Starting an Amazon selling business used to be a hard thing to do. I know what you’re thinking. You’ve heard about people making millions of dollars selling on Amazon, but this is a big commitment and you’re not sure if it’s for you.
This is why we’ve come up with a detailed guide that covers the A-Z of starting an Amazon FBA business and making money off it.
Selling on Amazon is a great way for you to make passive income with your own branded products. It is a great way to start an online business. This is because it allows you to sell products on Amazon’s platform, but without having to store or ship them yourself.
With Amazon FBA, e-commerce businesses can make a lot of money as third-party sellers. You own the products, but Amazon handles the stocking, inventory, and delivery for you. Over 2 million business owners worldwide are taking advantage of Fulfillment By Amazon FBA, and you too can. Before we dive in on how to start a successful Amazon FBA business, let’s go over some of the basics.
- What Is FBA With Amazon?
- Is Amazon FBA A Good Way To Make Money?
- How Do I Start My Own Amazon FBA Business?
- Why You Should Consider Using The Amazon FBA Business Model
- How Much Can Amazon FBA Make You?
- How Long Does It Take To Make Money On Amazon FBA?
- How Much Does It Cost To Start An Amazon FBA Business?
- Can You Still Make Money On Amazon FBA?
- Is Amazon FBA Worth It?
- Do I Need An LLC To Sell On Amazon FBA?
- Do I Need A Sales Tax Permit To Sell On Amazon FBA?
- What Percentage Charge Does Amazon Take From Sellers?
FBA stands for Fulfillment by Amazon, and it is a fulfillment service offered by Amazon.com. FBA is a good option if you have inventory to sell on Amazon, but don’t have the time or resources to ship it yourself. When you sell with FBA, you send your inventory to an Amazon warehouse and they handle all of the order fulfillment and customer service details on your behalf.
Amazon selects and ships them to the customer when someone orders your products. You’re doing little work; Amazon handles the bulk of the work but will charge you a fee for rendered service.
Once you register with the Amazon FBA program, the next thing to do is create your product listings and then send the goods to Amazon’s warehouse, and you’re all done. Amazon FBA handles the storage and shipments, including customer emails. They take care of refunds and returns when the need arises.
FBA can be beneficial to both new and existing sellers on Amazon. If you’re new, you can use Amazon’s fulfillment services (FBA) as a way to source inventory from third-party sellers at wholesale prices, then sell those items through your account. If you already have an existing business or brand on Amazon, using FBA lets you expand without having to invest in additional warehouse space or staff members.
Using Amazon FBA means you can skip the hassle of importing and retail arbitrage and sell on Amazon instead.
Yes! Selling products on Amazon is a great way to make money online because it allows you to scale your business quickly by selling your products through third-party platforms without investing in websites, marketers, ads, warehousing, storage, or even looking for customers.
Amazon FBA is a great way for Amazon sellers to make money from Amazon’s customer base. You’ll research and develop the products you want to sell while Amazon stores the goods in their warehouse and ships them to your customers.
For an Amazon seller, the Fulfillment by Amazon program may be just what you need to expand your e-commerce business. But before you jump in, you must understand that the FBA program may not work for every type of product, so do market research before you sign up.
How Do I Start My Own Amazon FBA Business?
Amazon FBA is a great way to make money on Amazon. It is a business model that allows you to sell your products and services by using Amazon’s fulfillment services. What this means is that you can ship your products to an Amazon warehouse where they will be stored and then shipped out for you when orders come in.
If you are serious about starting your own Amazon FBA business, these are some of the steps you need to complete to get started.
The first thing you need to do is set up an LLC or a corporation. This will help protect your assets from any potential liabilities that may arise as a result of operating your business. You should also have separate accounts for your Amazon FBA business and personal accounts.
The next best thing to do is open a seller account on Amazon. You will need this account even if you plan on hiring someone else to manage the day-to-day operations of your business. To do this, you’ll need to register as an individual or business and then fill out some basic information about yourself and your business.
You’ll be required to pay $39.99 per month to keep your status as an Amazon seller.
The third thing to do is find some products you want to sell and start sourcing them from China. You can find suppliers by searching on Alibaba or checking out our guide on how to source products from China.
Once you’ve found some suppliers, send them a message through their website or email address and ask them how much it would cost for 1-2 pieces of each item at wholesale prices (this should be pretty cheap). Once they reply with their prices, place the order with them so they can ship it directly to Amazon Warehouses.
The fourth thing to do is get started with your Amazon listing by creating high-quality images and listing descriptions.
The images are the first thing that people will see when they look at your product. Make sure that you have taken the time to create high-quality pictures of your product from different angles and in different lights. This will make it easier for people to see what your item looks like and make a decision about whether or not they want to buy it based on its appearance alone.
