Many people make a good living doing Amazon FBA. Making five and even six figure income doing business on Amazon is the American dream. If you’re thinking of joining the ranks of Amazon FBA profit spinners, you’re at the right place!
Thousands of people actually sell using the Amazon FBA model, although not all of them are making good profit. There are intricacies associated
with this business model and you have to learn them to make reasonable profit. Let’s get started.
Amazon wasn’t always like we know it today. The store started with selling books online, it’s almost impossible to imagine that this retail giant was once just a book store. Amazon has revolutionized retailing as a whole and they’re always innovating to satisfy customers and make more money. So what has this got to do with Amazon FBA? Everything!
The Amazon FBA business model is one that puts you and Amazon in a kind of partnership. You source the products you want to sell, and then Amazon handles packaging and shipping for you. Today’s world thrives on convenience, and that’s one of the things Amazon sells to both its customers and sellers.
So here’s how Amazon FBA works. You source the product, you list it on Amazon and then you ship it to one of Amazon’s fulfilment centers, otherwise known as warehouses. This is where your product will be kept until an order is made for it. If the buyer is a Prime member, he/she will get the product in 2-3 days, and with the new Prime now option, the product can be delivered in 2-3 hours. Another very beautiful thing about Amazon FBA is that you don’t have to be an Amazon seller to use the product. You can have your own e-commerce platform or even use another one like e-bay and still get fulfilled by Amazon.
So by using Amazon by FBA, you don’t need huge space to store inventory. Amazon does the storage for you so you don’t need to take constant trips to the post office.
Amazon processes your returns, and best of all you get to eliminate the bulk of customer service issues, since Amazon does handle that.
Your customers who are Prime Members can always get their products in 2-3 days. If they don’t get it in that time either because they are not Prime members or there was a glitch on the way, Amazon, will handle that - doesn’t affect you as a seller.
Last but not the least, your products as an FBA seller, are Prime Eligible.
The Amazon fees depends on your seller category and of course the products you sell. These fees are excluding the commission Amazon collects on every product that you sell on their platform. If you don’t sell on Amazon, then you won’t be paying commission on any of your products, however you’ll still pay for shipping and handling.
There are two categories of sellers using the FBA, the individual seller and the professional sellers. The individual seller pays a fee of 0.99$ per product sold, while the professional seller will pay a fee of 39.99$ every month. More on this later. Apart from your registration fee, you’ll be paying a weight handling fee, a pick and pack fee and an order fee, this is apart from the 15% seller fee every Amazon seller pays. These fees just listed are relative to the dimensions and weight of the product you’re selling. So the bigger and weightier the product, the more you have to pay.
Before we go deep, I’d like to address a few misconceptions. First Amazon FBA is not a get rich quick scheme, it actually takes a while for the big bucks to start rolling in. Say 3-6 month, at least. So if you have a day job, keep it, until your business starts to make enough money regularly for you to quit. So if you expect quick cash or quick ROI, Amazon FBA is not for you.
It’s a very hands-on business, you’d have to be willing to get your hands dirty. Of course you’re outsourcing your shipping and handling to Amazon, would you also outsource the sourcing of your products and then arranging it and then shipping it to an Amazon fulfilment center? No. You’d actually have to work to get these components to work.
If you want to be able to work from home, or start a scalable business, or you are looking for a side hustle, then selling on Amazon might just be the thing.
You need to create an Amazon seller account, it’s very easy to do. Just visit services.amazon.com. At the point of registration you have to decide whether you want to be an individual seller or a professional seller. Since you’re yet to source your inventory, we’d just say you go with being an individual seller. There are pros and cons.
The major difference between the both category is; if you’d be selling more than 40 items a month, you’re a professional seller, so a payment of 39.9$ will be deducted from your account on registration. However, if you’d be selling less than 40 items a month, you will be paying 0.99$ on every item sold.
There are a variety of ways to source for products to sell on Amazon.
The first method we’ll be dealing with is what is called “Retail Arbitrage”. You might have heard of it, at some point or the other. First you’d be needing money, the more inventory you have the more your chances of making more money. Since you’re just testing the waters, you’d be needing somewhere between 500$ - 1000$. Of course you don’t have to go all in. This is just the money you’d keep away just for the Amazon business.
You could always reinvest when you make profit, so you can make even more profit. Or keep your profit and just reinvest your capital. The fact is that some people are okay with pocketing an extra 500$ every month, and some make as much as 5000$ every month. Nothing wrong with either one, it just depends on what you want and the amount of effort you are willing to put in.
So here’s the concept, you find goods for giveaway prices in local stores or brick and mortar stores, and then you flip them for profit on Amazon. The best time to do this is when a particular store is doing a clearance sale, say Walmart is doing a clearance sale, and then you go in buy products that you can sell for maybe three times the price you bought them.
So after you’ve paid all the Amazon FBA fees, you’d still be able to make somewhere between 3$ - $10 per item. The fact is that not every product on the clearance aisle at your local supermarket will be able to sell on Amazon for a profit. So how do we find out which goods will make sense selling on Amazon? There’s one simple method to do that.
