Since most of my friends, family members, online community members tend to not be aware of what Amazon FBA is or how it works, I figured I would create a starter guide to set a foundation for future posts about how to maximize profits through Amazon FBA.
What is Amazon FBA?
Amazon FBA stands for Fulfillment By Amazon. This is a great way to dip your feet into an e-commerce business opportunity while limiting your upfront costs and allowing Amazon to do some of the heavy lifting. As I’m sure most of you know, Amazon is a massive e-commerce player and drives a ton of traffic to the site daily, which in turn acts as free advertising for you as a seller. Let me throw out a few key statistics to you:
90% of US consumers have shopped on Amazon, and 65% tend to shop on Amazon monthly.
Over 120 million Americans are Amazon Prime members
More than 50% of Amazon’s revenue is fueled by third-party sellers.
How Does It Work?
I will start by saying, the process is going to sound very simple, you will probably read this and say “That’s all I have to do?” and in some aspects you will be correct and in other parts it will require a little more elbow grease to get things accomplished. The first step you want to take is to create your Amazon Seller account, you can setup your account here: https://sellercentral.amazon.com/. There are several different business models you can venture into with Amazon:
Retail/Online Arbitrage: Buying discounted/deals/clearance products through retailers or online to resell on Amazon
Dropshipping: Buying products directly through a manufacturer who fulfills and ships the order directly to the customer
Handmade: Creating/Crafting your own product to sell on Amazon (Similar to Etsy)
Wholesale: Buying products in bulk directly from a brand or supplier at a discounted rate below retail to sell on Amazon
Private Label: Creating your own product label/brand
We will get into each of the above business ventures and how you can make money from each one in future posts so make sure you subscribe to our email list to be notified of new posts.
There are 2 different ways you can sell on Amazon, FBA (Fulfilled By Amazon) or FBM (Fulfilled By Merchant). If you utilize the FBA route that means you would ship whatever product you are going to sell into Amazon warehouse and the would package it, and send it to the customer via Amazon Prime two day shipping. They also handle all customer service and return requests, this minimizes your workload but in turn the fees associated with those types of sales are greater. If you were to utilize FBM then you would be shipping out product to customers yourself and handling all customer service and return inquiries, this is somewhat similar to what you would do if you ever sold anything on eBay before.
What Do I Sell?
This question and the answer to it may be the hardest part of selling on Amazon. I generally recommend trying to get into a product category that you already know a lot about or enjoy. The reason for this is, you probably have a good idea of where to purchase the product, how it works, what prices it sells for and how popular it is. Also if you decide to go into Private Label, you may be able to create something new or improve on an existing product to make it better since you are already familiar with it.
I know you may be eager to get in and start selling but this is one of the most important and time consuming steps of the process and you need to make sure you find a product or products that are going to sell well, and it’s something you can buy cheap enough that you can still make money after cost of goods, fees and shipping charges are all deducted.
Can I Sell Anything I Want?
A lot of people have the misunderstanding that they can buy whatever they want on the clearance rack at Walmart and put it up for sale on Amazon. Before you go out and buy product make sure you understand all the ins and outs of selling so you don’t waste your money. The easiest way to explain this is think of your Seller Account as a game and you start on level 1. Amazon needs you to prove to them you are a trusted seller so they “gate” you or prevent you from selling products in most categories, as you prove that you can sell they start to “ungate” you and open up more categories and more products for you to sell.
However, if you have a verified supplier of the product you are attempting to sell you can provide the invoice to Amazon and they will allow you to sell that product, if you don’t have a supplier and you just found a deal at Target that you want to sell, you will need to have sales and account history and a good track record to start getting ungated in other categories and be given the opportunity to sell a wider range of products.
Hopefully for those of you looking to learn more about the world of Amazon Selling were able to take away some good points in this post. I will regularly be checking this post for comments so please if you have questions feel free to comment below and if you enjoyed the post throw us a like, we would appreciate it. If you want to be the first to know of our future posts about Amazon FBA or other profit making ventures please subscribe via your email below.