Fulfillment by Amazon (FBA) is fast becoming a popular option for people wanting to start their own business.
It’s easy to understand why so many want to do business on Amazon. You get to sell directly to Amazon’s huge customer base while Amazon takes care the payment processing and shipping. Talk about a win/win.
So how do you start an Amazon FBA business? And how can you rise to the top of Amazon rankings and earn as much profit as possible?
That’s the focus of this article, as we’re looking at how to start your own business on Amazon with the highest chance of success.
Are you ready? Let’s dive in.
What Is Amazon FBA
Fulfillment by Amazon (FBA) is a quick way to start an e-commerce business of your own. But by being a part of the FBA program, you don’t have to fulfill your own orders one by one. Instead, Amazon stores your products and ships them to your customers on your behalf.
You can build your business much faster when you don’t have to concern yourself with warehousing, packaging materials, and shipping services.
All of this can be done under your own business name with private labeling. So you can build your own brand, complete with your own website and social channels, and grow the value of your business.
Decide What You Will Sell
Private labeling is easily the most popular way to sell on Amazon. That is, you establish your own brand and labeling and apply it to your product on Amazon.
Creating your own logo design and displaying it on your products does require more initial stock investment. However, if you are building your business as an asset that can be sold at a later time, then private labeling is the only way to go.
Keep in mind these three principles as you choose a product to sell.
Buy Low and Sell High
Look for products you can buy at wholesale prices and sell at retail prices. Aim for products with a cost of 25% to 35% of your target selling price. Many experts recommend selling a product between $10 to $50 per item, as more items are sold in this price range than any other.
Easy to Ship
You don’t want to ship bulky or heavy items like mattresses or weight sets for your initial entry into e-commerce. It is much better to choose lightweight products weighing three pounds or less, including the box and packaging materials.
Don’t risk losing profits due to damaged goods. Look for products that are simple and reliable and eliminate this needless risk.
Create Your Amazon Seller Account
In order to sell your products on Amazon, you first have to become an Amazon Seller. Thankfully, this process is pretty simple and straightforward.
Go to Amazon. Scroll to the bottom of the page and click on the link that reads “Sell on Amazon.”
At this point, you have a choice between selling as a “Professional” an “Individual.”
The Individual account is free, but it requires a seller’s fee of $.99 per item sold. The Professional account costs $39.99 per month but waives the seller’s fee. Also, only Professional account sellers can be featured in the coveted Buy Box on the right column of the page.
In short, if you’re creating a business, we recommend choosing the Professional account.
Find a Supplier
This is a very important decision that can make or break your business. You need a company that is responsive and uses quality materials without breaking the bank.
Most FBA sellers choose manufacturers and suppliers from Alibaba, a popular B2B marketplace based in China.
Write a template with your most important questions for potential suppliers. Ask any questions that are important to you, including the costs involved, how long it takes to send products to Amazon, and minimum thresholds for orders. Select six or more suppliers and send them emails with your questions.
As you receive information, evaluate suppliers on how quickly they respond, and grade their customer service. Ideally, aim for balance and choose a supplier that offers both high quality and a reasonable price.
On one hand, you don’t want to pay an expensive price for only a negligible difference to your customers. Similarly, you don’t want to go with the cheapest supplier if that means you’re settling for a flimsy product. Doing the latter could negatively affect your customer reviews, which are invaluable on Amazon.
Here is one last note about choosing a supplier that is very important: Amazon prefers sellers who have products in their inventory.
They aren’t likely to reward you with the highly-desired Buy Box placement if they know you’re inventory is low or empty. With that in mind, it’s vital to go with a supplier that offers minimal time delay needed to deliver your shipments.
Create Your Listing
Log in to your Seller Account and select “Add a Product.” You will notice that filling out your listing is pretty self-explanatory.
While creating your product listing on Amazon is not hard, you do need to implement a couple of strategic moves in order to give your product the highest odds for success.
Search engine optimization (SEO) is absolutely crucial in order to get your product in front of buyers. Both Amazon and the search engines rely on keywords to decide whether or not your product is relevant to their user’s search queries.
To that end, include as many keywords as you can in your listings. What keywords are your potential customers searching for? What key features of your product are people seeking. For example, instead of describing your product as “Home Speakers,” list is as “Wireless Home Speakers with Bluetooth and Subwoofer.”
Invest in professional pictures of your product. Even if you have the best product on Amazon, if your product images look cheap or homemade it will reflect poorly on your business — and your sales.
When it comes to your price, don’t assume the cheapest is the best. In fact, sometimes sales are better for higher priced items due to improved perceived value. And if your competitors lower their price to be below yours, you can find yourself in a race to the bottom with profit margins so low it destroys your business.
One option is to use re-pricing software to automatically price your Amazon items for maximum with this company.
Market Your Product
You will need to market your product initially to get the ball rolling. Purchase some sponsored listings through Amazon to get your product in front of buyers.
Amazon gives higher search rankings to listings with the best customer reviews. As a new company, you won’t have reviews yet.
So post your product on your blog and your social media channels. Let your friends and family know about it, and yes, purchase sponsored listings. Your goal at this point is to get as many customer reviews as you can until your product begins to appear in the free search results.
You will receive notifications whenever you get a new sale. And after 30 days, you will get paid every two weeks if you have sales. Even if you only make a minor profit, it’s cause for celebration.
As you continue selling on Amazon, you can test headlines, product descriptions, and photos to improve your sales conversion rate. The more you test, the more you will discover the best ways to increase your sales on Amazon.
And if your product and service are strong, you will receive a fair share of return customers to help grow your business.
The Final Word About Starting an Amazon FBA Business
Opening your Amazon FBA business is just the beginning. Once you have one successful product listing, you can add more products to your lineup and multiply your profits.
Concentrate on developing your brand outside of Amazon. Build up an email list on your company’s website and let subscribers know about your new product listings.
And always remember, customer service is the name of the game. Those with the best customer reviews get the most favor from Amazon and reap the most rewards.
If you found this article helpful, please check out our guide on five online business ideas that make money.