If you are thinking about starting an online business but don’t know where to begin with your new product, consider Amazon’s FBA program. Many people believe Amazon’s program is a bad choice because it is too expensive, and that they would be wasting money if they went that route. Despite the higher price tag, there are many other reasons that make Amazon FBA a great place to start your Amazon business.
First, and primarily, Amazon is one of the largest marketplaces in the world, and it would be virtually impossible for you to gain the exposure that Amazon provides for your products anywhere else in a relatively short amount of time.
What is Amazon FBA
Amazon takes care of all the logistical aspects of your order so that you can focus on more important things like product promotion, product selection and product sales. With this Amazon service, you put issues like warehousing, packing, shipping and so on into perspective. Amazon uses a system called FBA (Fulfillment by Amazon), which means that your products will be dropped into an Amazon fulfillment center, and they will do all the order fulfillment and delivery work for you.
Amazon FBA Business Benefits
By selling on Amazon, you can reach thousands of customers without the expense of building a physical store. Instead, customers order from the convenience of their homes, and you ship to them. Amazon FBA offers a prime opportunity for sellers to broaden their customer base and take their businesses to new heights.
One of the many Amazon FBA business benefits is that you don’t have to worry about inventory management. This is an included feature provided by Amazon web services and is a critical function for any online business. With no inventory management, you can also afford to expand your business and minimize the stocking costs that traditional brick-and-mortar retailers incur.
How to Start a Business on Amazon
Whether you are starting a business on Amazon or elsewhere, you need to first determine a business model, niche and focus. Let’s cover the process for getting up and running.
Decide What to Sell on Amazon
How do I decide what to sell on Amazon? That’s a frequently asked question among both beginning and advanced eCommerce merchants. Finding products to sell on Amazon with minimum effort is easy when you know your buying options. Some Amazon sellers make their money selling only one kind of product, such as a private label or retail arbitrage, but most grow by combining several profitable buying strategies.
Open a Seller Account on Amazon
Opening an Amazon FBA seller account is the first step in launching your Amazon business. While it may sound a bit intimidating, don’t fret; we will cover step by step, how to open a seller account.
This account is the one-stop shop for everything that you need to know about selling on Amazon. Their website, called Seller Central, provides a personalized business portal where you can manage your account, add product information, maintain and update your inventory, process customer payments and find additional helpful information. It’s also where all of your products will be listed.
Source Your Products
The advent of the Internet has made sourcing products far more accessible than ever before. You can now purchase directly from manufacturers and acquire products at massively reduced prices. In today’s tough economic times, it is imperative that sellers take every opportunity to increase its revenues while cutting costs.
- PLR Products: The best option for sourcing products is through private label rights or PLR products. Private label rights are licenses granted by various companies allowing an individual to “write his own ticket” on how a product should be marketed and sold. These companies usually require a significant upfront investment by the individual manufacturer or distributor of the rights to market the product under his or her own name. Private label rights are great for anyone who wants to establish their own brand by creating an exclusive niche in the marketplace. PLRs also allow a person to design a product with absolutely no restrictions from the original manufacturers and distributors and as long as the product meets the definition of quality and uniqueness.
- Wholesalers: Another way online can source products is by buying in bulk from wholesalers. However, this method is not the most viable option because it can sometimes be difficult to find suppliers of certain products, especially if you wish to source them from certain countries. In addition, if you try to catch the wave of a trendy product, you may be left with a lot of leftover inventory if your timing is off.
- Retail Arbitrage: As a seller of products online, retail arbitrage means purchasing products with the specific purpose of exploiting a price difference between two marketplaces, so you can resell them at a profit. Resellers will often research discounted products that are being advertised in online and/or brick-and-mortar stores, and then list them on Amazon FBA for a full or competitive rate that nets a gain for the reseller.
Ship to FBA
There are third-party fulfillment centers outside of Amazon that allow you to use their services and ship products directly to Amazon FBA for fulfillment to consumers, however, these companies generally charge high fees for their services. As long as you use a third-party warehouse, the majority of companies will accept your purchase order and provide you with great customer support and even help in the checkout process.
To begin the ship-to-FBA process, go into Seller Central and select Manage FBA Inventory. By clicking through the appropriate prompts, you will be guided through the entire process.
List The Product on Amazon
To list your products on Amazon, you need UPC codes for all products, along with product measurement and weight, as well as professional-grade photos. You also need to have an accurate and detailed product description based on optimal keyword research, including the appropriate listing category, so your product will appear high in consumer searches.
To begin the listing process, go to your Seller Central account and click on Add a Product. From there, follow the prompts through the entire process.
Promoting your Amazon products is a very similar process to promoting anything. First, you want to focus on Search Engine Optimization (SEO) with the product title and description. Google has a keyword planner that can help you select the most appropriate keywords. Sponsored ads are another option such as on social media or through Amazon itself.
Keep an eye on your competitors and be sure that your products are priced competitively. If your products are overpriced, buyers will turn to competitors. If they are underpriced, buyers may turn away perceiving your products as “cheaply made”. Focus on your positive seller rating and pride yourself on customer service.
How Much Does Amazon FBA Cost?
There are many different types of costs attributable to Amazon FBA. Amazon Seller Central details each and every one of them. The types of costs include:
- Inventory storage – rate depends on storage duration.
- FBA fulfillment fees – standard and oversize.
- Inventory removal – return and disposal.
As you can see, anyone can become an Amazon FBA seller. Use this article as a guide and checklist to get started. Patience and intrinsic motivation will lead you to success. Keep in mind that no path is easy, and you will likely experience ups and downs. Keep putting one foot in front of the other and make forward progress as the next Amazon FBA seller.