site contains over 3000 product categories.
Aliexpress – It is an online marketplace where buyers in the United States can buy from manufacturers. There are no minimum order requirements on AliExpress, but the prices are slightly higher. Ali express is a good option for small or start-up businesses.
How to communicate with manufacturers?
It is worthwhile to introduce yourself as a large corporation that sells in large quantities on Amazon. You should set up a business card and website.
Corporate email increases the number of responses from manufacturers and allows for negotiations on their own terms, as the manufacturer does not want to lose a serious client at all.
Create a corporate email address and only communicate with it.
Pay close attention to work experience and output volume. A good supplier should have a corporate email address as well as a company website with a photo of a manufacturing facility.
Request a product sample before purchasing a batch. Some providers offer this service for free, while others take charges.
Due to the nature of mass production, the finished product may be of slightly lower quality than the sample; therefore, if the sample does not shine with quality, it is best to decline cooperation in advance.
Give a detailed and exact description of the product you want. Otherwise, the manufacturer will act at his or her own discretion, which will have a significant impact on the quality.
Convince manufacturer on post-payment only. That means the manufacturer will receive money only after the goods have been checked for quality and accepted.
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How to source products?
The most frequently preferred way of this model is configuring via Alibaba.com. You can find the products you want to sell on Alibaba and ship these products directly to Amazon warehouses. Thus, you do not need to store and keep stock at any stage.
Alibaba.com is a Chinese online wholesale marketplace where manufacturers and distributors from all over the world sell their products. Most of these businesses will work with you to design and manufacture your own product.
It is now very simple to set up an Amazon FBA business with help of Alibaba.com. You can send your products directly to Amazon from Alibaba.com with your brand name and price markup.
Alibaba.com allows you to buy products in bulk. You can mark products with your brand name and a price range of $5 to $50 per item, depending on your purchase negotiation. You can easily sell it on Amazon for more than 100% profit, and people are buying them there.
Traditional sourcing involves buying a large number of products from a wholesaler and then selling individually at a significant price to consumers. You will find a lot of domestic and foreign suppliers who offer products at wholesale prices.
You can come up with your own product ideas & design and contract with the manufacturer to do so.
You can buy already manufactured products from the manufacturer, label them with your brand and sell them under your brand name.
Handmade Products –
You can make your own products for sale on Amazon and list them for sale in handmade categories. However, you must register with Amazon as an artisan, and your products must be handcrafted, not mass-produced.
How Much Does Amazon FBA Fee?
Individual Account –
In Amazon FBA individual package allows you to sell up to 40 items per month. In this package subscription, Amazon charges you 0.99 cents per item you sell.
Professional Account –
In the Amazon FBA professional package, you can sell more than 40 products. The Amazon FBA fee for this package is $39 per month.
Referral fees –
Your product sell happened only because of Amazon’s huge brand value. Amazon is referring your product, hence amazon takes some referral amount from your sell. It may be around 8 to 15%.
Fulfillment fees –
This is the cost to ship your products to your customers. Picking and packing your orders, shipping and handling, customer service, and product returns are all included in this fee.
This cost is depending on the size, and weight of your product.
Other Fees –
Inventory fees – Amazon charges you an extra fee for the storage of your inventory for the long term and removal of inventory from their storage.
High-volume listing fees – Amazon charges a monthly fee that has not sold in 12 months. This fee is waived for the first 100,000 listings.
Refund administration fee – In case of refund Amazon charges you a refund administration fee, which is the lesser of $5.00 or 20% of the referral fee.
Check here for all types of fees on Amazon – https://sell.amazon.com/pricing
How to increase sales on Amazon FBA?
Amazon considers some criteria when listing products. You must have to work on the below tips to enhance Amazon FBA sales.
1 – Reviews –
To increase sales, you can order the writing of paid reviews on freelance exchanges or other resources. It may be a little unfair but having at least 15 reviews significantly increases sales.
2 – Work with clients –
Communicate with customers, answer their questions, solve problems with returns and product defects.
3 – Advertising –
Earnings directly depend on the traffic coming to the page. You can increase it with the help of internal and external advertising. You must have to advertise your products to attract more buyers.
4 – Digital Marketing and Search Engine Optimization (SEO)
You need to highlight your products. For this, you can do Amazon FBA SEO studies on your products. You should research keywords that give the most buyers to your product.
When you open an Amazon store, simply listing your products here will not be enough. SEO can help you increase sales by increasing product visibility.
5 – Free shipping and discount campaigns
You can attract customers with free shipping or discount campaigns.
