Starting an online business can be a profitable move, but you still need some capital to get started. Whether you want to create a part-time business or eventually take it full time, this guide will show you how to start an Amazon store on a tight budget.
Is it possible to start up with very little money? Is it worthwhile to get started this way or should you rather wait until you have more capital?
These are the questions I will be answering in this guide – let’s get started.
How Much Money Do You Need to Start Selling on Amazon?
It is possible to start an Amazon store on a tight budget, but just how low can you go?
Based on a survey by Jungle Scout, the average seller spent $3,836 to start their Amazon store.
Here is a better breakdown of the average start-up budget:
- $500 or less (17%)
- $501 – $1,000 (12%)
- $1,001 – $2,500 (13%)
- $2,501 – $5,000 (17%)
- More than $10,000 (22%)
To give you some context, we started our Amazon business with around $2000. As you can see from the above, it can be done for less.
However, does the amount of capital you have directly impact your level of success as an Amazon seller?
This is a good question.
My opinion; Not necessarily.
Several sellers who started with less money have found greater success than those who had thousands of dollars to spend.
According to Jungle Scout’s report, 33% of the sellers who spent $500 or less have been in business for five years or longer. 70% of these sellers turned a profit in 6 months or less.
As for the sellers who started with at least $10,000, only 13% have been in business for five years or longer. 31% of those sellers turned a profit in 6 months or less.
To determine how much money you need to get started on Amazon, keep in mind there are required fees and essential expenses, recommended costs, and additional expenses that aren’t necessary until later.
How to Start an Amazon FBA Business with Little Money
There is good news! It is possible to start an Amazon store with a tight budget.
It would help if you did things in the right way. The video below will show you how you could start with a limited budget.
If you are still planning to work a full-time job, going the Amazon FBA route is ideal.
Fulfillment by Amazon gives you a more hands-off way to sell because they take care of almost everything for you.
You need to make the sales and get your products to a fulfillment center.
Whether you are starting your business with $500 or $5,000, there is a fundamental process you would need to follow to get started.
Getting Set Up with an Amazon Seller Account
The first step is to create an Amazon Seller Account – you can do so from this sign-up page.
After filling in some basic information, you have the option to sign up for an Individual or Professional seller account.
With an Individual account, you won’t pay any monthly subscription fees, but there are several limitations.
The Professional option costs $39.99 per month, but you have a lot more freedom as a seller.
If you are serious about starting an Amazon FBA business, go for the Professional account.
Ok, let’s move onto the next step.
How to Find Your First Amazon Product
Most sellers already have an idea of what they want to sell, but this doesn’t mean it’s what you should be selling.
When you are just starting, and you have a limited budget, you don’t want to compete with sellers with larger budgets.
This is why product research is so important.
I know that a lot of sellers are reluctant to invest in tools and software, but when it comes to product research, the right tools are incredibly worthwhile.
Even if you only use it for a month or two before cancelling, it can give you a huge advantage.
Helium 10’s Black Box is one of the best product research tools I have used to date. If you want to give it a try, you can take 50% off your first month using this eBusiness Boss link.
Here is a screenshot of the black box tool, the advanced filters are insane!
Once you sign up, you can start your product search.
Before you do, though, make sure you know which niche you want to target, as this will narrow down your search.
As you scan through products, you want to avoid any big brand names. Trying to compete with established brands will only eat away at your budget, leaving you with little to no profits.
You also want to keep an eye out for products with a low barrier to entry, as well as products that don’t have a high risk of being faulty or damaged during transit.
Aspects you want to pay attention to in the Black Box search results is sales and price trends, as well as reviews. The point is to find products with potential that you can improve on.
For example, look for products with 3 or 4-star reviews. This way, you know there is room for improvement (only go for them if you can improve the experience in some way!)
Along with providing sales-related data, Helium 10 can also show you which keywords are driving traffic to a listing by performing a reverse ASIN search. You can once again use this information to create better product listings.
