Today i’m going to show you how to start an amazon fba business with little time and money.
Now a few things i should mention upfront…
This is not a get rich quick scheme, it actually requires quite a bit of work and for this example you’d need around $1500 to get started.
If you haven’t been here before, Hello! My name is Nick (That’s me above) and i have been a full time Amazon fba seller for over two years now.
I started the business with two friends of mine and it allowed us to all quit our jobs to chase our dreams full time.
We started our Amazon FBA business with limited time and money…
We were all in full time employment and we started the business with around $1800.
I’m going to run you through the process we went through in order to take the business full time.
Before we start, let’s cover the basics…
What Is An Amazon FBA Business?
I think it’s safe to assume that you’ve probably heard of Amazon.
They are without a doubt the biggest online retailer in the world…
Currently they operate in 12 different online marketplaces
Their biggest marketplaces are:
- United Kingdom
This was the information i was given when i attended a Seminar at their London HQ Recently.
Anyway, what a lot of people don’t realize is that when you buy something on Amazon a lot of the time you will be purchasing from 3rd party sellers.
People just like me… and maybe you 😉
Let me show you an example of a third part seller using Amazons FBA service…
As you can see on the right hand side of the image, the company is called “Oilp” and their products are “Fulfilled by Amazon”.
A lot of Amazon sellers make use of the Amazon FBA service, it means anyone can start their own Amazon business.
You don’t need to be there all day picking, packing and posting things out.
Anyway… FBA Stands for “Fulfillment By Amazon” really it’s thanks to this program that we could all quit our 9 – 5 jobs.
With FBA, Amazon will look after all of your stock.
All you need to do is find products that sell, source them at the right price and send them into Amazon FBA for them to do the heavy lifting.
Here is a simple overview of how it works:
- You send your prepped products into one of the Amazons FBA Warehouses
- Customers find your products on Amazon and make an order
- The FBA warehouse will pick, package and post the item out on your behalf
- Amazon also handle the customer returns, customers can liaise directly with them to organize a return
- Sellers do have to deal with some specific questions, customers can send messages and you have to respond within 24 hours
In my opinion Amazons success is down to the complete obsession they have with the customer.
Amazons customer service is second to none…
So let’s get back to the reason you are here…
You want to know how to start an Amazon FBA business and i’m going to show you.
For this example we are going to focus on the Amazon private label business model.
This was the business model we followed because we were able to do it whilst working full time jobs.
There are a few different amazon business models but that’s a topic for another time.
A Checklist For Starting An Amazon Business
This process will differ slightly from country to country but the principles are the same…
I’ve also created a step by step video to help you fully understand the process.
If you are serious about building your very own online business, please watch the video below and read this article all the way through to the end.
This is the process we followed and now we all work for ourselves, it’s a great feeling.
** Disclaimer – Just because this worked for us it doesn’t mean it will work for you – All i can do is pass on my experience and hope you find it helpful**
Ok, let’s get into it.
1. Find A Suitable Product Opportunity
Before you jump in you need to learn how to do market research on Amazon.
You need to find a suitable product opportunity…
For all of my product research i use a tool called: Helium 10
If you are interested before signing up read my full helium 10 review, it explains exactly how we use each of their tools on a day to day basis.
Oh and you can also save money by using one of my coupons…
Anyway, I’ve also written an article to explain exactly how i do my product research, i’ll leave a link to it below:
The article above will run you through the process, if you’d like to see a slightly different research technique watch the video below…
An ideal product will include the following:
- Strong demand on the Amazon platform
- 30% Profit Margin or $5 Profit per sale
- Low levels of competition
For this example I’ve already found a pretty decent private label product opportunity…
Let me introduce you to, the “Air Plane Foot Rest”
I’ve put a red box around the best selling competitor…
This product ranks at #196 in Office products…
We will go further into these figures shortly.
Those numbers are crazy!
Now when you start up an Amazon business you don’t need to hit these sorts of numbers, to get started you just need a small slice of the pie.
2. Set Up A Company
If you want to build a serious business i’d suggest that you set up a proper business along with a company bank account.
Most accountants offer free consultations, have a chat with a professional before you jump in.
3. Set Up A Professional Amazon Seller Account
You’ll need to do this before you purchase your product – Make sure Amazon have verified all of your details before you invest anything into a product.
Once you’ve set up your Amazon seller account, try to create a listing of the product you want to sell…
You need to do this to see whether Amazon will allow you to sell the product.
Some product categories are gated and some products require extensive documentation when it comes to approval.
Create the listing first! I don’t want you ending up with a load of stock you can’t sell!