6 – Amazon ads
Amazon has PPC ad models that allow you to highlight products within its platform. By taking advantage of these advertising models, it can stand out from the competition. You can make your products appear higher in users’ search queries.
7 – Adwords campaign
By creating Adwords ad campaigns, you can place ads on the pages of the products on your Amazon store via Google. Thanks to these ads, you can increase the visibility of your products on Amazon and increase your sales with these campaigns.
8 – Social media activities
To increase sales you must have to do social media advertising campaigns through your social media accounts, and you can carry out advertising activities that will direct users to your store on Amazon.
9 – Attractive Product descriptions
Originally writing attractive product descriptions and providing as much information to the users with technical details not only affects the purchasing decisions of the buyers but also increases the value of your page.
10 – Use High-resolution Images
Using high-quality and high-resolution images, including additional images in product descriptions, and adding product-related videos, if any, to these pages will help you further increase the value of your page.
What is a Buy Box in Amazon?
The Buy Box is a button on a product’s detail page where buyers straightway start purchasing by adding products to their shopping carts. According to statistics, more than 82 percent of sales happened only thru Buy Box. So, you now understand the significance of obtaining a buy box.
How to get a Buy Box on Amazon?
Tips to get an Amazon buy box –
Professional seller account – Having a Professional account increases your chances of receiving a buy box.
Price – Determine a reasonable total price. Consider what the customer pays for delivery when determining the price of a product, and then compare the total price to the price charged by competitors.
Delivery – Timely delivery entails delivering and delivering products on time. Amazon uses separate metrics to determine which sellers can compete for a purchase box: late shipping speed and timely delivery.
FBA – Fulfillment by Amazon is a service that allows you to ship products. Utilize the FBA’s speed and dependability to meet customer delivery expectations.
Order Defect Rate (ODR) – Maintain a low order defect rate. Negative seller feedback and credit card chargebacks should be avoided. In other words, consistently provide excellent customer service.
Stock Availability – Keep enough inventory on hand to fill orders. If you run out of stock and are unable to fulfill your order, Amazon will not provide you with a Buy box.
Seller Rating – Increase the quantity and quality of seller feedback. The more positive feedback you receive from customers, the more likely you are to get the Buy Box.
Order Cancellation – Maintain a low order cancellation and refund rate. Avoid situations in which you must cancel a customer’s order due to a lack of inventory or for other reasons. In addition, keep customer expectations in check to keep credit rates low.
Sales speed – The two most important factors influencing your purchase decision are sales history and sales speed. Sellers who sell a large number of units have a better chance of keeping the buy box.
How does an Amazon ranking system work?
To rank any product in Amazon’s search results, the Amazon algorithm considers three important ranking factors.
1 – Relevancy
When it comes to ranking, Amazon has placed a high value on product relevance. If your product is not relevant to the category in which it is listed, or if you have used irrelevant keywords. Amazon will start lowering the ranking of your product in search results.
2 – Rate of Conversion
Amazon places a high value on conversion rates, which are determined by a variety of factors such as images, content, price, and reviews/feedback. If all of the factors are relevant to your products, you will have a higher sales conversion rate.
3 – Customer Satisfaction and Retention
Buyers who are satisfied with your products will return to your store to buy them again and again. If you get more positive reviews for your products, then it will lead to increase in your sale, and repeat sales are always beneficial to product rating.
Amazon Store Tax Process
When you make sales by opening a store on Amazon, you will be obliged to pay taxes as per the respective country’s tax system and practices. Because online sales are taxed, you must pay taxes on the products you sell and the invoices you issue because you are a business here.
You can get all information regarding business taxes in the USA at the below link.
Link – https://www.usa.gov/business-taxes
Amazon Store Billing
When you sell on Amazon, Amazon deposits the payments from your sales into your account in 14 days and bills you for these payments. You can track these invoices through your seller account.
Amazon FBA Advantages
1 – You can sell the product you want through Amazon FBA without any storage problems. Thus, you can save money on store rent and insurance.
2 – With Amazon FBA analytics data, you can access a lot of information about your virtual store and create new strategies to increase your sales.
3 – In e-commerce, the process of shipping and reaching the customer for the product can sometimes be painful. Amazon FBA does this for you and tries to satisfy customers to the greatest extent possible.
4 – Amazon sends your products in self-produced cargo packages and provides a professional service.
5 – Another challenging aspect of e-commerce is the returns process. The Amazon FBA service handles returns for you.
6 – Amazon’s 24/7 customer service provides free support to both you and buyers in the event of an adverse event.
7 – It is a comfortable sales system for the seller. Warehousing and logistics are handled by Amazon.
8 – It is not limited to Amazon. The FBA system is available for any e-commerce or personal online store.
