Amazon owns nearly half of the eCommerce market as of 2020. If you’ve ever thought, “I want a piece of that pie,” you’ve reached the right guide to start an Amazon FBA business.
In this guide, we will teach you everything you need to start an Amazon FBA Business. We will begin with account creation and delve into strategies and tools you can use to beat the competition.
What is Amazon FBA, and How Does it Work?
Amazon FBA stands for Fulfillment By Amazon. Amazon handles all of your fulfillment duties. Fulfillment refers to everything in logistical processing:
Amazon FBA sellers ship their products to an Amazon fulfillment center. From that moment, Amazon handles logistics for you.
Because Amazon knows logistics, they have the resources to be more efficient than almost anyone else in the world. If you remember the first time you’ve used Prime Shipping, you know what this means.
Receiving your package two days after requesting it is fantastic.
On the seller side, you cannot take advantage of this platform without being an FBA seller. But before you can take advantage of this platform, you first have to sell something.
There are numerous ways to sell things:
Different Selling Methods for Beginners
Assuming you don’t represent an established brand (yet), there are many methods you can use to get into eCommerce.
The clear winner for beginners is private-label selling. Below are the remaining options:
- Retail/Online Arbitrage
Here’s an explanation of why each one might appeal to you:
What is Private-Label Selling?
Private-label products are made by a third party and sold under your brand. With a formal agreement, you own the product while the manufacturer produces it. Walmart has Great Value, and Target has Archer Farms. Both make a great deal of profit for their respective companies.
They are great because you have complete control of the pricing, branding, and product. You state the specifications of the product.
However, you do become dependent upon the manufacturer. You will also need to overcome more established brands that create competing products.
Still, you can start a private-label company for as little as one thousand in many cases. Below, we will detail how you can create your private label.
Of course, you could manufacture the product yourself:
Why Choose Handmade Products?
If you have a sewing or woodworking talent you want to display, handmade products might be your best bet.
To choose handmade requires you to put in 100% of the manufacturing effort.
You have complete control of your profit.
The drawback here is that making items while managing inventory is nearly impossible. Unless you plan on handcrafting items in bulk, this is rarely useful. The alternative side of this is wholesale.
Why Choose Wholesale Products?
Wholesale products are when you find B2B businesses and buy their items in bulk. Wholesale products already have a loyal following, so you don’t have to work as hard to reach brand recognition.
However, that brand recognition typically won’t be about your store.
You also typically pay for the brand’s recognition with additional cost. I’ll discuss how you establish brand recognition of your brand later on.
Wholesale is similar to your last selling method: online or retail arbitrage.
What is Retail or Online Arbitrage?
Arbitrage is when an Amazon seller purchases items at a discount to resell at the total price on their page. Online arbitrage is when you look for deals by browsing websites. Retail arbitrage is when you look for deals at physical markets.
There’s great potential for earnings for people who can find the right sale.
However, it can be challenging to find a consistent supplier when selling only from retail or online arbitrage.
It is feasible to combine multiple selling strategies here. However, you run the risk of overextending yourself. That’s why beginners should focus on a single system.
What is Dropshipping?
Dropshipping is a trendy form of retail supply similar to private label selling. Unlike private label selling, you need almost no capital, and you handle no inventory.
Instead, you focus on promoting the brand while everyone else deals with production.
The problem with this (especially compared to private label shipping) is that the profit margins are skinny. You also have no control over production, leading to shipping and supplier errors falling in your lap with almost no power.
Choose a Niche and Products
A niche is the area of focus for your product line. For example, products in the outdoors niche may include tents, compasses, and lanterns.
Some niches are easier to get into than others, but any niche can be profitable if handled correctly. Your niche is all about products you choose to sell, so your first step is to find ideas for what products you want in your store.
Step 1: Find Product Ideas
While any niche might be profitable, it’s essential to start with items that have proven capability. To find these items, I recommend five areas for you to take a closer look at:
- The Amazon Trend Report
- Amazon Movers and Shakers
- Amazon Best Sellers
- Google Trends
- Amazon Analytical Tools
It’s always best to choose the best option that works for you. So play with all of these to find a good fit.
The Amazon Trend Report
The Amazon Trend Report is an annual release of trending and featured products. For example, the 2021 report tells us of an increase in fitness equipment sales of 55% in March and June of 2020.
This trend should increase as home gyms become more popular.
Amazon Movers & Shakers
Amazon Movers and Shakers share a list of products that have seen the most growth over the last 24 hours. This listing is different from the best sellers list in that this list measures the change of sales.
If you are an Amazon seller, pick movers who appear frequently in this category.
