How to Start an Amazon FBA Business
Amazon is the world’s largest e-commerce platform, where anyone can become a buyer or seller. The headquarter of the company is in the USA, and most of the visitors are from there. Entrepreneurs from the USA and other countries are just beginning to learn how to sell on Amazon. So, it is pleasantly pleasing that there are no barriers to remote sales for them.
Why is it worth starting a business on Amazon?
Due to well-thought-out logistics, quality of service, and fast delivery, the trading platform attracts more than 2 billion users from all over the world annually. Most US residents, if necessary, the first thing they do is to log in to Amazon. For buyers, Amazon is a genuine brand that guarantees quality and speed of purchase; for sellers – a trading platform with top quality users who are there to purchase goods and services.
The total trade turnover of the site is about 150 billion dollars a year, while 40% of all sales come from private sellers, about a hundred thousand go into a millionth trade turnover.
More than 30 categories of goods are available on Amazon so that you can sell almost everything there, from home-made jewellery to large household appliances.
What is Amazon FBA Program?
Fulfilment by Amazon (FBA) is a program that enables third-party sellers to store their goods in Amazon’s warehouse and make sales while Amazon handles all the deliveries when orders are placed. For a small commission, Amazon solves all “turnkey” logistics issues:
- Store your goods in their warehouse
- It independently delivers your products to customers.
- Remit payments to your seller account
That is, if a third-party seller decides to use the Amazon program, all that remains for the seller to do is:
- Produce or purchase goods.
- Deliver the goods to an Amazon warehouse.
- Promote your product on Amazon and work with customers.
Such a program has significantly reduced the barrier to enter the online trading market. Anyone can start selling electronics, food, fitness equipment, clothes, etc. under their brands. Moreover, to start the FBA program, you don’t need to have a huge staff or exclusive licenses.
Pros and Cons of Amazon FBA Program
Here are pros and cons that can help retailers decide if the FBA program is the right choice for their business:
Traffic Source: With Amazon’s FBA program, you don’t have to worry about getting traffic or customers to buy your products. Amazon gets about 13% of traffic against 3% in traditional e-commerce sites.
Logistics: Amazon provides the infrastructure to store goods, reducing operational risks for third-party sellers.
Convenience: The FBA program frees the retailer from severe headache. In addition to storing retailers’ products, Amazon handles all the heavy lifting. When an order is received, Amazon staff select, package, thoroughly negotiate with customers regarding services and returns, and ship products.
Quick Organic Sales: Amazon makes it easier and faster to rank your goods than Google. It implies that you can get sales relatively fast.
No website needed: Many successful Amazon sellers do not have a website. To get started on the FBA program, you need to have a brand name, and you are good to go. Even nameless brands make up to $100k a month on Amazon.
FBA merchants gain access to Amazon Prime customers. Amazon Prime customers are individuals who pay $ 99 annually in return for a more extensive selection of products and free two-day delivery. The number of Amazon Prime customers has not been officially disclosed, but speculation is that there are more than 70 million of them in the United States, and they spend on Amazon twice as many as those who do not use Prime. Merchants who use their own logistics facilities do not have access to Amazon Prime customers.
Amazon has created a system where sellers can only think about making good sales. Every other thing has been taken care of. So enjoy while sales troop into your account.
No customer base: Amazon does not provide the contact information of your customers. That means that you can only communicate with customers within the site’s dashboard.
Manipulation by other sellers: Amazon is a closed system with transparent ranking rules. So, competitors can use it to bring down your ranking on Amazon’s search engine. Third-party sellers may buy your product and leave you a bad review, or they can buy your product and return it marked “does not match the description.” All of these events negatively affect your ranking in Amazon SERPs. It is impossible to deal with it, but you can play it safe.
Huge competition: If you have released a unique product under a personal brand and it is popular, but you have not taken care of the patent and registration of a trademark, then soon it will appear with other sellers on completely legal grounds.
Amazon doesn’t encourage branding: Most buyers pay attention to the number of reviews, product pictures, price, and ranking a seller has. If you have a unique product, but few reviews and your products are expensive, buyers won’t patronise you. However, if someone with a similar product sells at a lower price and with many reviews, buyers will purchase their products. To succeed in Amazon’s FBA program, you need to learn and master local SEO.
How to Succeed in Amazon FBA
To succeed in the Amazon FBA business, you need to follow these steps:
The right mindset
This is perhaps the most crucial step to take seriously. As an entrepreneur, you need to have the right mentality to survive. What do I mean by this? Starting a sales activity on Amazon is a real business activity, with all the risks, and of course, the potential benefits.
If you have the right mentality, you will achieve great results. However, you must know that there may be moments of setbacks in which you may want to quit. If you’re not prepared to overcome tough situations, leave it at the start. Focus on something else and do not risk losing money that you’re not willing to lose.
The most important thing to do before registering on Amazon FBA program is to search for the right products to sell.
This is a very crucial step when it comes to selling on Amazon. Choosing the wrong products can ruin your business. I believe you don’t want to invest all your money in a non-profitable venture. It’s advisable to take your time to plan and prepare before selling on Amazon.
Perform in-depth analyses, try to understand what margins are there to enter the market, and always make a careful assessment of the competition.
Production and shipping
This step may seem confusing and complicated. You might be scared of buying products from Chinese websites or from someone you have never met before in your life. However, with due caution, you can quickly get cheap products from sites like 1688.com and make a huge profit when you resell on Amazon. You must be well prepared to take several necessary steps:
- Find and contact a reliable supplier
- Request samples of the products
- Negotiate the price
- Make the required payment
- Quality control
Now that you have gotten your products, it’s time to start selling. The most exciting and at the same time, the scary part. It would help if you asked yourself several questions before you start selling on Amazon, and these include:
- Who will buy my product?
- Will my products bring more customers?
- Will I get excellent reviews?
- Are my competitor’s products better than mine?
- If customers are not satisfied with my products, what do I do?
It’s essential to answer all the many questions that will pop up so that you can know what to do in any situation.
How to Register on Amazon FBA
Becoming a seller on Amazon is as easy as ABC. Go to central seller page and create a seller account. There are two types of seller account on amazon that you should know, they include:
- Professional seller account
By registering for an individual seller account, you will not pay any monthly fee. However, for each sale you make, $0.99 will be deducted from your account. It’s important to note that sellers with this type of account are limited to only 40 sales per month.
Professional sellers pay a monthly fee of $39.99. However, these sellers enjoy certain benefits that include:
- Access to free advertising
- Access to an unlimited category of goods
- No restrictions on transactions and many more.
You should know that before registering, you need to have a working bank account with a card linked to it for withdrawal. It is possible to connect both credit and debit cards on the platform.
One of the easiest ways to build a profitable Amazon business is to register for training or course on how to start Amazon business.
There are many courses available, but Amazing Selling Machine may be the best option if you’re a beginner to learn how to build successful business without wasting much of your time and money.
Amazon FBA business is as real as whatever you can think of a business, and you can earn thousands of dollars monthly by working smart. If you learn how to choose the right products and find the best suppliers with excellent prices, then the sky will only be your limit.