4. Find A Good Supplier On Alibaba
A lot of people ask me the following:
“Nick, Is Alibaba Safe?“
The answer to that question is Yes and No… The majority of suppliers are good, trustworthy people but we have been stung in the past.
Take the time to talk to a few different suppliers and once you find one always put your payments through the Alibaba Trade Assurance (Until you have built on the relationship).
The video below shows you how we go about finding trustworthy suppliers on Alibaba.
Let’s get back to the example, let me show you what i found on Alibaba.
As a starting point, this looks pretty good.
Please be warned that a lot of the time the figures quotes are just a guide, most suppliers put out the lowest price with their most basic product option.
Later in the article i’m going to give you some extra tips on negotiating with these suppliers.
The majority of the time this figure won’t include the cost of freight.
For this example let’s assume that we can manufacture and ship this product to Amazon FBA for $3 per unit.
If we order 500 units to start with we will be investing $1500 into this product.
** Useful Tip – Look for suppliers that have been doing business for sometime. It’s always worth googling the company to see if anyone has been scammed in the past – We usually only use suppliers with a strong number of transactions along with a trading history of 5 – 10 years**
Ok, before we get too excited let’s talk profit – How much money could we make from this item?
5. Working Out Your Profit With The Amazon FBA Fee Calculator
Next we want to make sure we know how much profit we can make.
For this you can use the Amazon FBA fee calculator to workout the Amazon fees.
As we are following the Amazon FBA business model I’ve enter the item price on the right hand side.
As the best selling competitor was priced at $19.99 – I’ve decided to pitch this product in at $18.99…
You don’t always need to provoke a price war but i always like to consider the worst case scenario.
If we get a foothold in the market, we can consider raising our price to $19.99.
Anyway.. As you can see after Amazon fees we will be left with $12.79 for every unit we sell.
Not bad at all.
If we minus the $3.00 cost of the product itself then we are left we $9.79 net profit on each unit.
So if we sell all of our 500 units we’d make $6,396 in Revenue & $4,895 in profit!
Not a bad return on investment, that’s for sure – we’ve literally turned $1500 into $6,396..
Its worth mentioning that we will also have other associated costs.
You’ll have to get images made and you’ll need to budget to launch the product.
Once the product finds it’s place on Amazon it’s all pretty straight forward from there.
The top selling competitor is currently selling around 7,700 on a monthly basis…
That’s $153,948.73 in revenue and $75,383 in profit!
Anyway, let’s not get too carried away.
The main point here is that this looks like a solid product opportunity.
6. Checking Product Quality & Supplier Capability
Before we go any further we want to order a sample from any suppliers we have added to our shortlist.
A lot of the time we ask the supplier to mock up the product in finished packaging, this way we know what their printing quality is like.
You’ll also want to think about relevant safety warnings, do some research and make sure you’ve got the correct warning labels on the product and packaging.
Your supplier should be able to provide you with certification and testing reports.
7. Create A Listing On Amazon
Now let’s assume you have found a supplier and you are happy with the product.
Before you make an order there is a few things you need to do.
First things first you’ll need to buy a barcode.
In Amazons terms of service they ask for all barcodes to be purchased from an official GS1 source.
We’ve written a full article on amazon barcodes, if your interested read it here.
Some sellers choose to take the risk and buy a barcode from elsewhere, the decision is yours but personally i wouldn’t take the risk.
We’ve put together a amazon barcodes playlist on the YouTube channel, you can watch part 1 below.
Once you have a barcode you are ready to build out your listing.
The reason i suggest to do this before you order the product is because some categories are gated by amazon.
Make sure you are able to sell a product before you invest your hard earned money.
You’ll want to fill your listing the most relevant, high traffic keywords…
I’m a big believer in modelling people that are already having success.
When launching a product i like to see which keywords the best selling competitors are getting their keywords from.
You’ve you’ve set up your listing, you will need to generate something called an FNSKU label.
This is a unique Amazon identifier for each product in their eco-system.
We explain this in full detail within the Amazon barcode playlist on our YouTube channel.
8. Set Up An Order With Your Chosen Supplier
As mentioned earlier, we find most of our suppliers on Alibaba.
When setting up an initial order with a new supplier we use the Trade Assurance program, although we’ve never had to claim we’ve never had an issue with a supplier when using it.
You should try to negotiate beneficial payment terms with your supplier.
Usually you can create an agreement to pay 20 – 30% upfront – this way a supplier can manufacturer the product (They have costs too remember)
Then if you like you can arrange an inspection for your products from a 3rd party.
They will attend the factory on your behalf and inspect the products to ensure they are of a satisfactory quality.
This is also a useful opportunity for you to learn about the factory/manufacturer themselves.
In the past upon inspection we’ve found out that we are actually working with a trading company rather than the factory direct.
