Amazon FBA (Fulfillment by Amazon) is an online business model that allows you to leverage Amazon’s extensive network of distribution centers and warehouses.
After you sign up as a seller, Amazon provides you with two options for order fulfillment: FBM (Fulfillment by Merchant) and FBA (Fulfillment by Amazon). Choosing FBM means you’ll take care of handling, packing and shipping orders directly to your customers.
Selecting FBA, on the other hand, implies that Amazon will use its fulfillment centers to store your inventory. Once a customer places an order, Amazon will use its expertise to manage, pack and ship the relevant items to your customers’ addresses. Simply put, you sell it, Amazon ships it. Customers get an industry-leading logistics solution which reduces delivery times and keeps them happy.
What this means for entrepreneurs is that you can run a hands-off business from anywhere in the world. Also, with fulfillment taken out of the equation, you can focus on finding profitable items while Amazon does the rest on your behalf.
Amazon FBA Overview
The average startup costs of launching a full-fledged Amazon FBA business ranges from $500-$5000. Beginners can definitely test waters by investing $500-$1000, which will get them an FBA membership, a Seller account, and a decent inventory.<br><br>The trick to getting started with low investment is to find manufacturers or suppliers who’re ready to ship or make as low as 50 units. The other primary startup costs would be getting your products to Amazon’s fulfillment center, which can also be achieved at a reasonable cost.
Most people start making money with Amazon FBA within 3 months of starting the business. However, this isn’t always the case as it can take time to find a profitable product and streamline communication with prospective suppliers.
Also, there is some waiting period before the samples arrive at your doorstep so that you can test the quality before listing it on Amazon. Other waiting times pertain to putting your logo and brand name on your private label items, as well as delivering your items to Amazon’s warehouses.
The trick to getting started with low investment is to find manufacturers or suppliers who’re ready to ship or make as low as 50 units. The other primary startup costs would be getting your products to Amazon’s fulfillment center, which can also be achieved at a reasonable cost.
Interestingly, selling via Amazon FBA also provides you with the opportunity to earn a passive income. With sites like PeoplePerHour, you can hire a freelancer to generate product listings on your behalf. There are even companies that’ll send your products to Amazon automatically, as well as manage orders for you.
However, it’s always recommended that you keep tabs on your business activity as potential changes can impact the way your operations are set up at any time.
How It Works
How Does Amazon FBA Work?
To use the Amazon FBA service, you need to go through the following steps:
Create an Amazon Seller Account
In case you aren’t registered to sell on Amazon, you’ll need to create a Seller account. Once you do, you’ll see an option to choose FBA – just follow the on-screen instructions and get the job done.
List The Products You Want to Sell
Once your account is activated, you should list the products you want to sell. Click “Inventory” > “Product” at the top of your screen to do so.
Choose Amazon FBA as the Shipping Method
Follow the steps here to add FBA to your Seller Account.
Prep The Products to Be Shipped
Your items should be prepared, packaged and labeled the way you want them to arrive at your customer’s doorstep.
Send Your Items to Amazon
Amazon has connections with several companies that offer discounted shipping to FBA customers, making it simple to send and track your products. You can read Amazon’s Partnered Carrier Program page for more information.
Once your products arrive at an Amazon fulfillment Center, they’re ready to be shipped to the customer. Amazon picks, wraps, ships and tracks the ordered items for you.
Of course, the company charges you a fee for handling both storage and fulfillment. You can get more information by visiting the pricing page for Amazon FBA
How Do You Make Money With Amazon FBA?
To make money with Amazon FBA, you need to know how to sell, and there are a few techniques that successful merchants utilize. Below are your options:
One option is to buy low-priced items and list them on the Amazon marketplace at a higher value. The best sources of supplies are the clearance racks of Home Depot, Walmart, and other similar stores.
You can buy used books (hardcover) for $15-$25 at yard sales, book stores, and other places to resell on Amazon at a higher price.
Another way to make money with Amazon FBA is to buy goods in bulk to resell at a higher value. Suppliers are often willing to offer good discounts to those who buy in bulk, so you can make a decent margin on every item you sell.
The most recommended way is to have a third-party vendor or contractor manufacture a product for you, then sell that item under your own brand name. You can get private label products made through sites like Alibaba.com.
In addition to the selling technique, you need to know how much to sell the items for. For FBA merchants, it’s ideal to have a profit margin of at least 30% and a minimum dollar value profit of $5. However, certain items, such as groceries, will generally have a higher margin and lower profits.
Frequently Asked Questions
Can I sell in countries outside of the U.S.?
Yes, you can list products on any of Amazon’s marketplace, including Amazon.ca, Amazon.co.uk, Amazon.de, and others.
However, you’ll need to make sure that the FBA service is available for the country’s marketplace. Also, you’ll need to create a Seller Central account with the Amazon website of the country you plan to sell in.
I saw a great product the other day. I think people will buy it…Should I go with my gut feeling?
In a word: no. Many sellers believe that their product idea is excellent and that buyers would flock to their Amazon page, but the truth is, great FBA businesses aren’t built on gut feeling.
In fact, it’s always advisable that you do market research to see what people are buying on Amazon. Find a product category and see what items are high in demand, then research the competition to ensure you aren’t entering a cutthroat market. By doing so, you can ensure the product will successfully sell on Amazon.
Does the FBA fee vary for selling products outside of Amazon?
Yes, it does. Amazon multi-channel fulfillment costs vary from the standard FBA expenses, but you still get competitive rates and capacity to scale. You can get more information by visiting this page.
What price range should I target to earn $x in profit?
There’s no set price, and it’s not about how much you sell a product for. Margins vary based on the type of inventory you’re planning to sell. Products that sell in the $50-$100 range can still make you $2,000-$3,000 a month, while those selling for $500-$1000 can fall short of that profit figure.
The amount you take home each month entirely depends on the cost of goods sold, the quantity you manage to sell, and profit margin potential, among other factors.