I have gone into more detail in the below video (If you want a solid understanding I really would recommend watching the videos I’ve made for this article):
If budget is a significant constraint, there are several free tools you can use too – Unicorn Smasher is one of them, and you can read my full review here.
As a final note, before you get excited about your product choices, it’s crucial to find out what the FBA fees are.
Fees depend on the product’s size, weight, shape, and storage requirements, all of this will impact your budget.
Sourcing Your Products
Before you can list your products, you need to know where to source them.
This tends to be one of the more time-consuming processes until you can find a reliable supplier.
Many sellers use sources such as AliBaba to find products at an affordable rate, which means better profit margins.
You can see a screenshot of the Alibaba site below; it’s easy to use once you get used to it.
The other options are trade stores, clearance items from local retailers, and local manufacturers.
We prefer to sell our own brands, under our own private label. We no longer look at trade stores of clearance items.
Before you decide on a supplier or manufacturer, look at what shipping will cost you. The last thing you want is for shipping to eat away at your profits. This is particularly likely if you are shipping your products from overseas.
You should also consider how quickly you can replenish your stock should you make a lot of sales in a short space of time.
Once you ship your products, you can receive them directly, or you can send them straight to an Amazon Fulfillment Center.
Just make sure your supplier meets the necessary shipping and packaging guidelines, or you could end up paying extra.
With any new supplier, we always ask for their experience with sending products into Amazon fba.
Setting Up Your Brand and Amazon Product Listings
Now comes the exciting process of establishing your brand.
I suggest doing a little research before you settle on a name or logo to ensure you won’t run into issues with competitors.
Don’t forget to check domain names too.
Once you have the basics down, you can start giving your brand a voice through taglines, copy and colour themes.
With an identity, you can now start creating your product listings.
Take your time with this process as everything from headlines and images to keywords make a difference. Both in terms of how Amazon ranks your listings to how potential customers perceive your brand and products.
All that’s left to do is market your products.
This is generally where some additional budget comes in handy.
However, it’s still not impossible to market your products with little to no budget.
Along with optimizing your product listings, you can build an email list, run specials, and promote content on social media.
Once your brand is more established, you can move onto paid campaigns, including PPC.
TLDR: Checklist for Starting on Amazon
If you are searching for a simplified version of how to start an Amazon store on a tight budget, here is a handy checklist:
- Create a Professional Amazon Seller account
- Create a budget that includes the monthly Amazon fee of $39.99 per month and commission & fulfillment fees. This will take up about 15% – 35% of your project sales.
- Add your business name, license, and address to your account, as well as your credit card details.
- Decide whether you want to package and ship products yourself or if you will go the Amazon FBA route. There are a lot more steps involved with packaging and shipping products yourself.
- Pick a niche and spend time researching which products to sell.
- Make a note of the FBA fees associated with the products you choose to sell and add it to your budget.
- Find a supplier or manufacturer for your products and build a relationship. You should also consider any shipping fees and work that into your budget.
- Build your brand and product listings using professional images, engaging copy, and a keyword strategy.
- Find free tools you can use to keep track of product performance and competitors and to identify new opportunities. If you have some extra budget, there are some excellent paid tools you can use.
- Create and implement a marketing strategy to increase sales and grow your business. Here is a handy guide for how to scale your Amazon FBA business.
Building Your Amazon Store One Step at a Time
It’s not impossible to start an Amazon store on a tight budget; it just requires some careful research and planning to ensure your capital doesn’t go to waste.
If you’ve got a limited budget, but you want to learn how to sell on Amazon, you don’t need to pay $100’s or $1000’s for a course.
For a limited time, we are giving people access to our full Amazon course for a ridiculous price. If the offer is still live, you’ll find it by clicking the link below.
With the right products and enough dedication to building and growing a reputable brand, there is no reason why you can’t turn your part-time venture into your full-time success story.
If you are still wondering whether Amazon FBA is worth it, read through my thoughts and opinions here.