How to Start an Amazon FBA Business and Succeed
An Amazon FBA business uses simple logic and can be quite profitable. However, it is anything but a get rich quick scheme. Just like any other business, it is serious and requires a lot of work. Amazon is a big name in the online retail industry. It is the largest in the UK, USA, and many parts of Europe. While many people have heard of it, they may not know that every time they make a purchase, they are most likely getting the item from a third-party merchant using the Amazon FBA service.
FBA is an acronym for “fulfilled by Amazon”. So, Amazon takes care of the merchant’s stock. When you place an order, the item is taken to an FBA warehouse directly. Amazon picks the order then delivers it to you. Amazon FBA is also responsible for customer service, mostly. They take care of customer returns and forward to the seller only if it is a specific query.
A customer cannot doesn’t know the difference between buying from a merchant, selling via Amazon FBA, or buying directly from Amazon. The customer service team, the return policies, and the delivery options are all the same. When you are an Amazon FBA seller, you don’t have to watch your stock. Selling 1000 items takes the same effort as selling 10.
The customer gets the same quality service that is offered by the biggest brands. As an Amazon seller, it is possible to run a single-person business and sell tons of items per month. You can do this remotely, wherever you are in the world.
All you need to do is buy merchandise and send it to Amazon FBA. From there, focus on making sales. There are two major Amazon FBA business types. Invent your own product from scratch. Professionally design and manufacture an item then convince people they need it. This is no easy task and after going through all the trouble, people may reject your invention. Improve or reinvent another person’s product. Find an item that is selling a lot but is substandard and make a better one. This method is easier and more profitable.
If you want to become an online seller, then you must have heard about Amazon FBA (Fulfilled by Amazon). In this business model, the seller (you) selects the product they would like to sell, you then find a supplier and order, package, and ship the products. The goods are housed in an Amazon Fulfillment Center and the rest is up to them. This model is a little complex and has pros and cons. However, it is an attractive venture once you understand it. If you’ve done your research and decided that you want to try Amazon FBA out, you obviously want to get things up and running. So, where do you start?
Step One: Select Your First Product
This is the hardest step in this entire process. It can also be time-consuming. The product you choose will either break or make your business. A product that is rather expensive, being offered by too many sellers, or one that has little to no demand may not be profitable at all. Take time to research the market, brainstorm, and talk to different suppliers.
Brainstorm the Market Then Choose a Niche Market
Explore what you are passionate about. Think outside the box, make a long list, and then narrow down the ideas.
Research the Market
Once you have a product in mind, conduct intense market research. Check major retailers to see the average price list of the item. A quick keyword search is also useful. Visit a site like MerchantWords so you know what keywords consumers search for. Next, check Best Sellers Rankings to see how your product is doing.
Avoid Competition with Well-Established Products or Brand Names
Brand names are not easy to compete with. The same goes for well-established products—unless you have a brilliant idea on how to break into a market.
Step Two: Product Source
This is another difficult step. Where will you get the product from?
Find a Supplier
Try sources that are outside the U.S.A such as Alibaba. You can get quality products at a lower price.
Ship Your Products
Figure out whether you will ship by air, boat, or train. For international shipping, make sure you understand customs procedures and laws. After you receive the products, package the products in preparation for the Amazon Fulfillment Center. Amazon has strict guidelines in place. Outsource this task if you cannot do it efficiently.
Step Three: Market Your Products
Listing the product on Amazon will make it visible to consumers but there are still other steps involved.
Optimize the Product Description
What makes your product awesome? Say it in the description and add clear pictures. SEO keywords play a huge part here.
Find Ways to Advertise
Look for a low-cost option such as a PPC (Pay Per Clicks) program. Facebook is another great platform for advertising.
Gather Product Reviews
Multiple positive reviews will boost your sales. Send your item to a product reviewer or ask for an endorsement from people with many followers.
You have probably heard of Alibaba. It is an online wholesale market, originally Chinese, where distributors and factories from all over the world showcase their products. Most of the companies registered there can team up with you to design and make your own unique product. Alibaba has made it even easier for most people to create Amazon FBA businesses.
As a result, Amazon has seen an increase in white-labeled products directly from Alibaba. They have a large price markup and an attached brand. While some of them don’t do well, many sell a lot.
You can get a product on Alibaba and buy it in bulk. The items will come with your brand slapped on them. Alibaba prices are so low. If you play your cards right, you can resell the products on Amazon and get a profit of 50%+.
Don’t mistake this with creating fake products. Not only is that bad business, but it is also unethical. Your business will be shut down. The point is to think of an improvement of a product. Next, contact the factory that makes that product on Alibaba, legitimately, and ask them to make unique boxing gloves for you. The items will have your branding. You can then join the market as a competitor of the original product.