The description of your product should be well written and informative so that potential buyers can get a good idea of what they are buying before they even make a purchase. If you have any questions about creating listings or photos, then you can check out the Amazon Seller Central Help Center which has lots of useful information on how to do this yourself.
Amazon FBA is a model that allows you to sell your products on Amazon.com and give them the option to store, pack and ship your goods. The benefit of this business model is that you can save time, money, and energy by not having to handle the fulfillment of your goods yourself.
When you use Amazon’s fulfillment services, your inventory is stored in an Amazon warehouse and then sent out when someone buys it. This gives you access to thousands of high-volume orders at once without having to worry about fulfilling them yourself. This is a very big win, especially for small business owners like you and me.
Some of the other benefits of the using Amazon FBA as are business owner are:
It reduces overhead costs. The cost of starting an online retail business is much lower than traditional brick-and-mortar retailing because there are no physical stores where you need to pay rent, utilities, and employees.
You can also save on other expenses like shipping costs, packaging, and marketing materials since they’re all handled by Amazon. In addition, you don’t have to worry about hiring employees since everything is managed by Amazon.
You won’t spend money on storage, shipping, and staff wages. Amazon takes the weight off your shoulders. Your biggest challenge will be finding the right products that will sell out fast. That way, you’ll stay in profit.
FBA is a low-risk business model. If you’re not sure about this, think about the following:
- You don’t have to invest in inventory or storage space. You just send your products to Amazon and they take care of everything else.
- You don’t have to worry about shipping costs. When you sell your product on Amazon, they take care of getting it from their warehouse to the customer. So you don’t have to worry about that at all!
- You don’t even have to worry about marketing! Amazon does all the hard work for you when it comes to finding new customers, so you can focus on doing what you love – making money!
Amazon takes care of all the payment processing and customer service so you can focus on what’s important – growing your business. You can use Amazon fulfillment services (FBA) to sell your products at a lower price than your competitors because you don’t have to worry about shipping costs or handling problems.
3. Quick Delivery And Shipping
Amazon has warehouses all over the country. When you ship your product to an Amazon warehouse, they will keep it in storage until someone buys your product. This allows you to offer two-day or even one-day shipping to customers without having to deal with shipping logistics yourself. If a customer orders your product on Monday morning, they could have it by Tuesday evening if they live close enough to an Amazon warehouse.
With Amazon FBA, you can offer free two-day shipping on most items and Prime members get free two-day shipping on most items as well. This is a huge benefit for consumers who want their product delivered quickly without having to wait for it in the mail or pay for expedited shipping fees.
4. Multi-Channel Fulfillment
Amazon is not the only game in town, but it is the biggest. If you are considering selling your products on Amazon, you should know that there are other options available to you as well.
This method allows you to sell your products on multiple channels, including your website, marketplace, and retailers. You can sell your products on other shopping sites such as eBay, Shopify, WordPress, or BigCommece under Amazon’s fulfillment. Your product also gets listed on other platforms, even though Amazon will take care of the shipping when the order comes in.
In this case, you’re still selling through Amazon’s marketplace but fulfilling orders yourself instead of letting them do it for you. This allows you to find customers that aren’t on Amazon.
The biggest reason why anyone would want to use the Amazon FBA business model is that it provides more visibility than any other option available. If you want your product to sell well, then you need people to be able to find it easily.
With an eCommerce store or even with a dropshipping business, there’s no guarantee that people will see your products when they search for similar items on Google or Facebook. With Amazon, though, there are no such limits imposed by search engines — as long as you have an optimized listing page and properly optimized keywords in your listing title, then people will see your product when they search for similar items on Amazon.
The short answer is that it depends on the product, but you could be making anywhere from $10,000 – $100,000 per month or more. But in general, it’s easy to make a decent income by selling on Amazon.
The key is to find products that are in demand and have a low price point so that your profit margin is high enough for you to make a profit when selling your goods on Amazon. FBA sellers can still make a lot of profit on Amazon regardless of the charges they pay. The best part is that Fulfillment by Amazon doesn’t require much expertise on your side. Anyone can make money from Amazon’s FBA business. All you have to do is find a good product.
If you are consistent, you could list your first product on Amazon within your first three months. Making money off the products within that time will depend on the visibility and demand for your products. The truth is, to make real money from any business requires dedication and time.
Even though Amazon helps you out with the bulk of the work, you still have to do your part. Here’s a short guide that can point you in the right direction when starting an Amazon FBA Business.
You have to research and decide what product to sell. To do this effectively, you must stay flexible and follow trends. Seasons change, and so do your customer’s tastes. Just because a product did well last year doesn’t mean you should sell it this year—Times vary.
As an Amazon FBA seller, you must find a product that solves a problem and is in high demand. You should also consider the price of the products, and consider sourcing goods at cheaper rates, so you make more profit.
