Amazon is one of the largest and most popular online marketplaces. Users can buy items from Amazon directly or from third-party sellers via the Amazon eCommerce platform.
It has one of the best opportunities for sellers. It allows third-party sellers to sell items using their website. If you’re interested in selling a few things or a lot, Amazon can help you do so.
Furthermore, Amazon has a wide range of products. You can sell anything from books to electronics to sports equipment. Amazon is selling products to over 200 million people only in the USA, so you can imagine that there is no shortage of opportunities.
Startup plan for making money from Amazon FBA business in 2022?
What is an Amazon FBA?
FBA stands for “Fulfillment by Amazon.” With this program, you simply send your product to Amazon’s warehouse. Market your product on Amazon’s eCommerce platform. Once you get an order, Amazon will take all the responsibilities of product fulfillment, including packing, distributing, returns, etc.
There is a second program offered by Amazon called FBM (fulfilled by merchants). In this case, you fulfill all the orders by yourself instead of paying service fees to Amazon. This service is suitable for those sellers who already have an established business all over the world. But if you are a beginner, then FBA will suit you best.
How does Amazon FBA work?
Amazon FBA business is quite a simple yet powerful process. It allows sellers to grow their business online without investing too much money in storage facilities and staff. You can add your products to the FBA section by following some instructions using your Amazon seller account.
With just a few clicks, you will be able to expand your business in an entirely cost-effective manner with the direct help of Amazon FBA. The way Amazon FBA works is very straightforward.
Here’s the complete picture of how Amazon’s FBA business works and what Amazon does.
- First of all, you seller, search and select a winning product to sell through Amazon FBA.
- Add your logo and brand name to your product.
- A factory manufactures your product in bulk.
- After that, you send your product to the Amazon warehouse in your desired country.
- Amazon stores the products in inventory.
- When customers purchase your product, Amazon packs and ships your product to your customer.
- Amazon deals with the whole process, from the transaction of payment to updating your inventory.
- It handles all the customer care service responsibilities, including returns and refunds.
- Amazon deposits your sales profit directly to your bank account every two weeks.
8 steps to launch your Amazon FBA business:
Amazon FBA is not a get-rich-quick scheme. It requires hard work and time to become successful in this business. You have to be wise during the whole process, from selection to product marketing.
Keep in mind that competition is getting high in the online markets. If you want to stand out from the crowd in any meaningful way, you need to go for a different and unique product instead of a trending product.
Step 1: Choose your niche
If you want to make money by selling on Amazon, you have to find a profitable product. By picking the right niche, you will be able to grow your business quickly and accurately. However, it doesn’t mean that you will get rich the day after, but it will help you compete and stand out in the market.
Amazon eCommerce is a big game. Sellers from all over the world are there on the Amazon eCommerce platform, trying their best to maximize the sales. Thus, competition will be high. Therefore, it is necessary to be professional in selecting your niche.
Control your emotions while selecting your niche. Start with what you’re passionate about and brainstorm the related ideas. Don’t bound yourself to limited categories. Think broadly and out of the box.
The market is far more competitive these days, and if you want long-term success, building a brand using a different product will get you farther than chasing a trending product.
Key points to keep in mind during the selection of your niche
- Your interest and passion
- Community of people you want to serve
- Is there a buyers market for this type of business and product
- Is this a growing market and will remain in demand even after ten years
Choose what suits your personality:
To run an Amazon FBA business is not child’s play. You have to be very keen on every single prospect of the niche you will select. Wrong selection of a niche that is not in demand but you are in love with this niche will suffer you later on.
It seems sensible that selecting a demanded and profitable niche will be a good decision than going with your interest. In this case, you only focus on the sales and revenue of the product that can gear up your brand-building process.
But, if your interest drives you and you think you can generate sales and build an online brand in your niche, you have to be very clear in your niche and pickier in Amazon product research.
For example, if you are interested in the automobile business, selling hardware items will be more profitable than bikes or cars.