Amazon Best Sellers
The title gives it away, but the Amazon Best Sellers list provides the top 100 of all categories. Those categories change depending on the shopping history of the one who looks at it.
Thankfully, the navigation bar on the left side allows you to break things down by categories.
Keep this in mind when performing research after selecting your product category.
Google Trends allows you to see topics of interest for people in your target region. You can either use data from other Amazon lists or enter a subject of interest.
For example, I just entered baby toys, which is an excellent product type to sell for beginners.
Rising and related topics include playpen, fidgeting, and action figures. There are also related queries like “cleaning baby toys” and “fidget toys” that give you an idea of trending keywords.
In combination with other product lists, you can find something to sell in this category.
Pinterest is a website that is chock full of ideas you can inspire. Several crafty projects can be the inspiration for unique product listings. These can include anything from baby toys to plant pots.
“Pins,” similar to “likes” on Facebook, determine the popularity behind whatever crafty project you are looking at. More pins may indicate higher potential popularity when selling this as a product.
The visual representation will also give you something you can provide to suppliers as a reference. Be sure that this is an inspiration for your product. It isn’t wise to steal someone’s custom creation.
Amazon Analytical Tools
There is a wide range of analytical tools available for Amazon. It’s important to pick the one that works the best for you. Many of them are free trials, so it’s important to test around when finding something that fits.
For tools around product ideas, you need something that helps you run an Amazon keyword search. Products on Amazon are built around keywords, so focusing there will give you solid ideas. You can start by searching for products you are interested in.
For example, searching “beach towels” will contain a series of related keywords like the following:
- turkish beach towels
- beach towels for adults
- beach towels oversized
- beach towels for kids
These related keywords are just providing more details to whoever is searching. Amazon tries its best to find something that meets “buyer’s intent.” That’s why the best Product research software typically displays on the search results page, like a browser extension.
At this point, you don’t have to be too picky with your potential products. It just needs to be viable. For narrowing down your list, we move onto the next section.
Step 2: Choose Products from Your List
The most significant mistake people make when choosing their product is picking a challenging product line. Either the shipping costs are too high, or the storage fees are ridiculous. Either way, your product list needs to consider these limitations:
- The products need to be in high demand
- There needs to be lower competition for those products
- The weight of those products should be below 5 lbs.
- Item dimensions should be below 18″ x 14″ x 8″
- Sales price should be between $10 and $70
- The target price needs to be within 25% of your sales price
- Avoid moving parts
- They need to be daily use products
- The products should not have too many reviews (but they should have some to show the niche is popular)
You might be thinking that this is pretty specific, but there is a list of good reasons why these recommendations exist.
First, the shipping cost behind heavy and bulky items is high. Because you don’t have experience handling all of the expenses enhanced behind those items, stick to smaller items.
Sticking to daily-use items also increases your chance to hit a potential market. People will easily find a reason to come by and buy your items.
Moving parts are more prone to break, so make sure you have a static item—no mechanical bits, batteries, or moving parts if you can help it.
Items with moving parts are easy to break during shipment.
Later, I will address how to source products that meet these criteria.
How to Create an Amazon Seller Account (Step-By-Step)
Before we get into product sourcing, you need to create an Amazon Seller Account. The steps for this are below:
Step 1 – Fill in The Forms
Step one requires you to have all of your basic information ready:
- Your name
- Phone number
- Desired name of the store
- ID information (expiration date and customer identifier)
- Date of Birth
Amazon needs this information to verify your identity.
Step 2 – Submit Digital Documents
Amazon will require the following for you to sign up:
- A passport
- A Driver’s License (front/back color photo)
- A state-issued ID
They will not accept screenshots of the photo ID, so get your camera ready to take pictures of your chosen identification.
Amazon also has a bank verification process to ensure they may withdraw and verify your identity associated with your bank. If you have to choose the “others” option under the bank drop-down menu, you’ll need to have a bank statement handy.
After putting in this information, Amazon will inform you that they will send a card to your house to verify your physical address.
There will be information on the card you need to return to the temporary page that will transform once you submit this information and complete an interview.
The card takes about a week to ship. Before it arrives, you can schedule your interview.
Step 3 – Interview
Step three of the Amazon Seller Account process involves a video interview to verify your identity further. To complete the interview, you will need to have some essential items ready:
- A valid, physical government-issued ID (which you just sent a picture of for them)
- A physical copy of your bank statement
They won’t be willing to take a digital copy (like they did in the previous step). The interview takes about 30 minutes, and you schedule it during the final stage of filling out forms and submitting digital information.
They will quiz you on identifying factors and request you hold up both your ID and the statement. Once you do this and fill out the postcard, you will have access to Amazon Seller Central.
How Much Does it Cost to Sell on Amazon?
