At some point or another, almost everyone has thought about just quitting their job and starting a business from home. Whatever your idea is and whatever you’re looking to sell, the thought of working from home, setting your own hours and being your own boss is tempting.
Perhaps, you’ve already started a side hustle and are looking to take it to the next level. Whatever your situation, if you are looking to increase your income and explore new revenue streams, an Amazon FBA will help.
Starting or expanding a business online can be intimidating, but we’ve got a step-by-step guide of everything you need to know.
What is an Amazon FBA?
Amazon FBA stands for “Fulfilment by Amazon,” and it means precisely that. Amazon will fulfil your orders and give you access to its vast customer base, warehouses, and customer services.
In all practicality, it’s a business model that allows you to act like a large business, without having to be one.
Is Amazon FBA right for me?
Amazon FBA is a very useful tool if you are looking to make some cash on the side or want to grow your business. If you are a sole trader or a start-up, it can offer you an effective way to enter the marketplace. If this sounds like you, or what you would like to be, then Amazon FBA is for you.
Having said this, there are a few things to consider before you get started. If you only sell products infrequently or only at specific times of the year, such as Christmas, the fees for year-round storage at an Amazon warehouse may mean FBA is not cost-effective for your business model. Similarly, if you have a minimal profit margin, the fees for using Amazon FBA’s services may make this a financially inefficient option.
What are the main benefits of an Amazon business?
One of the key benefits to Amazon FBA is logistics. Running your own business is always less-glamorous than you think. There is lots of inventory to check, storage and warehouse issues, tracking problems, and production complications. With an Amazon business, all this is taken care of by Amazon. You ship the products directly to Amazon, and they take care of the rest, leaving you time to focus on other aspects of your business.
Using Amazon also means you’ll have reduced costs. Shipping and storing your products with Amazon is considerably cheaper than having to source and pay for them yourself. Lowing your overheads means you can sell your products for the same price with a higher profit margin because you won’t be paying for space in a warehouse. It also means you don’t have to store all your products in your spare room. Another obvious benefit is visibility. Amazon has over 112 million users in the US alone, and it racks up $17 million of sales every hour. Having your brand included seriously increases your visibility. FBA is effectively a business model with a powerful marketing strategy built-in. Increased visibility very quickly turns into growth.
Is there a downside?
Starting a business on Amazon can allow you to grow your business without worrying about many stressful aspects. However, there are some things you need to be aware of. Unless you plan on selling only a few items, Amazon has a set of fees. Consequently, your profit margin will be smaller unless you raise the price of your items to cover these fees.
Additionally, the process of setting up an Amazon account can be disheartening. There are lots of hoops to jump through, which is tedious and frustrating. However, if you can get through the first part with the help of this guide, you’ll find that the benefits far outweigh the negatives.
Costs you need to know
As you’ve seen, the costs are the only real downside to using Amazon FBA. You should evaluate all the costs before you get started rather than being stung by something later on. It’s much cheaper than you might think to sell through Amazon, but the actual cost will depend on what you are selling.
The only initial setup cost is the type of account you require. An individual account is cheaper than a professional one, which will set you back $39.95 per month. However, this has more services and lower ongoing selling fees. The individual account is free to set up but has slightly higher selling costs and is more restrictive.
The only other real costs you will need to factor into your business plan are the storage and shipping costs. Both of these costs will vary based on what you plan on selling. Storage fees will also fluctuate depending on the time of year. Storing products in the run-up to Christmas will incur higher charges. Luckily, Amazon has a helpful guide of how much you can expect to pay. You should figure out your finances before getting started to make sure that this is for you.
A Step-by-step guide to getting started
Now you know what you’re getting yourself into and how it could help your business, you need to know what to do. Starting an Amazon business is relatively straightforward, but understanding all the intricacies can be confusing and overwhelming. This step-by-step guide will break everything down, so you have the confidence to start selling immediately.
1: Set up an account
To officially get started, it’s a comparatively easy first step. You have to create an account. Head to Amazon and scroll to the bottom of the page. In the blue banner which stretches across the bottom of the page is a heading that says, “make money with us.” Underneath this heading is the line “sell products on Amazon.” Click this, and it will redirect you to the seller homepage. Here, you’ll need to click “sign up.” Follow the steps to create your own account.
Be aware that you need to choose either an individual account or a professional one. The difference is that a professional account offers much more support and allows you to sell more products each month. An individual account is free but has lots of restrictions. For example, if you plan on selling more than 40 units per month, you’ll automatically need a professional account. You need to decide if this will be a part-time hobby to make a bit of cash or something you want to put a lot of time and effort into making a success. If you’re serious, you need a professional account.
2: Choose what to sell
If you have an existing business selling a product, this stage will be very easy because you already know what you are going to sell. However, if you aren’t sure what you want your business to sell, you’ll need to do plenty of research.
When researching products, you need to consider any competition in the marketplace. While Amazon can help your business grow, it’s offering the same service to your competitors. Entering a saturated marketplace with lots of competition for similar products is not a good way to go.
You’ll also need to research price points. You need to know the average price your product sells for and how many items you’d need to sell to meet your targets. You will also need to check that there is a demand for your product. You can try using keyword tracking tools to see how many people search for your product online.
Remember that the more specific and niche your product is, the easier it will be to find on Amazon. Your product will eventually fall into one of Amazon’s predetermined categories, so you need to think about how your product will fit in.