9 – Security – Ultimately, e-businesses receive sensitive information from their customers, so FBA is a guarantee of secure transactions.
10 – Prime – Amazon sellers gain access to Amazon Prime customers with privileged service and access to a broader product category. These customers spend twice as much on Amazon as regular users. The delivery time with Prime shipping is only 24 hours.
11 – Amazon’s algorithm favors FBA products, which will appear in search results above the rest.
12 – Consumer’s trust – One of the biggest advantages of selling on Amazon is that trust. Amazon users trust the products and purchases they make.
13 – Reach to a wide audience – There are millions of users using Amazon. Having your store on Amazon helps you reach a wide target audience.
14 – FBA products are eligible for free two-day delivery to major customers, which can boost sales significantly. Using the FBA for this purpose is a good idea.
15 – FBA products have a better chance of winning a shopping cart or Buy Box, that’s what the majority of buyers want to get.
16 – Amazon stores, pick up, packs, and ships products; handles returns and refunds; and provides customer service, allowing you to concentrate on higher-level operations that will maximize your success.
17 – The FBA guarantees, fast delivery and accurate tracking of your shipment, and you will not be penalized if the FBA misses the shipment and delivery.
18 – Your items are safely kept in Amazon distribution centers rather than at home.
Amazon FBA Disadvantages
- Furious competition – The high level of competition among sellers breeds manipulation. Competitors can specifically purchase products to leave a bad review and downgrade the rating of the product and the seller.
- The number of sales depends entirely on the ranking of the product. Buyers prefer Products with high ratings and positive reviews, so it is difficult to compete in the early stages.
- Advertising cost – Since there are many different sellers on Amazon, the competition in this marketplace is also quite high. To stand out from the competition of other companies selling similar or identical products, you need to allocate a budget for extra advertising efforts. This causes you to spend a lot of effort.
- Store fee and commission fees – When you open a professional seller account, you pay a certain monthly storage fee. In addition, after the sales you make, you have to pay different commissions to Amazon depending on the product category. This can cause your profitability to drop.
Products cannot be sold on Amazon – Prohibited items
Before selling a product on Amazon, you should familiarise yourself with the list of items that are prohibited from selling on Amazon to avoid having your account blocked and losing your invested funds.
Offensive or controversial materials, products that promote or glorify hatred, violence, racial, sexual, or religious intolerance, or promote organizations with such views.
Drugs and prohibited substances, as well as drugs that must be dispensed strictly under the supervision of a licensed physician.
You cannot sell Gambling-related products, lottery tickets, and coin-operated slot machines.
Unknown-origin alcohol is not allowed. Only the sale of wine that has been previously agreed upon with the administration is permitted.
Hazardous materials such as mercury batteries, industrial cleaners, fireworks, and so on.
The sale is restricted to specific product categories. For example, state-unlicensed infant formula, goat’s milk infant formula, and any product containing Chinese meat.
Products that depict nudity, amateur pornography, products with nudity on the label, and so on.
It is prohibited to sell lights, cribs, toys, and medicines that have not been certified in the United States.
Toys that look like weapons are only sold in certain areas and require prior approval. Amazon has a comprehensive list of prohibited foods.
We tried to answer the question of what Amazon FBA in the shortest possible way is.
Being successful on Amazon and achieving high sales figures is not that easy. You need to analyze the products to sell on Amazon well and determine your price policy well.
Amazon provides ample opportunities for sellers from all over the world.
You should consider the cost of your products, Amazon fees, and shipping costs to get them to Amazon. However, when all costs are considered, it is clear that owning a store on Amazon is far more convenient than owning a physical store.
Amazon offers numerous opportunities to sellers from all over the world. It is simple to introduce products to the American market. However, before planning sales, carefully analyze the market and become familiar with the rules for selling on the marketplace.
Frequently asked questions on Amazon FBA
How do I find the best products to sell on Amazon via FBA?
You have to choose products having products with high demand and low supply. Choose low competition products. Use tools like Helium 10, SellerApp, AMZScout, Jungle Scout to check the competition of products.
Is using the Amazon FBA program really a way to make a lot of money?
Yes. If you do Amazon FBA business with the right planning, Learning, and exact execution, then there is a high chance that you can make a lot of money.
How much money should I save to start an FBA business on Amazon?
You can start an Amazon FBA business with a low investment of 100$-200$. But you have to invest your profits as capital to grow a small start-up into a full-fledged business.
Is Amazon FBA profitable in 2021?
Yes, Absolutely. If you are dedicated, hardworking, and ready to learn a lot of things, then Amazon FBA is business for you.