Step 2: Find products to sell on Amazon:
Amazon products sourcing is the foundation of a successful business. A winning Amazon product can scale your business as vigorously as nothing else.
There are many routes you can take to start selling on Amazon.
- Either you can manufacture your product or can buy from any other manufacturer.
- You can purchase products from the wholesale market at cheaper rates and sell them on Amazon at a high cost. (retail arbitrage)
- You can search for an in-demand product and sell it under your brand.
- You can also improve the products that are already selling.
The last two steps are Private labeling methods. In this article, we are primarily discussing selling private label products under your brand.
What is a private label?
Private labeling for Amazon FBA is to source a product manufactured by one company but label and market it under your brand name. You find a product of your choice with high sales and average reviews and sell it on Amazon.
Product sourcing is all about opportunity. A popular, in-demand product with low competition and low marketing will be an excellent opportunity to swipe all the sales by implementing better marketing strategies.
How to find profitable product ideas?
The best platform to find a potential and profitable product is the Amazon Best Sellers list. You can see the top 100 best-selling products category by category on the Amazon best sellers list. Simply, click on the categories to explore the top-selling Amazon products in each.
Guidelines to find the best Amazon FBA products:
These are three standards to keep in mind while sourcing a product:
- Price of the product:
To be profitable in business and ensure a reasonable profit margin price of the product should be $15-$50.
2. Size of the product:
Your product weight should be under 2lbs to keep the shipping cost down.
3. BSR rank of a product
Your product should have a low Best sellers rank. BSR is your key to assessing a product’s demand. Products with BSRs of around 1500 or below are considered good products for Amazon’s FBA business.
For all the products you’re considering, analyze them for:
1. Profitability
You can use the “rule of 3’s” to estimate the profitability of a product. Each product sale is divided into three parts: ⅓ for Amazon fee, ⅓ for landed, and ⅓ for you.
Here’s the process of estimating the potential profitability by assessing cost and revenue.
- Costs
- Landed cost:
The collective cost of producing/buying products and transporting products to Amazon’s warehouse.
Cost of inventory
Shipping cost
Preparation or inspection fee (if any)
2. Amazon’s fees:
- Referral fee:
It is Amazon’s commission.
It is 15% for each item you sell.
- Fulfillment fee: (for FBA sellers)
Fee for packing and shipping of products
It varies based on the product’s weight, dimension, and shipping destination.
- Storage fee:
FBA sellers paid monthly or long-term product storage fees.
- Selling plan fee:
For professional Amazon sellers: $39.99
For individual Amazon sellers (sales 40 units or less per month): $0.99
- Others:
Business costs, including advertising and management
3. Revenue:
To get a profitable margin, the price of a product should be $20-$70.
2. Demand for the product:
The demand for the product can be determined by looking at its Best sellers rank. BSR of a product specifies the sales ratio and updates on an hourly basis. You can find out the BSR of a product in the “Product information” section.
If a product has a lower BSR number (less than 1), it means it is making high sales. Similarly, if the BSR number is greater than 1, the sales margin is low.
Therefore, you can identify the demand for a product by seeing how many similar products have nice low BSRs for their main category on page one of Amazon search results.
“How to find products to sell on Amazon” post by junglescouts also recommends finding,
- A product that is not affected by seasonality
- Improvable product
- A product that can be manufactured easily
Best Amazon FBA product research tools:
You can do the product research manually by typing the main keyword for your product on the Amazon search bar and then clicking on “All departments”.
Amazon will show you the search results related to keywords. Now, you will click on each product and scroll down in the product description to check the BSRs. You have to repeat this step for every single product.
It is possible but laborious.
There is a free chrome extension that makes the job a bit easier. This extension shows you the BSR of products right on the page without clicking on each product. You can add this extension from DS Amazon Quick View.
But now, there is a more manageable way to assess the information about a product using software called “Junglescout”.
Junglescounts gives you the critical data to validate which products have high demand and low competition.
Add junglescout to your browser bar and click it when you get search results on the result page. This software will immediately show you complete stat about the product, and you can easily estimate the potential of any product.