This isn’t necessarily a bad thing! It’s just good to know who you are dealing with.
Remember… You will need to make sure each of your products has an FNSKU label on it.
With some Amazon specific products we will include the FNSKU label on the packaging design itself.
Alternatively you can poly bag and label each product, there are a lot of different options.
9. Create The Shipment Within Amazon Seller Central
You need to start thinking about where you are going to ship the finished products to.
We usually do this one of two ways:
- You can receive the goods yourself, this way you can check them over before sending into Amazon FBA
- Send the goods directly from your supplier to Amazon FBA
When we started out we went for option number one (mainly because at the last minute we realized we needed to apply a FNSKU label to each product).
If you send your goods directly into Amazon FBA make sure the paperwork is correct and Amazon are named as the delivery address, not the importer.
We are lucky because Ed has a lot of experience with shipping having worked in the industry before we went full time as Amazon sellers.
I’d also make sure you understand Amazons FBA requirements, they have pretty strict requirements when it comes to receiving products.
10. Launch Your Product and Start Selling!
Once Amazon have received your items you are ready to launch your product and start selling!
Later in this article i’m going to talk to you about marketing on the amazon platform, i want to try and help you get started on the right foot.
Before we get into that let me run through a few import things about negotiating and manufacturing
Manufacturing & Negotiation
With Amazon FBA you are going to need to get used to negotiating.
It’s something that get better with practice, there are times when I’ve managed to negotiate up the 50% off the original price.
You can play one supplier off against the other, most suppliers will be keen to work with you…
A lot of these companies understand the value of working with a new Amazon FBA business.
When searching for suppliers on alibaba enter “OEM” after you keywords… This stands for Original Object Manufacturer.
By finding OEM manufacturers you can hopefully bypass the re-sellers and trading companies.
It’s important for you to speak to a few different factories, you’ll soon get a good feel for the supplier you want to work with.
When i’m looking for a new suppliers these are the things i’m really interested in:
- MOQ – Minimum Order Quantity
- Price Point
- Production Capability / Lead Time
When you are starting out the first point is probably the most important.
MOQ stands for the minimum order quantity a supplier offers.
Some factories only deal with businesses looking for 10,000 units plus.
To start with i’d start with smaller amounts, you need to get to know Amazon.
Our first order was 500 Units, we sold out pretty quickly and really we could of gone for 1000.
But hey i’d prefer to learn the lesson this way round!
Price point is obviously important, Amazon FBA can turn into an expensive hobby if you don’t have the right profit margins.
The production capability / lead time is also important, some factories are slow some are fast!
When it comes to the re-ordering side of things you want a supplier that’s efficient and quick.
Dealing With Freight Forwarding & Customs
As mentioned earlier, we are pretty lucky as one of my business partners has a lot of experience with Shipping.
Through his contacts we have a good network of freight forwarders and custom clearance agents.
You have two choices when you are sending your goods across water.
- Sea Freight
- Air Freight
If you are selling across the US and using US based manufacturers you could explore the possibility of sending your goods via road or freight.
All of our suppliers are based over seas so for us, it’s either sea freight or air freight.
If you are sending goods by sea from China to the UK or USA you are looking at about 6 – 8 weeks (although delays aren’t uncommon).
Sending your goods via airfreight will take less than a week…
But in some cases you’ll pay more that 4 or 5 times the price.
When we started out we sent our goods via air, mainly because they were quite small items!
Nowadays we will mix between the two depending on the demand as well as the size and weight of the product.
Sometimes we might even split goods between the two…
If we are running low on stock we can send enough cover by air and the rest by sea.
Marketing On Amazon
If you are a beginner to selling on Amazon, i wouldn’t let yourself get too overwhelmed with the finer details here.
I’m going to cover the fundamentals so you’ve got everything you need to get started.
Over the years I’ve found that products seem to gain quicker momentum when they are brand new listings…
When your product’s in stock and your listing is ready you need to start driving traffic to your amazon listings.
You can do this in a number of ways, some of the popular options include:
- Running Facebook Ads
- Setting Up Google Ads
- Starting Aggressive Amazon PPC campaigns (For the first 8 days)
- Using Influencers
When i’m launching a new product, i’ll usually use a combination of the above methods.
When it comes to launching we usually like to follow the CPR method.
In simple terms according to the CPR method you need to be hitting a certain number of daily sales for a particular keyword…
You can target a keyword by generating keyword rich URL’s or directing a buy to use a particular keyword to find your product.
All of this can start to sound quite complicated but it honestly doesn’t have to be.
Some people launch products by simply using Amazon PPC – Before you do this i’d recommend finding the keywords you want to target.
Struggling to work out which keywords you should target? Don’t worry i’ve got you covered watch the video below.