Here are a few points to remember when deciding on a product:
- Size And Weight: Amazon FBA fees are determined by the size and weight of the goods. It’s essential to choose products that aren’t too large or heavy. Oversized products attract higher fees.
- Price: Most buyers filter the search results according to price. Choosing a product between $15 and $50 would be perfect for an FBA product. Products within this price range mostly attract impulse buyers. That is your advantage. That way, your products will have more visibility on the platform.
- Popularity: Go for products people know about and can use. Since you’re not meeting your customers directly, you have to make sure the products you’ve sent out don’t require some tutorial before use. Go for popular products, find out how your competitors promote them, and do it even better.
Once you’ve figured out what to sell, the next step is to find a supplier. There are more than one ways to get supplies. You could source locally or on e-commerce platforms like Alibaba. If you choose to source locally for products, you could come across unique products at reasonable rates.
Alibaba has great stuff too, but you’re buying the same products with a bunch of other sellers at the same price. The competition will be fierce. This explains why some sellers choose to come up with custom-made products to gain the advantage of having unique products.
Keep in mind that some of those goods on Amazon are owned by individuals; make sure you buy from trusted vendors. Before placing a large order, make sure you get product samples to avoid paying for inferior goods. If it helps, get in touch with other amazon sellers. They could connect you with trusted vendors on Alibaba.
If you’re a seller on Amazon, you know that it can be a highly competitive business. There are millions of products for sale on the site, and it’s easy to get lost in the crowd.
You must ensure your list is updated. Amazon only helps you with storage and shipping. When it runs out, you have to send in new stock, so do well to stock up when necessary. It’s tempting to treat inventory like an afterthought when it comes time to set up your business. But this is one area where you don’t want to cut corners: You need enough inventory available at all times so that you don’t run out or have to wait too long between shipments from China.
Although you’ll be enjoying the massive traffic on the Amazon website, your copywriting and marketing skills will come into play. An excellent copy will make it easy for customers to find your products on Amazon. Put in good copywriting skills when listing your products or writing titles. Use keywords in your tags.
Keywords are terms associated with selling products. Inserting them in your titles gives you listings visibility. If you get these three things right, you should be making money from Amazon FBA in less than a year.
Amazon FBA is a great way to make money, but it’s not free. You’ll need to set up a business with a legal structure, buy supplies and equipment, and pay for shipping costs. You’ll also have to spend time setting up your inventory and managing your listings.
To start an Amazon FBA business, you’ll spend a considerable sum of money on the inventory, which could cost up to $4,500 depending on the products. You’ll run into many costs in your FBA business which we’ll outline in this article.
The costs of procuring products could be pretty high. For a retail business, starting with at least 300 or 500 units of the goods is ideal. The larger the stocks, the longer it will take before the need to update your inventory. If you start small, you must be careful not to take all the profits.
A considerable part of your profits should go back into the business in stocks. That way, you’ll be able to grow your business.
You’ll have to ship your products to Amazon, especially for storage outside of the US. Shipping costs ain’t cheap. You have to pay for the manufacturer to ship the goods to you in some cases. Shipping costs depend on the shipping company and other factors such as the weight of the goods and distance. Altogether, shipping consumes a lot of money.
You’ll need product photos, great ones. People are moved by what they see. Make sure they see a fantastic photo of what you’re offering. If you’re hoping to make huge sales on Amazon, you must invest in quality pictures.
If you’re going for a professional photographer, you should be spending between $30 to $50 per photo. If you have a smartphone, you can take great pictures and reduce the cost of acquiring images.
Product packaging will attract graphics costs but maybe not so much. Basic knowledge of graphic design will help you with the product’s packaging. Or you could hire freelance graphics designers on Fiverr or Upwork to get the job done.
Advertising your products is another critical aspect of your business. Amazon has a large customer base, but you need to advertise your products to be ahead of your competitors. With Amazon sponsored ads, your products get more visibility.
You might want to advertise on Facebook and Instagram, too, and running those ads comes at a price. Email lists are another great way to promote your products, which could cost you some bucks.
A lot of sellers have made money from Amazon FBA. It’s a proven means to earn a side income from e-commerce that doesn’t require storing and shipping products yourself. All you need is one great product, and you can trust Amazon prime customers to buy them.
You’re wondering if Amazon FBA is worth trying; it is. Fulfillment by Amazon is profitable and convenient. If you’re unsure, these points should be enough motivation for you.
First, Amazon is a big brand. You’re selling products on Amazon; that’s huge. With over 197 million monthly shoppers, Amazon stands as one of the biggest e-commerce websites. Selling on such a platform is worth the while. Their customer base is significant, and people are always shopping. At Amazon FBA, your job is to give people the products they want.