3. Assess the competition
Next, we have to evaluate the competition, how many similar products exist in the market and whether there is an opportunity for newcomers. We can determine the competition by identifying the number of similar products and their quality reviews and ratings.
Step 3: Source your private label products:
After finalizing the product, now it’s time to search for suppliers. You need to find a manufacturing company that supplies you with the private label product in bulk. There are several websites where you can find suppliers like Alibaba.com, GlobalSources.com and DHgate.com, etc. For example, on Alibaba.com, type the main keyword of your product and search for suppliers.
Calculate the Financial Viability of your Products:
It is imperative to calculate the financial viability of your product to ensure a reasonable profit margin. Hence, before getting excited over finding a product that costs $2, which you can sell on Amazon at $25, calculate the profit margin by utilizing the Amazon FBA calculator.
So, you can get the exact profit figure after deduction of Amazon FBA fees, shipping fees and marketing costs, etc. If you are generating a profit of 15% -25% after all the deductions, you have an excellent Amazon FBA business.
Testing your products
The quality of your product should be outstanding. It is essential to test the product before selling it on Amazon. Sometimes, products that look outstanding in pictures are trash in reality.
Therefore, when you have evaluated the profitability of a product and decided to sell it, buy some samples to check the quality. Once you start selling on Amazon, you have to keep the product’s quality high to win customers’ trust. The success of your business depends on customer reviews. So, don’t risk the wrath of your customers.
Building relationships with your suppliers
Developing excellent and trustworthy relationships with your suppliers for a long-term and ethical business is necessary. It will help you know more about the manufacturing of your product. By this, you will feel more confident in selling your product. With time, you may also get better rates and more favorable credit terms.
Step 4: Establishing your Brand:
For the development of a success-oriented business, establishing a brand is a must. A solid brand name and logo will help you in the marketing procedure. Before launching a brand, you have to be clarified in some criteria,
- Why do you want to develop a brand?
- How can your Brand improves your business on Amazon
- What should be the reasons for people to use your products?
- How will your Brand connect to the audience?
- Do you have strong competitors on Amazon, branded themselves and their private label products?
- What can you do better in this field?
- Your Brand name
There will be two names you require on Amazon,
- Your seller name
Your seller name is your company name in actuality. Every product you sell will fall under this name. It can be your brand name if you work only with a single niche. However, if you want to grow your business in multiple niches, you have to create a more generic company name that covers all categories.
- Your product brand name
The brand name will be separate for each product you launch on Amazon. For example, if you sell a toy product, you have to generate a toy style brand name. According to Amazon’s brand name guidelines a seller can develop a fancy and innovative brand name to attract more traffic towards his product.
However, there are some restrictions from Amazon regarding brand name,
- Each seller must provide a unique and original brand name.
- The display name should be less than 20 characters.
- There should not be offensive words in display names.
- You may use “-” and “_” but no other special characters.
In a nutshell, your brand name is worth a little time considering.
2. Your Brand Design
In the case of brand design, you have some options, including,
Option 1: You can brand the product either by printing the brand name/ logo on the product or gluing a sticker on it.
Option 2: Second way is to brand the packaging instead of the product itself.
First of all, you have to get your Brand designed. You can yourself create your Brand design, but if not, go to fiver.com and find someone there to do this task for you.
Step 5: Create your Amazon seller account:
Creating an Amazon seller account is necessary to ship your items to Amazon fulfillment centers. Without a seller account, you can’t list your products on the Amazon marketplace.
You can create your Amazon seller account by going to Amazon.com and clicking on the “start selling”link.
Step 6: Shipping your Amazon product:
There are two different shipping routes: ship by air and ship by sea. Initially, shipping looks complicated, but it will become very easy for you once you understand the process.
Initially, the order quantities are likely to be low (500 – 1000), so the fastest & easiest way to get your first few shipments to Amazon is by air.
For this purpose, you will use Amazon air freight companies like FedEx, DHL, and UPS.
