Creating A Successful Amazon FBA Business on Your First Try
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If you’ve been thinking about starting a side hustle to make money online, you will have invariably come across the Amazon FBA business model as an option. And a very viable option it is.
Amazon FBA businesses have helped their owners make significant money. Over 200,000 sellers on the platform make over $100,000 per year and 20K of those sellers make over $1M.
And although over the years the competition has become fierce, there are still tons of products out there available for sellers to make their wealth.
With the right tools and strategy, you can make a healthy income for you and your family. So, let’s dive in and see if Amazon FBA is right for you and how you can stack the odds in your favor to succeed.
What is Amazon FBA?
Let’s make sure we’re on the same page.
Amazon FBA stands for “Fulfilled by Amazon”. This means that Amazon houses your product in their warehouses around the world and when an order comes in through their website, they take care of processing of that order.
When a purchase is made, Amazons’ team picks your product off the shelf, packages it, ships it out to the client, deal with returns, processes the transaction, takes their cut and allocates the remaining money to your amazon account.
It is all seamless to you, the seller. You get reports on sales, returns, profit, costs, and every other aspect of your business that you can imagine (except customer information).
What are your responsibilities?
As an Amazon FBA seller, you have a few responsibilities in the process:
You must create your listing
There are entire courses that will teach the right way and the wrong way to put a listing together. Search is at the heart of Amazon so creating listings with strong SEO and detail will help you get more visibility. Take your time with this step and do your research on how to properly structure product titles, descriptions, and keywords.
Although this is a bit of work, there are many experts on upwork and fiverr that can help you with that process. It might be worth having them do a couple of your initial products and you watch and learn so you can the future products yourself.
As important as the words are, most buyers purchase based on visual appeal. Take high quality professional pictures of your products from different angles, in user and with the right environment. Your manufacturer can provide some of these images but most likely you’ll want to go the extra mile and do it yourself
You must set you price
This is a bit of art and science. Obviously, you want to cover you costs (product, returns, marketing, shipping, profit etc) but you also want to stay competitive otherwise you’ll never get sales.
Do research on comparable products to understand the pricing range. See what sets your product apart and determine how to value that to maximize profit on each sale. Also understand that in the beginning, it’s wise to discount the products heavily to drive traffic and sales.
Review Amazon terms, safety and package requirements
Your products must meet Amazon packaging requirements, safety requirements and any other regulations. Amazon has many rules around proper packaging and labelling and it is your responsibility to meet those requirements before the product can be sold
Don’t take these lightly as any discrepancy will have your product listing pulled while an investigation is taking place. This can take a very long time. And if there is a need to repackage the products, it can be very costly.
Manage inventory levels
You must make sure your products are available in Amazon warehouses in order to have them sold. When you have your listing completed and approved, Amazon will tell you where to ship your product based on their algorithms which predict the closest warehouses to your end customer.
You need to have your products shipped to those warehouses so they can further distribute them to smaller regional warehouses. If you have no product at their warehouses, Amazon obviously can’t sell your goods.
Amazon does get frustrated if you regularly run out of product. When your listings get pulled you lose a lot of momentum (and marketing spend) and you’ll find harder to regain traction if the product has been unavailable for weeks.
Run marketing campaigns
You are not required to run marketing ads for your products howe
ver this is a good idea when just launching a product. Paying for sponsored products allows you to get your product at the top of the page when searches for your keywords take place.
This allows you to make sales, which then you get ratings, which is the social proof needed for additional sales.
It is also a good idea to run campaigns during Amazon Days, holidays, cyber Monday, and black Friday because the traffic volume is high your ad spend can generate tremendous returns.
Respond to customer inquiries
You are also required to respond to customer inquiries within 24 hours. Amazon is a stickler for having sellers engaged with their customers and provide good service. As a seller you get a rating by your customers and by amazon and if you are deficient in these responsibilities, you can get your store closed
These may sound like daunting tasks for someone who’s never sold on Amazon before, but these requirements are not that difficult to meet once you are used to the process.
Running an Amazon FBA store is truly a fraction of the work compared to running a full-blown ecommerce site but many of these are just basic steps required for any online business to be successful.
