As the world’s largest online retailer, Amazon is a powerful platform for entrepreneurs looking to start and grow their businesses - it’s arguably created the largest number of millionaires than any other company. And with the launch of Amazon’s Fulfillment by Amazon (FBA) program in 2006, the company has made it easier than ever for small businesses to sell their products on Amazon.
If you’re thinking about starting an Amazon FBA business, there are a few things you need to know. First, you’ll need to find a niche market with products that are in high demand. Once you’ve found your niche, you’ll need to source your products from manufacturers or distributors, ideally who can ship them directly to Amazon’s fulfillment centers. Next, you’ll need to create an Amazon seller account and list your products for sale on the platform. Finally, you’ll need to market your products and generate sales.
When done correctly, starting an Amazon FBA business can be a great way to build your brand and generate significant revenue. But it’s important to do your research and understand the program before getting started. With that in mind, let’s take a closer look at how to start an Amazon business.
1. Determine what you want to sell
The first step to starting an Amazon FBA business is to determine what product or products you want to sell. This may seem like a daunting task, but there are a few key factors you can consider to help you make your decision.
First, you’ll want to decide if you want to resell existing name-brand products or create your own private label products. Reselling existing products is an easier way to get started selling on Amazon but your margins will be lower and it’s not the greatest long-term business model as competition is fierce and you have little control. Launching your own brand by selling private label products, however, has significantly higher margins and gives you much more control over your business on the Amazon marketplace. Private label is our recommended business model and this guide is focused on starting an Amazon business through private label products.
Next, identify a need or want that you have that is not being met by the current market. For example, you may have a unique skill or knowledge set that you can leverage to sell products related to it. Alternatively, you may identify a niche market that is underserved or that you could serve better than the current competition.
Another key factor to consider is the cost of goods. You want to make sure that you can source your product at a reasonable price so that you can maintain a healthy profit margin. Additionally, you'll want to consider the shipping costs associated with getting your product to Amazon's fulfillment center. You may want to reconsider heavy items with large package volumes.
Finally, you'll want to think about the potential demand for your product. How many people are searching for it on Amazon? How much competition is there? These are all important factors to consider when choosing what to sell. Use a tool like Helium 10 to conduct this research.
2. Research the competition
When starting an Amazon FBA business, it is important to research the competition in order to be successful. There are a few things to keep in mind when researching the competition.
First, take a look at the products that your competitors are selling. What are they selling? What are their prices? How often do they sell?
Second, look at their reviews. What do customers say about their products? Are they mostly positive or negative?
Finally, take a look at their ranking on Amazon. How high are they in the search results? The more you know about your competition, the more prepared you will be to take them on!
Helium 10 is another great tool for this research.
3. Create a business plan
It is important to have a business plan when starting an Amazon FBA business, even if it’s an informal one you create in your iPhone Notes. This will help you map out your business goals, strategies, and how you will achieve them. Here are a few tips on creating a business plan:
- Define your business goals. What are you hoping to achieve with your Amazon FBA business? Do you want to generate a full-time income? Make a supplemental income? Build a 100-person business? Build a small lifestyle business? Once you know your goals, you can create a plan to achieve them.
- Research the Amazon FBA marketplace. See what is selling well and what areas are underserved. This will help you determine what products you should sell.
- Create a marketing plan. You need to let potential customers know that your products exist! Write out a plan for how you will market your products, whether it is through social media, paid advertising, or other means.
- Make a financial plan. Determine how much money you need to start your Amazon FBA business and how you will finance it. Make sure to factor in the costs of shipping, inventory, advertising, Amazon fees, and other necessary expenses.
Creating a business plan is an important step in starting an Amazon FBA business. By taking the time to map out your goals, strategies, and finances, you will be setting yourself up for success.
4. Set up your Amazon seller account
The first step to selling on Amazon is to set up your seller account. You can do this by going to Amazon's seller website and clicking on the "start” button. This will take you to a page where you can create your seller account.
You will need to provide some basic information about yourself, including your name, address, and phone number. Once you have created your account, you will be able to log in and begin setting up your seller profile.
Your seller profile is where you will list your products, set your prices, and include information about your business. You will also be able to upload photos of your products and set up your payment information.
Once you have set up your seller account and profile, you are ready to start selling on Amazon!
5. Choose your fulfillment method
Now that you know the products you want to sell and have sourced them, it’s time to decide how you want to fulfill your orders. There are two main ways to do this with Amazon:
Fulfilled by merchant (FBM)
This is when you, the seller, ship the products to Amazon customers directly.
- You have more control over your inventory since you’re shipping it to Amazon yourself.
- You don’t have to pay Amazon storage fees.
- You have more freedom to brand your packaging.
- It takes more time and effort to ship products directly to consumers.
- You have to keep close track of your inventory levels to ensure you don’t oversell.
- You have to stock shipping supplies and resources.
- As you grow, your logistics become more complex and difficult to manage.
Fulfillment by Amazon (FBA)
This is when Amazon ships the products to the customer on your behalf.
- Amazon handles all of the shipping, so you don’t have to lift a finger.
- Amazon’s shipping network is vast and efficient, so your customers will usually get their products faster.
- It’s generally faster and cheaper to ship products to Amazon than it is to ship them directly to the customer.
- You have less control over your inventory since you’re relying on Amazon to ship it for you.
- You have to pay Amazon storage and shipping fees.
Both self-fulfillment and fulfillment by Amazon have their pros and cons, so it’s important to decide which one is right for your business. If you’re just starting out, fulfillment by Amazon might be the best option since it’s less hassle for you. As your business grows, you can transition to self-fulfillment if you want to have more control over your inventory.
6. Get started listing your products
The first step is to create a listing for your product on Amazon. You'll need to include important information like the price, quantity available, and a product description. You will also need to add pictures to make your listing more appealing. Once you've created and optimized your Amazon listings, you'll need to set up a payment method so that you can get paid for your sales. Amazon offers a few different options, so you'll need to choose the one that's right for you. Finally, you'll need to ship your products to Amazon so that they can be fulfilled. Amazon provides a shipping label that you'll need to attach to your packages.
7. Promote your Amazon FBA business
First and foremost, to have a successful Amazon FBA business, you need to create a strong and differentiated brand. A brand will make you recognizable and trusted in the market, which is essential to growing your business. You should also consider investing in Amazon Search Engine Optimization (SEO) to make your listings more visible to potential customers. Additionally, convince friends, family, and social media followers to buy from your store and leave reviews. Reviews are crucial for building trust and credibility with potential customers. Finally, don’t forget to take advantage of Amazon’s promotional tools to attract new customers and drive sales.
Starting an Amazon FBA business is a great way to make money online. It's a relatively easy process and can be quite profitable. You'll need to find a good niche, create a product, and then market it on Amazon. You can also use Amazon's fulfillment services to ship your products to customers. With a little effort, you can start a successful Amazon FBA business.
Once you've launched and established your Amazon FBA business, it might be time to diversify by launching a website with a reliable web development company or by using a simple DIY ecommerce platform like Shopify.