When you start larger inventory orders of quantity 5000 or above, you have to choose shipment by sea services.
The simplest way is to ask your suppliers to do shipping for you. It costs around $6 per kilo, with shipping times around 8-10 working days.
Using a Third-party inspection service
Using this service, you send your products from manufacturers to a third party company that receives, inspects and stores your products instead of Amazon’s fulfillment centers. You choose
This option is quite suitable for specific reasons like,
- If our inventory is out of Amazon fulfillment centers, we can send even a small amount of products if needed.
- At the start of your selling business, it is good that your products are getting checked by someone before sending them to customers.
- You can get rid of quick stack up of Amazon storage fees.
For shipment of products to third party suppliers storage companies, you give the address to the manufacturers and let them handle the rest procedure.
You have to create shipping labels inside Amazon to ship your products to Amazon fulfillment centers either directly from manufacturers or by a third party supplier storage company.
Step 7: Launching your products on Amazon
Here is a five-step Amazon product launching plan, which will make your product highly scaled.
- Optimize your listing
Optimize the heading of the product by adding related keywords. There should be 5-7 attractive images displayed on the page and a logical product description. If you are Brand registered, you can add different eye-catching pictures and even videos in the description.
Amazon is a search engine, and it will search the products by analyzing words, not by pictures. So, none of your photographs will work if you haven’t inserted the specific keywords.
There are several ways to use keywords, but one of the best methods is to utilize unique keywords in your listing via the headline and bullet points.
2. Focus on getting reviews
Getting reviews is an ongoing process throughout your business journey on Amazon, but in the first few weeks, it is essential to focus on getting reviews. By finding reviewers, your sales will boost, and of course, the credibility of your product will increase.
3. Create some keyword-rich FAQ’s on your listing
Analyze your competitors’ product pages, see what questions the customers asked from the seller, and their feedback in the review section. Paste the same questions in your listings with comprehensive answers to get more trust of customers.
4. Look for bloggers or YouTubers with large followings to review your product and post or make videos about it.
Give them discounts and special offers just for their customers for a limited time. It will quickly boost your sales and rank your business.
Step 8: Building your ‘off Amazon’ audience:
Building an ‘off Amazon’ audience is the secret sauce to growing your Amazon business quickly and getting ranked. If you combine the Amazon pay per click with the traffic coming in from external sources, you will accelerate your sales, which will increase your ranking.
The best way to increase your ‘off Amazon’ audience is to build an email list. If you know about Amazon, the main reason for its success is its database of 200 million people who have entered their credit cards into the system.
If you want to accelerate your sales and ranking, you have to build your database of interested parties first to convert them to a database of paying customers.
Influencer Marketing
Social media influencers have fundamental importance in society. They have a massive list of followers. People love to watch and follow them. Get the benefit from the power of influencers by requesting them to post about your products, make videos, talk about the products on social media, etc.
To get rapid traffic to your listings, develop beneficial relationships with the social media influences and send them free PR samples. It will direct quality traffic towards your brand and products. Ultimately, it will boost your conversion rate; as a result, Amazon will give you more love and push you to the top ranking.
Other ‘Off Amazon’ methods
Other methods for growing your brand off of Amazon include building a social media audience, content marketing, and paid advertising via Google or Facebook. It will increase your reach to the audience and ultimately accelerate your conversion rate.
Is Starting an Amazon FBA Business Still Worth It in 2022?
Yes! Thousands of beginners are heading towards Amazon and are successfully building their business on this eCommerce platform. Like any other business, Amazon also demands time and hard work. It is possible to make $million on Amazon business, but you have to be creative and hard working to make it successful.
Several tools have been introduced to make the tasks more manageable for you, but you still have to do some vital tasks manually to compete and stand out in the market. Here, a comprehensive and innovative business model is required to be a top-ranked seller on Amazon.
By 2040, 95% of all purchases will be done via eCommerce, and Amazon considers the head of all the eCommerce platforms. Therefore, it is worth it to start an Amazon business in 2022.