What is the process to become an FBA seller?
The process of getting up and running on Amazon FBA isn’t terribly complicated however it can be time consuming when it comes to product development and getting your first shipment out. But here are the general steps required.
- Open an Amazon FBA account through Seller Central. You’ll need to complete a profile, a number of legal, tax and payment forms. This is a good time to look at a few youtube tutorials on how the system works so you can get accustomed to the process
- Find a product that you would like to sell on the platform. Below we will discuss this in more detail as this product selection is the difference between success and failure. Ensure the product meets all specifications and that you have rights to sell it (ensure there are no patent issues, safety concerns, special licenses or permits required)
- Have the product manufactured and ensure the safety, packaging and shipment specification defined by Amazon are met.
- Then create your listings, pricing, product description, and all required details for each product you’ll sell. We recommended just starting with 1 or 2 products as you get the hang of the system.
- When your products are ready, go to Manage Inventory and send your first shipment to the Amazon locations provided. If you purchasing large quantities of product from abroad, it is sometimes best to use a 3rd party warehouse to hold the product versus sending everything to Amazon. Amazon’s warehousing fees are high and their space is limited. When you first begin, they will limit the amount of space they allocate to you. Since you’ll get better pricing from your manufacture by buying in bulk, you may need a warehouse to hold your products until you’ve sold enough and it’s time replenish the Amazon inventory. I’ve personally used Logistics Plus as they have warehouses on both coasts of the US and have people in China that can support the transfer of goods.
- Once your products arrive at the amazon location you can start selling. Most buyers will purchase based on social proof and will want to see ratings on your product. In order to get ratings, it’s important to provide deep discounts so people purchase your products. Amazon allows you advertise in their platform, where you can create, monitor and optimize ad campaigns. They also have a Pay-per-Click option called Sponsored Products that helps rank your products at the top of pages for keywords. This will help generate traction
- Always interact with customers when questions come up. Be detailed and thorough in your response and help your customer see value in their interaction with you. Eventually many questions will be answered by the Amazon user community that have purchased your product. Just because your products may have a high margin, a low return rate, you respond to customers promptly and you offer deep discounts, doesn’t mean you’ll make money day 1. At the end of the day, if you have the wrong product, you won’t have a successful business.
Finding the right product
This is by far the most important step. It doesn’t the effort you put in if you have selected a product nobody wants.
And failing in the world of Amazon FBA can be a costly proposition. As you saw from the steps above, there is time, cost and effort to launch an FBA business.
So product selection is worth getting help with and spending some time and money upfront on. Vik, the creator of FBA Stars has been very successful in finding products that make money and has helped many of his clients find top notch products.
Not only does the program dive into product selection, but it also covers:
- Why now is a great time to get into Amazon FBA
- How to properly set up Seller Central
- Tax considerations
- Product research methods and how to add value to those products
- Finding suppliers & shippers
- Getting reviews and improving ranking
- Using PPC advertising
- Facebook and Google ads
- And much more.
There are other programs on the market but this one has proven itself.
Get excited and motivated
Like any business, success rarely comes overnight. It’s takes time and tenacity to create a full-time income from Amazon but many have done so for themselves and still do today. Getting help from successful entrepreneurs that have “been there, done that” can leapfrog you to success much more quickly
Here are some examples of recent successes to keep you motivated.
If you don’t want to build, consider buying
Some people just don’t want to wait for the success. Building an online business like an Amazon FBA site, can be incredibly rewarding. At the same time, it takes time, effort and commitment.
The alternate option, is to purchase an existing Amazon FBA business. A buyer broker like MadX Capital help buyers find the right online businesses to purchase that can give them immediate income.
They will find the opportunity, work with the seller, negotiate the deal, conduct due diligence and help close and transfer.
Amazon FBA is not a get rich quick scheme. It takes time, money, and patience to create a profitable store. But the opportunities are there and have been proven over the years
At the same time, it’s important to stack all the chips in your favor. Leveraging training programs and resources that have been proven can be the difference between success and failure. This is especially important around product selection.
So as you embark on your journey, find strong programs to help you along the way, keep learning but most importantly, take action and start!
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