Selling on Amazon will require one of two general payment plans:
Individual plans are for providers who sell less than 40 items per month. It costs 99 cents per item sold plus separate selling fees of $9.99 per month (plus applicable tax). If you are still deciding on what to sell and don’t care for Amazon’s advanced tools, start with the individual plan.
Professional plans are for people who want access to Amazon’s advanced selling tools. Professional programs are more likely to qualify for the buy box and have top billing on product detail pages. They also have access to detailed APIs and reports. Professional sellers can also sell in restricted categories.
Professional sellers cost $39.99 per month but do not have to pay a per-item fee. However, all accounts still have to pay additional shipping, referral, and storage fees.
But before you start enjoying all the feels you might have to pay; you need inventory. For stock, you need a source of products.
Source Your Products
Product sourcing is the process of finding a location where you can get your products. Wholesalers seek B2B product sources, retail arbiters hunt down product sales, while private label sellers are somewhere in-between.
Newcomers believe this is the most daunting task because of the negotiation and a natural expectation of what you should ideally pay.
Private label selling avoids some of these issues, given its low barrier to entry.
Here are your options when finding product sources:
- Contacting manufacturers
- Trade shows
I’ll show you why my favorite starting point is Alibaba.
Alibaba is one of the world’s largest providers of private label products. Why? Because they are straightforward to buy from in bulk and resell at a much higher price. As a business model, it doesn’t get much easier than starting here.
To acquire products via Alibaba, follow these steps:
- Sign in by clicking the Sign in/Join free button in the upper-right-hand corner
- Fill in the information from the pop-up screen or sign in using a social media account
- Search for the product you want using the search bar on top of the screen
- Click on the product that looks like the most appealing
- Click the contact supplier button on the right side of the screen
When searching, be aware that you can filter the location, certifications, patterns, materials, and many other things on the left half of the screen. If you need the product now, click the “ready to ship” box.
You can also test the product by checking the “free samples” box, allowing you to initially request a smaller product shipment to see if it meets your quality standards. Business certifications (like ISO, BSCI, or FSC) can also help narrow this down.
Amazon Analytical Tools
Amazon analytical tools exist all over the internet. Some of them are free, and one option is the AMZScout tool. Try out a bunch of different tools by searching “Amazon Analytics Tools” on Google.
Many of them offer free trials, so try on a couple of them as you’re coming to a decision. Make sure you pick something that is easy to use, as you’ll be using it a lot.
Contacting Manufacturers (Search on Google)
Many private label manufacturers exist for this purpose. Given the popularity of eCommerce, they can help you make your manufacturing dreams a reality.
Below are a few examples of manufacturers you can contact:
- ThomasNet (High-quality Items from construction equipment to oil drilling)
- GlobalTech Industries (Candlemaking)
- Nature Design Crafts Limited (Creative pieces)
- TailorMade Products (Custom plastic molding)
- Lider Wholesale & Retail (Phone Accessories)
There are hundreds of private-label providers that could fill the rest of this article. All of them are great, but each has its process, which we won’t get into here.
If you want to see how legit they are, check third-party sources to determine how they review. The Better Business Bureau (BBB) is also an excellent place to study.
As an Amazon seller, you have a unique opportunity to see some products in action. Trade shows can be huge or small (depending on the industry) and can cover everything from small kitchen items to cars.
Just be sure you got the right invite.
The purpose of a trade show is to showcase the latest developments in your industry. They can be exciting, often causing visitors to loosen their wallets to match the excitement.
If you get the opportunity as a member of a specific industry, you should certainly go to them.
Trade shows allow you to be on the cutting edge of things. However, they aren’t for small spenders who want to get their feet wet. If you are a beginner, stick to window shopping at trade shows and buying for Alibaba.
Tips to Avoid Fraudulent Suppliers
Fraud is rampant everywhere, so it’s no surprise that you find them with some suppliers. To avoid fraud with your suppliers, here are the following areas:
- Check public records before you call a private label manufacturer. They should have some history, even if they are small. Google reviews are an excellent first stop.
- Ask questions to the supplier to see about their process. If they seem nervous and keep pushing you to payment, that’s a sign of a fraudster.
- If they seek an untraceable payment method, seek out other suppliers. They should be willing to make payments via traceable methods.
- Check the information on the supplier through court records. If they are China based, choose the “China Trial Process Information Disclosure Website” or “China Judgements Online” to see if they have any litigation history.
- Make a phone call to speak with suppliers directly. Professionals are more willing to talk over the phone.
- Request samples to test out the product.
It’s best to take a combined approach if dealing with manufacturers. Even with websites like Alibaba, you need to be careful.