Read this article first if you like but the above video will run you through our exact keyword strategy.
Anyway, once you have your target keyword\keywords you can decide on your strategy and get to work.
You want to tell Amazon that your product is super relevant to this keyword is a subtle (Not spammy) way.
Optimizing Your Amazon Listing
By using the video above you’ll be able to find and organise your target keywords…
Next up you need to make sure your keywords are in all the right places.
For this i’d recommend watching another video I’ve made (Check it out below).
In my experience, your title, bullet points and back end is the most important place for your keywords.
Once you’ve filled your listing with relevant, high traffic keywords it’s time to make sure your images are on point.
You’ll want your main image to be as inviting as possible.
A lot of people use sites like Fiverr to get computer generated (rendered) images of their products.
These can be a great way to show the perfect image of your product, you want your image to look as interesting as possible.
Think of Amazon as a shop window, as people are scrolling through are they going to stop and look at your product?
Here are some other good image types you should be working on.
These types of images are great to re purpose and use on your amazon listing.
This image has been posted by one of their Amazon customers, but you don’t need to have sold any products before creating some of these.
Find influencers on Instagram and start sending DM, look for influencers that would be happy to receive a free product in return for some cool pictures.
Looks of influencers or even friends of yours will do this for free.
Once you’ve got a few of these you could create a collage and put a strap line at the top of an Image to say: “Customers love that our product does X”
This is a great way of providing social proof to your audience…
Show them that other people like using your products.
In Use Product Images
If you’ve got the budget find a professional photographer to take a few images showing your product in use.
This helps to build trust between you and your customer…
The above example is from a product that is actually doing over $2,600,000 a month…
I’ll put their sales figures for the month below, you wouldn’t believe the amount of money some 3rd party Amazon FBA sellers are making.
Anyway, images like this are important!
You could include a few different product images like this to show your product being using in different ways.
If you are a beginner when it comes to Amazon FBA you probably won’t be at this point right away but it’s always good to refer back to.
If you are starting an Amazon private label business i always recommend building a brand of related products…
In the long run these types of businesses are incredibly valuable.
Here is a great example of a cross selling image…
This seller has built out a collection of products that relate to each other.
This is exactly how you build a brand using Amazon FBA.
The above image is actually one of the marketing images from a Facial serum product, but this seller has a number of related products that this same customer might enjoy.
Over the course of a year this will boost revenue and profit no end.
How To Get Reviews On Amazon
A lot of people ask me the following:
“How am i supposed to get reviews when I’ve only just launched the product?”
There is no doubt about it having a strong level of positive reviews is a BIG part of selling on Amazon.
Amazon Early Reviewer Program
If you are starting out i’d recommend using Amazon’s early reviewer program.
This can help get your product started!
These reviews are genuine customers, so you will need to work on your sales velocity at the same time!
Amazon charges $60 per SKU to enroll into the program.
Nowadays if you want to sell on Amazon you are going to need a top quality, customer pleasing product…
This way naturally the positive reviews will roll in.
I’d strongly advise against getting friends or family to leave reviews, Amazon can track your IP address and they are very good at linking people together.
If you get caught you could get your account banned… permanently.
Using Social Media To Your Advantage
To get a good flow of positive reviews you need to be having more conversations with your customers.
If you have a social media following this can be HUGE, you can communicate with customers and ask them to review their products.
Just don’t try to incentivize them to leave a “Postive” review, this is against Amazon’s Terms of service.
You could do something like run an Instagram story with a poll to ask if customers have tried X product…
Then you can follow up with the ones that vote “Yes” and ask them to leave a review on Amazon.
A tribe of happy customers on social media is like rocket fuel to an Amazon FBA business.
Using Automated Amazon Emails
This is without a doubt my number one recommendation.
Amazon allow you to email customers through their messaging platform, this is a huge opportunity.
I use my automated emails to achieve a few things:
- Surprise the customer by attaching something of value that they don’t expect (Maybe a free eBook to help them use the product)
- Make the customer feel important – Prompt them to reach out if they have any issues
- Follow up and ask them to leave a review on Amazon
I’ve written an article to run through this process in full detail, if you’re interested you can read it here.
Starting An Amazon Business With Little Time & Money
So that’s how we did it.
The journey started with $1800 between three of us and from this initial investment we now all work for ourselves.
We found one private label product, reinvested the profits and built up a collection of hot selling products.
The majority of our products are sold across the European Amazon marketplaces, we continue to learn new things every day.
We moved into a slightly bigger office about a year and a half ago, since quitting the 9 – 5 i haven’t looked back since.
If you have any questions at all PLEASE leave me a comment below, i’d be happy to see if i can help you out.
More from me soon,