Secondly, you won’t put in so much on marketing. Amazon makes it relatively easy for you to reach customers. It cuts the costs of advertising. You could take advantage of the Amazon-sponsored product ads and reach a larger audience with your products at no extra cost. Amazon will add it to your charges. While other businesses are struggling with marketing, you’re making sales on one of the biggest e-commerce websites.
Also, shipping and delivery are so much easier on Amazon FBA. Business owners are constantly faced with the challenge of shipping and delivering products to buyers. Sorting out those orders and sending them out is never easy. On FBA, Amazon takes care of it. They ship the orders to your customer’s location and go ahead to deliver them to them directly.
That eliminates the chances of mixing up orders or missing products. Plus, delivery is way faster; everyone knows Amazon for great customer service. This adds up to make the operations smooth.
You can quickly scale your business. If there’s one thing that limits growth in a retail business, it’s space. Most retail companies can’t scale up because they can’t afford to pay for so much space and storage is essential. Amazon gets that out of the way. They store your goods for you, so you have enough space for everything else.
The fees you’re paying to Amazon for storage wouldn’t get you a warehouse. Since you won’t have to deal with storage costs or space, expanding your business becomes more feasible. Also, you’re not in charge of shipping and delivery; Amazon is. That is another challenge Amazon solves for you. You can scale up your business under these conditions.
You don’t need limited liability company insurance to sell on Amazon, at least not for a start. You can sell on Amazon as a sole proprietor and be guaranteed success, but you might need an LLC if you’re hoping to expand the business.
An LLC is a legal business entity that offers insurance to business owners. It protects them from debts and other liabilities such as lawsuits. It separates your business and person as two separate entities. A growing FBA business with business partners and employees demands you form a limited liability company.
An LLC will separate your business from your person and protect you from lawsuits that could arise in due course, especially if you’re selling health-related products. Other than that, you’ll do just fine as a sole proprietor.
You do not need a sales tax permit as a new Amazon seller, but a sales tax permit becomes necessary as time progresses and your business grows. You must have a valid sales tax permit for the state your business is operating from or your hometown so you can collect and remit sales tax. When you’re shipping goods across the states, you must consider nexus.
Nexus, which means sufficient physical presence, determines if you need a sales tax remit or not. Nexus is formed when a significant physical presence is established. Unfortunately, each state’s definition of substantial physical presence differs.
When you ship your products to an Amazon fulfillment center in a particular state, you’ve established a substantial presence there (although substantial presence can mean different things in different states). You will be required to collect a sales tax permit in that state. However, some states have tax exemptions, so be sure to verify before shipping your products.
Amazon charges 6% to 45% off the selling price for each product and account fees of $39.99 for professional accounts.
We’ve highlighted the fees you’re expected to pay as an Amazon seller to guide you.
Amazon takes fees from its FBA sellers for product storage and shipping. The service allows sellers to get customers’ orders sorted and delivered smoothly. A reason over 90% of Amazon sellers uses FBA. However, these charges vary depending on the size and weight of the products.
FBA fees cover picking and packing, and returns and refunds as the case may be.
The picking, packing, and shipment fees are grouped into one. These fees depend on the product’s weight and size. Products weighing 20 pounds, 18 “x14” x8 size, and below are considered standard. Anything above that is treated as an oversized product and attracts higher fees.
You’ll be charged monthly for product storage inventory. Standard products attract a charge of $0.83 for standard size and $0.53 for oversized products.
These are fees Amazon charges for sales of products, and there are three categories of such fees:
6% to 45% of your product’s selling price is charged as referral fees for every sale. The referral fee also depends on the product category. For details on this, refer to the Amazon seller fee schedule.
Amazon assigns a minimum charge on referrals for specific categories. You’ll pay either the minimum or the basic referral fee for products under this category. Whichever fee is higher, that’s what you’ll pay.
This applies to products under the media category such as DVDs, video game consoles, books, etc. Amazon charges a $1.80 closing fee for these types of products.
If you’re using the individual Amazon seller account, it’s free, but the professional account costs $39.99 monthly. The individual seller account is ideal for first-time sellers or low-volume sellers. You won’t want to pay that much monthly if you’re not selling much, although you’ll be charged 99 cents for listing each product.
This fee is deducted from your payout. If the product hasn’t been sold, you won’t be charged. For higher volume sellers, the professional seller account is perfect. There are no listing fees. You’ll also be eligible for buy box, sales tax calculations, and third-party site sales.
So, there you have it—the complete guide to getting started with Amazon FBA. It’s an exciting opportunity for anyone who wants to make a little extra money on the side, and it’s also an excellent opportunity for beginner entrepreneurs looking to get started with their first business.
Once you learn key best practices and implement them in your business, you can start earning a full-time income from home.