Amazon FBA has made the life easier to everyone who desires to open an online business today. Learn how to sell on Amazon and what is the potential of the most popular e-commerce in the world.
If you are looking for an opportunity to become a seller and open your online business, so it’s worth to know what Amazon has to offer you.
You’ve probably bought several times on Amazon but not everyone is aware about the possibility to become a real seller and make money thanks to it. That’s why I want to show you how to sell on Amazon and find a new way to become a digital entrepreneur.
What Is Amazon FBA?
Amazon FBA stands for Fulfilled by Amazon. It means that Amazon allows other people like you and me (3rd parties sellers) to sell our products on its platform, meanwhile Amazon will take care of packing and shipping to the customer.
You will take care of buying the products you want to sell and once they are available Amazon will take care of the rest, including customer service after your products have been sold.
Do you see already what an amazing opportunity? It is something you couldn’t even image some years ago.
How It Works?
Briefly I describe how the process looks like if you use Amazon FBA to sell your products.
At the beginning it can be considered quite a long process but once your business is up and running all of the steps will definitely take you less time.
Here in order all the steps:
- Find the products you want to sell on Amazon
- Create your product listing on Amazon
- Prepare the products to ship to Amazon
- Amazon receives your products and storages them
- Amazon makes your products available online
- Customers buy your products
- Amazon packs and ships your products to the customer
- Amazon take care of customer service
As you can see once you find good products to sell the most of the job is donee, meanwhile the rest is on Amazon. Of course here the process it’s quite simplified but in fact these are the main steps to show you how to sell on Amazon.
Amazon takes some fees to use the FBA program, but considering the potential sales you will make it’s really not that much (You are in business!). There are 2 main fees: Selling fee and Fulfillment by Amazon fee.
They may vary depending on the products, you can check it yourself by going to the FBA calculator and just copy an paste the ASIN number of a product of your choice (you find it in the listing).
An example below:
If I were to sell this item my fees would be $1,95 as Selling Fee and $4,74 as FBA fee, in total $6,69. Considering an item price of $13 and a cost of product ($0,20) and ship to Amazon ($0,50) per item, my net profit would be $5,61 with a 43% net margin.
Set Up Your Seller Account
To sell on Amazon the first thing you need is to open an account. You can open an account as an Individual or as a Pro Seller.
Pro account: it costs $39,99/month but it offers a lot more features
Individual account: it costs $0,00/month but you pay $0,99 per item sold.
The Pro account is definitely needed if you want to make Amazon FBA your business. Instead, if you want just to sell some items from time to time and not doing it regularly then you can start with the Individual account, you can always upgrade.
Once the account is set up you have access to Seller Central Dashboard and can start listing the products to sell.
The Individual plan can be a good solution at the beginning to minimize the costs and risks, especially if you would like to sell using the real arbitrage method. You have a limit of 40 items per month.
Otherwise if you are willing to put money into wholesale or private label products method then you need to open a Pro account. More than 40 items per month.
Let’s dive now into the different methods you can use to sell on Amazon.
How To Sell On Amazon Thanks to Amazon FBA
To start selling on Amazon there are typically 5 different methods:
- Retail Arbitrage
- Wholesale Goods
- Private Label
- Handmade & Manufacturing
It means buying goods in retail or online stores for very low price and resell them on Amazon. To be able to make money from it the seller needs to seek for opportunities in retail stores where there are inventory reduction or during sale period.
Once you find interesting products you can use the Amazon Seller app to check the potential profit of that particular product.
Many people have started this way and definitely it’s possible to have a full-time business just using retail arbitrage but of course it requires more time for you to personally go and find deals.
With this method you purchase goods in bulk from a wholesale supplier and then resell them at a margin.
You have to do a really good research upfront to find good products to sell and then ship them to Amazon. With this method the margin are definitely higher but you need more capital to start.
Find Good Suppliers
As you can image the hardest part it’s to find good suppliers from where purchase the products. Usually to find good deals the best supplier are in China, that’s why it requires time for you to research a good supplier, make a deal and wait for the products to be shipped to you.
At the beginning it can be hard to find trusted supplier and I recommend you to always ask them to send you some sample to check the quality of the product.
If you are interested to find a way to connect with trusted supplier I wrote a blog post about it. You can find it here.
You can buy products from the manufacturer and then customize them with your specific brand .
The main advantage of this method is than you can build a name for your brand and be recognized as unique. This add more value to your effort of building a business.
You can also have an assortment of goods under the same label and offer related products to your customers.
Of course it requires higher investment as you need to create and register your brand.
Handmade & Manufacturing
If you are making some handmade products yourself than you can sell them on Amazon but you need to check first the Amazon’seller fees to see if you can make reasonable profits.
If your budget is very low you can start with this method. You can list your product and when someone order it, you will purchase the product and your dropshipping supplier will ship it directly to your customer. In this way you will be charged for the product only when there is an order.
Dropshipping products unfortunately tend to have lower margin and therefore less profit for you. Moreover the shipping time are much longer if your supplier are in China, that’s why a customer used to buy to Amazon and receive the goods in few days could be not satisfied.
Selling with Amazon FBA has its advantages or benefits. Here some of them:
- Most FBA items are listed for Amazon Prime shipping
- Free shipping to Prime buyers
- Higher rankings for product listing
- Buyers trust more the offer when they see it’s Fulfilled by Amazon
- Amazon handles picking, packing, shipping, customer service
All of the above benefits combined will definitely helps you concentrate your efforts only on your core business. What you need to do is to find good deals and then invest time in marketing and advertising.
Amazon FBA is definitely a real opportunity today to start an online business. If you are willing to study, to find the right products and good suppliers you can potentially earn a full-time income and even more if you will put in efforts constantly.
Every kind of seller is welcome on Amazon, from the most expert to the newbie. As you see there are many ways you can sell on Amazon, you need just time to understand the process and make the things work for you.
I hope this blog post will help you understand a bit more on how to sell on Amazon.
Are you already selling on Amazon or would you like to start? Please share your experience below and let me know if any question.
READ MORE: How To Start A Dropshipping Business