3: Supply and demand
Whether you are looking to expand an existing business or hoping to start afresh, your supply chain is crucial. If you make all your products by hand, consider how much work it would take you to complete a large order. If you have an overseas supplier, consider the shipping costs.
When starting a business with Amazon FBA, you need to be prepared to cope with a large number of orders. If you have an existing supplier, you need to check with them if they can meet an increased demand. If you are sourcing a new supplier, you’ll want to check everything from the quality of the products to the shipping cost and the legal aspects of crossing borders. Apart from Amazon, your supplier is the most important relationship for your business.
4: Establish your brand
Now you know what you’re selling, how it’s made, and you have a supplier, you’re almost ready to start selling. You could just put the products online immediately, and you would probably make some sales, but if you’re looking for a long-term revenue stream, you need to carve out a brand identity.
Not only will this differentiate you from more generic offerings on Amazon, but the algorithms that select which products to show on the same page as you will be kinder if you have a clear brand image. Establishing a brand includes everything from finding a name, a logo, a slogan, and an ethos, to the legal aspects of copyrighting, online domain names and a branded website.
It will also help you get more hits online if your product is branded with your name and logo. If your product cannot be branded like this, this about packaging. If you plan to sell branded content, your username and account name will become your brand which will stand for your reputation.
5: Input everything to Amazon
This stage is one of the most crucial, and for many, one of the most boring. Once you know everything there is to know about your product, you need to transfer all that information into Amazon’s product listings. Helpfully, Amazon has broken down everything you need to include, so if you follow the steps online, you won’t miss a thing.
Log into your account, and in the drop-down “inventory” menu, select “add product.” On the next page, you can either add an existing product from Amazon’s catalogue, or “Create a new product listing.” Then, you’ll need to find the category your product will fit into. If you’ve done your research, you can just type this into the search bar. Narrow it down as much as you can so you have a specific niche. Then you can move on to the descriptive section.
Here’s what you will need:
Professional photos of your product. Sometimes, your supplier will be able to provide these, but if they can’t, take some professional-quality photos in good lighting. Bad photos are a sure way to lose sales.
Detailed title. Your product titles need to be accurate, descriptive, and, if possible, contain a USP (Unique Selling Point). When people go to the search bar in Amazon, this is what they will be searching for. Don’t make it too long or too general.
Product specifications. You will need to add the specific specifications of your products such as brand name, size, material, care instructions, colours, quantity, warranty information, weight, and installation guides. This not only helps the customer understand what they are buying, but it also helps Amazon work out how much it will charge for shipping. Once you’ve filled in all the information, you’ll see an option regarding fulfilment. This is where you choose to either have Amazon fulfil the order or choose to do it yourself. If you have an FAB account, select the option to have Amazon send your products from their warehouse.
Product description. This is the creative part. This is where you persuade the buyer to choose your product over a competitor. You need to describe the product in detail, highlighting the best features. Make sure it’s in small chunks and is easy to read. This should reflect your brand’s personality and encourage the reader to choose your product over a competitor’s. Make sure you use key words and phrases in the bullet point section. Amazon algorithms will scan the text and push your product to the top of the page based on these keywords.
Price. You will also set your product price here. There are two options. The first is the suggested retail price. This is not the price customers will pay but the amount they could pay for the item. Next up is the actual sale price. Make sure you are selling your products for a reasonable price, too high or too low and you’ll lose customers.
Once you’ve filled in all the tabs, you can click “Save and Finish.” If you are unable to click this because it is greyed out, it means you haven’t filled everything out correctly. You should see an exclamation mark (!) next to the section with an error. Once everything is entered correctly, click the “Save and Finish” button. Congratulations! You’ve officially added a product to Amazon.
6: Shipping information
Now you need to tell both Amazon and your supplier how and when to ship your items. On the “Manage Inventory” page, select the product you want to send. You’ll need to follow the steps to create a shipping plan. This will let you decide how much stock you want to ship to Amazon. Amazon will give you customised instructions on how to make sure your products are FBA approved. If your supplier is unable to meet the requirements, you’ll have to ship products for yourself to prepare them properly before shipping them to Amazon’s warehouse. If products aren’t correctly packaged and labelled, the warehouse won’t be able to store them.
Once you’ve made it through the rather complicated setup process, you’re ready to start making money. All you have to do now is ensure that Amazon has enough stock to send your product out immediately. Amazon Prime has over 150 million users, many of which expect next-day delivery, so you need to keep an keen eye on stock levels. It’s up to you to decide when to restock the Amazon warehouse; too early and you will end up paying more for storage, too late and customers won’t receive orders on time.
Now Amazon does all the hard work for you so you can concentrate on other aspects of your business such as sourcing stock, eCommerce, advertising, and marketing. You can also keep track of your results and see where you might need to improve. There are lots of tools available to help optimize your product descriptions, refine your keywords and help boost your sales.
One key way to boost your sales is to encourage Amazon buyers to leave feedback. Accounts with lots of positive feedback about their services and products are ranked more highly by Amazon’s algorithms. Since Amazon handles the shipping and customer service, you’ll have to devise other ways to directly appeal to customers such as asking if your product was delivered on time or offering a discount code in exchange for a review.
An Amazon FBA can take a lot of the stress and hassle out of starting your own business. However, it won’t do all the work for you. If you’d like more information on how to get organic rankings and boost sales in Amazon, check out our guide on the topic!