Finding the perfect product idea can be challenging. It is not something that you can do overnight. Take your time, research and think everything through.
Every iconic product you see today started as an idea. If you have an idea, you are probably wondering how you can transform it into a product.
Here is the whole process in 14 steps.
Make Sure You Have a Unique Idea
Imagine after spending your money, effort and time you find out that the product you are trying to create already exists. Before you become too excited, perform a Google Image, Amazon, and patent search.
Find Out Why the Product Doesn’t Already Exist
After establishing that your idea is unique, it’s time to find out why. Maybe nobody wants to buy the product. Maybe someone is solving the problem in other ways.
You need to think about pricing throughout the designing and manufacturing journey. Research your sector’s profit margins.
Sketching and Brainstorming
Before you start pouring in money, make a simple sketch. This will help you visualize the idea, think about the details and uncover any problems.
Proof of Concept Prototyping
These are prototypes that show how your product is supposed to work although they may not look the part. Be sure to use very little money with these prototypes.
Computer Aided Design
This refers to creating a virtual, 3D model of the product. You can use any of this CAD software: FreeCAD, Tinkercad, AutoDesk Fusion and OnShape.
This is the second stage of prototyping. It involves making the 3D model physical. This stage has three prototype categories:
- “Looks-Like”: these look like the final product but without functionality.
- “Works-Like”: these may not look like the real product, but they function the way it is supposed to.
- “Looks-Like, Works-Like”: these look and work like the final product.
Testing the Product
This is both time consuming and tricky. It needs to be done continually throughout the prototyping stages. There is basic usage testing, “use and abuse” testing, standards testing and postage and drop testing.
Protect Your Idea
You need to make sure that other people don’t steal your intellectual property. Other than patents, trademarks, and copyrights, avoid sharing your idea with anyone unless they must know and can be trusted.
Making the Product
This is exciting because it means that your idea is going to the market. Know the number of products you want to make as that determines the manufacturing route (commission, small batch production, on demand production or mass production).
Optimize for Manufacture
There are so many manufacturing processes such as CNC machining and injection molding. The one you choose depends on whether your product meets the design requirements.
Funding the Idea
You can start from the bottom with what you have and grow from there.
Alternatively, you can use the following funding methods:
- Competitions and grant funding
- Business loan
- Equity investment
Who Will Make Your Product?
There are products that you can make yourself. The other option is finding manufacturers locally on Google. For low costs, try Alibaba.
Selling the Product
Here are several options for selling:
- Third-party platforms like Amazon
- Your own ecommerce website
- Selling to distributors or retail
To start selling on Amazon, you will need to find a supplier first. Choosing a supplier is a critical process and you must be extremely careful. So, how do you do it? It is important for you to manage your product’s quality. When the products you ship to Amazon are poor quality, your business will be in trouble. Having too many product returns and bad reviews is never good. Amazon can remove all your listing privileges or cancel the listings.
This will take you back to where you started, and you will hardly sell any products. For this reason, you cannot just work with the first supplier you come across. You must find a factory that not only makes quality products, but also delivers on time. You need to get good prices for the products and lowest possible number of defects. There are three main factors to consider when picking a supplier. Check them out.
Option 1: Going to China in Person
Going to a China market or trade fair is an amazing option if you have the money for it.
If you get an opportunity to attend the Canton Fair (China Import and Export Fair), you will meet so many different suppliers. You will also get a great chance to browse and see any new available products as well as get ideas for products you may want to buy or create. Take a trip to Yiwu Market (Yiwu International Trade City) and check out the thousands of booths with various wholesale items. There are different kinds of mass market, non-technical, inexpensive items.
The idea of going to China may not make sense for some Amazon FBA sellers, financially. This means searching for suppliers online—more specifically, Alibaba. Option 2: Searching for Suppliers on Alibaba. For online Chinese suppliers, Alibaba is the best place to look. Many Chinese factories do not create websites. If you find one with a website, the web presence will be greatly limited. A Google search, therefore, may turn out to be fruitless.
Although there are good Chinese factories with a strong web presence and English-speaking staff, their prices may be too high for small Amazon sellers. When seeking suppliers on Alibaba, make it a key rule to source from “Trade Assurance” suppliers or those that have no problem accepting “Alibaba Secure Payments”. Factories like these guarantee their work in that, they don’t get payments if they ship substandard items or fail to ship on time.
Option 3: Working with Sourcing Agents
These companies help sellers locate product sources.
They are a good option for new sellers who don’t have manufacturing experience. Their payment is catered for by a percentage of the buyer’s order.
Sourcing agents will save energy and time. However, you should seek to know all about the product you are selling before depending on an agent.
The Best Option for You
If you don’t have the budget to go to China, Alibaba is a good option. The most important thing to consider is quality.