Wanna start an Amazon FBA business in 2022? It’s been quite a few years since people worldwide have figured out that they can start a fully-fledged business online using Amazon. This isn’t exactly new, and there have been countless people that started their private label business on Amazon that are now worth millions.
What makes this business model so attractive is that you can develop a product, source it, store it and sell it without holding inventory. Amazon takes care of storage, shipping, and handling for you. This has helped many entrepreneurs start international businesses, live in one country, manufacture in another, and sell in a third one.
Since the pandemic, people have gotten more accustomed to shopping online, and those habits have stuck. This is why getting into eCommerce is not only a great business idea, we’re getting closer and closer to e-commerce being synonymous with commerce. There are certain steps you need to get through to start an Amazon FBA business.
1. Product research
his is the most important step. Being an Amazon seller helps you be time-efficient by not worrying about overhead. However, there are technical aspects of Amazon that you will learn. No matter how well you do in terms of technical aspects like SEO or Pay Per Click advertising, none of it will do you much good if you don’t pick the right product.
Amazon makes its money by charging your fees for keeping the inventory in the fulfillment warehouses, for making the deliveries, and a percentage of your selling price. So for a first-time seller that wishes to spend the least amount of money launching their product, it’s wise to keep to the following guidelines:
No complicated mechanical or electrical items – Amazon has a harsh return policy, meaning any customer can return any product within 30 days for a full refund, no questions asked. This is why it’s smart to avoid complex items requiring you to spend additional money doing quality assurance and testing, which would cost more and complicate the process.
No fragile items – For basically the same reason, you don’t want your items to be damaged in transport or by the customer since they won’t care and return it.
No oversized or bulky items – Amazon charges 2 out of 3 of its fees based on the size and weight of the product, so this inclines higher costs and possibly lower margins.
The price range is between $20 and $70 – The rule of thumb is that in most cases, you will pay ⅓ of your selling price to Amazon in fees, another ⅓ to your manufacturer, leaving ⅓ for you. And within this ⅓ you have left will be your acquisition cost to get customers, which will be expensive for a new product. A price below $20 is too low to leave enough room to get a decent margin, and new sellers cannot afford to go to economies of scale.
On the other end of the spectrum, it will not be easy to find an item with a $70 price tag or more that you can comfortably source for a modest amount of money in a sufficient quantity for your first batch to test it out properly.
Once you know your guidelines, it’s time to find a product. The best way of doing this is by simply browsing Amazon and seeing what catches your eye. Of course, it’s easier said than done. By looking at a page of search results, you can have some idea. You can look at the best seller rank of items or the number of reviews. You might see what kinds of items are doing well.
However, there is much information hidden beneath. This is why all committed sellers use some market intelligence software. This is what it looks like when you run the AMZScout Pro Extension on an Amazon page:
Here you can see exactly how much any product makes and what the average product is making on page one. What are many product’s fees, and how old the listing is. There are also charts for looking up the BSR, price and sales history of any product or niche.
You also have scores that give you insights into how high is the barrier to entry to any niche. This is all the types of data sellers need and are simply unavailable otherwise. This is how you properly calculate the risk and identify an opportunity.
When it comes to where to look, some departments are more private label friendly than others, meaning that you are more likely to find items that match your criteria. Those departments include but are not limited to: Baby, Home and Kitchen, Sports and Outdoors, Toys, and Pet Supplies.
You can also look at the Amazon trend report , which Amazon does to compile important information about what is going on on the platform. They have articles, comments from experts and quite literally a list of trending products.
There are no rules. You can also look at what sort of items show up on social media and then look up where they would be positioned on Amazon and check if there is an opportunity. You want to find a niche where you believe you can add a similar product with possibly some possible design changes or features that will make it stand out.
2. Finding a supplier
This is also very crucial, and it’s another step where you should not rush. For good reason, most people opt to look for a supplier on Alibaba.
There are a few things you should keep in mind while contacting suppliers trying to identify the right one:
- Good communication – This comes first. You might come across suppliers who use google translate. Sometimes simply miss the point of the question or the point you are trying to get across. Your supplier is a potential partnership that will last for years. Just like in any other type of relationship – communication is key.
- The necessary features – You need to ensure that the supplier can make what you ended up making. Make sure you are very specific and understood.
- MOQ – Also known as the Minimum Order Quantity. It is the lowest number of product units you can order in a single batch. You should also learn how the pierce per unit changes at which order quantity to see how low your markings can get in the future.
- The Alibaba badges – Alibaba has gotten very strict regarding potentially shady operations on its platforms. However, it’s better to be on the safe side. So make sure you pick a supplier with the badges golden supplier, on-site check and trade assurance.
3. Getting a prototype, testing it and getting product photos
Once you find the supplier that meets your demands, the next step is to have them send you the prototype of the product with your specifications. This is the time where you need to take the opportunity to make product images that are later going to be used in your listing.
After doing that, it’s time to do some stress testing. You should literally try your best to wear out or even break your prototype. This is to see how likely a customer might damage it. This is your last chance to make any changes, which might include finding a new supplier all over again.
4. Registering on Amazon and ordering your first batch
When you have a prototype you are happy with, it’s time to order for your first batch of items. Before you do that, you will have to get an Amazon professional account, the process is pretty straightforward. You just need to have two different bank accounts, one for making payments and another for receiving them.
When you get the account, you will have to “add a new product”, which basically adds your product to Amazon. This will give you the option to create your initial shipping plan and to get an address of your designated FBA warehouse where you will send your first shipment to. This also means that you have a listing now. The listing won’t be active or visible until the inventory comes in.
5. Creating your listing
While you wait for your first shipment to arrive, it’s time to work on your listing. The clock is ticking and you have to get all the keywords in your title, your bullet points, product description and backend.
Unless you have experience with SEO and copywriting, it might be a good idea to get an outside hire to handle this for you. You should already have the product images ready. You should also have used the list of your SEO keywords to create your initial PPC structure.
6. Promoting and selling
Once your inventory gets loaded into FBA, you are officially an Amazon seller. However, the journey has just begun, you need to secure organic rankings for your listing. This basically means that you want to be displayed on as many results on as many relevant searches as you possibly can.
The only legitimate way of doing that is by using the Amazon Pay Per Click system. This will be an ongoing process while running your Amazon business, either to secure or maintain those organic ranks. You rank up by getting sales that result from someone searching for a phrase and buying your product.
The algorithm doesn’t care if you get the sales via people finding you organically or by clicking on the ad. The more sales you get, the higher you rank, it’s that simple. Also, the more you rank organically the more “free” sales you get since you will be more visible.
You should set up your campaigns so that you target your most relevant keywords, the ones that directly describe your product. You should also run automatic campaigns to identify more potential targets that you can extract and target more aggressively later on.
In conclusion, getting started on Amazon is not that complicated. It’s also not a guaranteed success since there is no such thing in business. What makes it attractive is that you can leave all the heavy lifting to Amazon and only focus on the things that directly bring you sales.
However, Amazon will not sell things for you, well it will once you figure it out a little bit. You still need solid decision-making, observation, and most importantly, good solid information. This is why you should not rush to sell the first idea you have, take your time, find a list of products that have a good chance of working and then pick the one that is most likely to work.
Once you go through this process it gets much easier finding new products and launching them. Also, when you are not a beginner anymore you will know how to sell any product. It’s almost like any modern-day entrepreneur doesn’t have the luxury of not knowing how Amazon works. Good luck, sellers!