With an Amazon FBA business, eCommerce sellers gain access to a ready made customer-based of over 150 million Amazon Prime users with shipping, packaging, and customer services built-in.
As an entrepreneur, you can easily set up your own Amazon FBA business and and start selling for less than $1,000.
In this guide, we’ll tell you more about Amazon FBA, how it works, and how you can start your own online store today.
Table of Contents
- What is Amazon FBA business?
- Types of products people sell via Amazon FBA
- Revenue people are making on Amazon FBA
- How to start an Amazon FBA business
- Take a course to learn for yourself
What is Amazon FBA?
Amazon FBA, or Fulfilled by Amazon, is a fulfilment network that gets your products to millions of your consumers swiftly and safely. They offer product storage, distribution and customer services.
There are many fulfillment companies – such as ShipBob, Shipmonk, Amazon, among others— however, Amazon uses its immense E-commerce platform to pull in a huge percentage of SMBs and consumers.
Apart from the immensity of the Amazon Prime platform, Amazon FBA also offers lower shipping rates to your consumers. And Amazon Prime customers get free two-day delivery on all purchases, making your products more attractive.
Amazon FBA businesses are best-suited for small-sized products that are in vogue. Delicate, heavy or huge products incur higher charges and Amazon FBA storage fees could range from $2.41 (for 10 oz shipping weight) to $137.32 (for special oversize).
When it comes to Amazon FBA storage fees, the smaller the better.
Difference between Amazon FBA and Amazon MCF
Amazon Multi-Channel Fulfillment Centers (also known as Amazon MCF) is similar to Amazon FBA, but the former gives sellers the opportunity to extend their operations beyond the Amazon Prime marketplace. Hence, MCF sellers can place their products on their websites or third-party marketplaces and Amazon will cater for shipping, packaging, handling, and customer services.
Note that the ongoing costs of Amazon MCF are more expensive than for an Amazon FBA business. And not all marketplaces support the use of Amazon FBA as a third-party fulfillment center.
The reason is not far-fetched; Amazon puts its logo on every product it packages and delivers. Even online marketplaces like eBay and Walmart restrict their users from using Amazon MCF services.
Types of products people sell on Amazon
For people who don’t know what to sell with their Amazon FBA business, you can conduct product research on Amazon or other marketplaces like eBay, Alibaba, Facebook, and Walmart.
The trick is to find a product with a high probability to trend, then make and customize your own version. Then, place the products on Amazon.
According to Hubspot, the five most profitable products on Amazon are books, clothes, electronics, kid toys and games. Understand the fact that the most profitable products on Amazon or any online marketplace change with weather, taste, trend and time.
Hence, you ought to be on the lookout for products with the potential to reign in the nearest or distant future.
Typical revenue from Amazon FBA stores
An Amazon FBA business is by far one of the most profitable businesses that do not require you to have a manufacturing site or warehouse. With the aid of Chinese manufacturers (easily found on Alibaba) and Amazon FBA, you can manufacture, store and ship products to your customers.
The good thing about Amazon FBA is that you don’t need to worry about customer service; Amazon is to the rescue!
According to JungleScout, over 50.7 percent of Amazon FBA sellers make from $12,000 to $300,000 per year. While 20 percent make up to $3 million per year. Only a staggering 23.8 percent make below $1,000 per month.
How to start an Amazon FBA business
As we’ve hinted earlier, the first step to starting a successful Amazon FBA business is product research. Without proper research, investing in a product is nothing but a mere gamble.
Researching your product
After choosing your preferred supplier, request samples. Depending on the kind of product, sample costs range from $50 to $300. To give your product a distinctive feel, you can request for customization from the production company. Usually, production companies are more than happy to accommodate you and your needs.
Once you’ve received the samples and you’re happy with them, proceed to order inventory. Your basic expense is the product inventory as it covers storage, shipping, handling, and customer services. This is the amount of money you pay to set up an Amazon FBA seller profile.
Understand that the FBA account is different from the FBM account.
When it comes to an Amazon FBA business – you sell it, and Amazon ships it.
On the other hand, an Amazon FBM seller ships the products themselves. The only thing Amazon does for Fulfilment by Merchant sellers is to list their products on Amazon E-commerce site.
In general the amount required for order inventory could range from $500 to $2,500. Remember, the Amazon FBA fees depend entirely on the nature, weight, type of product.
Developing a brand
There’s a difference between product customization and business branding.
Branding is your identity and logo, while product customization deals with the shape, color and other features of your products. Most times, product customization and branding is done at the manufacturing stage, hence you need to send your manufacturer your logo beforehand.
Although the manufacturer may offer to give you an auto-generated logo, it pays to hire a logo designer from Fiverr or 99designs. For $5 to $50, you can get a logo on Fiverr. For $300 and above you can get a quality logo on 99designs.
Alternatively, you could even design your own logo with the help of online graphic design courses.
Once your inventory is with Amazon and your seller’s account is up on their site, it’s time to market your products.
You can use a combination of SEO, social media, paid advertising and content marketing strategy to drive interest and generate sales, and keep the 4 Ps of marketing in mind.
Take an Amazon FBA course to learn for yourself
They say that one of the best ways to learn something new, is to just start doing it.
However, that logic doesn’t necessarily apply to starting a new business.
In order to maximise your chances of success and avoid making common mistakes, we’d recommend taking an Amazon FBA course. There are hundreds of successful entrepreeurs who share their widsom and best practice, so why not take advantage of that?
To make it easier, we’ve reviewed and compiled the best eCommerce courses that you can enroll on today. Some of them are free, but the highest quality ones are only around $20 for 4-6 hours of learning material. With these online courses, you’ll be able to study at your own pace, interact with other students, and ask questions directly to the instructor if you get stuck.
So, what are you waiting for? It’s time to start your own Amazon FBA business!