There are Amazon scanning apps available on Google play store and App store. Using this business model, what we are trying to find is something that’s very discounted in the store, at perhaps rock bottom price but that is selling at a good enough price on Amazon for you to be able to make a profit. Our aim is to get somewhere between 3$ - 10$ profit or more after paying Amazon their cut.
It’s important you have this app, otherwise, you’d be like a pilot flying without his instruments, and you’d be flying blind. That is the only way you’d be able to tell what products will be profitable on Amazon or not. What you do is just to scan the bar code or the UPC of the product and it gives you important information about the product on the spot.
Here is the information you’d be getting when using this app
With these apps you can also see the breakdown of all the fees you’d be paying on that particular product, that is after they have entered how much you want to buy the products for.
There are two very popular apps to do these with, there’s the Amazon app and then there’s Scoutify app. They both do the same thing. The Amazon seller also connects to your Amazon seller Account. The Amazon seller app is free, the Scoutify App however is not free, you’d pay 49.99$ every month.
This is very similar to retail arbitrage, in fact it is retail arbitrage, the only difference is that this is done online. Instead of going to brick and mortar shops to look for inventory that you can flip for profit on Amazon. It’s the same thing you do off line that you do on online, so you find goods which are also in clearance sales. Here you can compare their prices directly against the Amazon prices and know if you should flip it or not. The advantage you have over the offline arbitrage is that you are neither limited by space or time. The caveat here is that you might be tempted to get much more inventory than you should get.
As earlier said there are so many ways for source for inventory, we’ve just discussed the arbitrage methods. There are many other methods. After you’ve sourced for products, the next thing is to get them listed on Amazon and start sales.
Now that you have an inventory, it is time to list your products on Amazon. Amazon actually has a video that shows you how you can go about putting your products on the platform. However as an FBA seller using the Retail arbitrage method to source for products, a lot of work has been done for you already. So you don’t need to take pictures of the products you want to sell.
You don’t need to make a new listing, neither do you need to write new copy for the product you are buying. There are already product listings for the product you want to sell, you can use them. Talking about the Amazon video it doesn’t exactly factor in FBA sellers.
To list your products on Amazon, click the inventory button, you’d find it on top of your screen, then click add product. You’ll have to search for the product, either by name or by bar code. Enter the details about the product and also the condition. So if you are selling a used product, you should put that information there.
Now for shipping options you have two. You can list your products and have then shipped immediately or you can have them shipped at a convenient time for you. For shipping option, you either have the option to ship it yourself or have Amazon ship it for you, using the FBA program.
You’ll find the options to do this in “Advanced View”. You’ll find two buttons, you should choose the second button. If you choose the first button, your product will be available for sale immediately, but the other option, you’d be able to work a shipping schedule. Which is actually what you want since you are planning to sell more than one product. If you are just selling one product the “ship immediately” option will work very well. With the second option, after you have listed them, your products won’t be available for sale until the hit the Amazon fulfilment centres.
Now you need to pack your products, put then in cartons, with UPC codes and ship them of the nearest fulfilment centre. These barcodes are specific to you, so you should put them on the carton of you products, that’s the only way Amazon can different your products from others.
So you’ll need a printer, you’ll need paper, tape of staplers, of course your smart phone is also needed in this case.
There are other preparations you might need to do also, depending on the products you’re selling.
If it is a cloth for instance, you should pack it in a plastic bag, with the sticker on the top of the plastic bag.
A bottle with fluid in it will need extra protection, so it should be bubble wrapped.
Finally, you should know that Amazon would charge for handling. Yet, they would want you to do some of the work of packaging. That is your products should be almost ready or shipping, all Amazon needs to do is just put the products in a box, label and ship.
Go to your “Manage FBA Shipments” you’ll find it under your inventory, then click on continue with shipment plan. Next you buy shipment from Amazon. You can use FEDx or USPS, all these company partner with Amazon, so you can actually get your inventory moved at a very subsidize price. Once your products get to the Amazon fulfilment center, you need do nothing more, just sit back relax and wait for the orders to role in.
Using the retail arbitrage method, usually it takes a while to get products that will actually make you profit on Amazon. Yes, it isn’t an easy task, if it were easy, everyone would be selling on amazon and making money. It is also advisable to sell products that range from 15$ and above in price, so that when Amazon has taken out their share you can still have a profit. You’d actually have to go through a lot of items before you get a few that will be available for profit on Amazon.
The fact that an item has good profit margin from the Amazon app, still doesn’t mean you should sell it. You have to check marketability on Amazon. You have to make sure Amazon doesn’t sell such a product, or that the product or category isn’t dominated by a big brand. You want to check the BSR of the product. That is the best seller rankings, anything number below 100 is excellent, products with BSR of up to 5000 are also good.
Other characteristics of a good selling products is that it should be small and lightweight. You are charged for shipping and storage based on space and weight of the product. It should also have low level of competition. It will take a while to get the hang of sourcing for inventories. However, there are a lot of people making 5 and 6 figure incomes doing Amazon FBA business.