Thankfully, Alibaba has a dispute page for if something goes wrong. If dealing with manufacturers directly, follow all of the steps above until you trust them.
Getting Products from Alibaba to Amazon FBA
Is it possible to ship products directly from Alibaba to Amazon FBA? The short answer: yes. You have two options for shipping to an Amazon Fulfillment Center.
- Direct to Fulfillment Center
- Through a Third-Party logistics company
Benefits and Drawbacks of Shipping Directly to a Fulfillment Center
The “Direct to FBA” option is quicker and less expensive.
However, you won’t be able to check quality control. Also, it informs the supplier you are selling their supplies on Amazon (which might provide them leverage during later negotiations).
In addition, Amazon has particular shipment requirements that your supplier might not follow. If you sell oversized items, you may also need to move them to different fulfillment centers.
For more information on what you should sell as a beginner, scroll back up on how to narrow your product list.
Ensure the products are shipped to you the first few times to run some quality control. Once you know you can trust the supplier, you can transition over to other options. Here are three additional tips for shipping from China to FBA:
- Ship to a CA address to reduce the wait time for items. CA is the closest area to China.
- Make sure that whoever handles the freight has experience working with Amazon.
- Make sure your supplier applies barcodes to each item. They require separate labels for bulk items and pallet items as well.
Benefits and Drawbacks of Shipping to a Third-Party Logistics Company
Having a middleman during your shipment allows them to inspect the product before it arrives at Amazon. Amazon has a partnered carrier program to make this easier. You don’t have to worry about creating and moving shipments around because of this.
The major drawback comes back to the incredibly high cost of using third-party companies.
While they handle issues with Amazon, you are going to pay for this outside of Amazon. This process means you have to calculate this outside of your other price calculators.
If you are shipping small groups of times (typically less than $1000), don’t bother with the third-party option.
Setting Up Your Prices for Your First Amazon Product Listing
Once you’ve established your inventory is on its way, you can start to look at other aspects.
One of the aspects that Amazon places a great deal of importance on is the pricing of your product listing.
When setting up prices, be aware of all potential costs as you do so. These costs include the following:
- Fulfillment fees
- Shipping fees
- Individual seller fees
- Referral fees
- Your monthly subscription fee
- Storage fees
To collect all of your potential costs, one option is to use a free extension. You can also plug in all of the potential costs through a spreadsheet. Regardless, make sure you choose something that works for your needs.
Typically speaking, you’ll want to shoot for the lowest price on Amazon. Just be sure that your pricing strategy doesn’t bankrupt you in the process.
It is common for Amazon’s providers to engage in price wars that differ by pennies.
However, you’ll want to focus more on gaining those first few reviews and providing a quality product at first. It is a generally good rule to keep your target price within 25% of the sales price.
How to Create Product Listings
Once you’ve gone through your chosen initial price, we can create product listings. Listings include a detailed description of the product, informing your prospective buyer why they should buy your product. Your first tip comes back to Amazon SEO.
Amazon SEO, or Search Engine Optimization, is creating product descriptions around keywords people type in the Amazon search box. SEO and product optimization take place on all levels of your listing:
- The title
- The bulleted list
- The detailed description area
- The extra description area below product details
- High-quality images
- Popular and relevant keywords
The point is to create product copy that starts with your most compelling issues, eventually delving into all potential objections as they continue to read. Your product needs to solve their problems, provide them benefits, and eliminate doubt through this description.
You also need to target actionable keywords so that Amazon can direct people to the right area. “Buyer’s intent” is a crucial phrase used often in Amazon circles, ensuring that the keyword finds the closest mark to what the buyer wants. Find Amazon Keyword tools that work the best for your needs by looking around.
Going back to our beach towel example there, competing for “beach towel” probably will get you to fall behind all of the most popular providers. However, typing “beach towel” will reveal a series of other potential keywords with greater detail. (hooded beach towel, oversized beach towel, etc.)
You’ll want to make sure that the keywords you choose best describe your product. More words typically mean more detail, so be careful when picking the most fitting description.
How to Promote Your Amazon Products
Once you get your product listings finished, your potential customers are more likely to increase with promotion. While Amazon SEO and an engaging product description are a good starting point, you need additional promotion platforms.
Here are a few examples of what you can use:
- Amazon PPC
- Amazon Brand Promotion
- Off-Platform Efforts
Let’s delve into each one:
What is Amazon PPC?
Amazon PPC, or pay per click, pays Amazon for a premium location on their platform. Sponsored ads and display ads are two of the most common examples of this. However, you can also pay for recognition along Amazon’s plethora of third-party websites (like IMDB).
Amazon Sponsored Ads are typically limited to the tops of search results. So if someone searches “beach towel,” they’ll find your beach towel in an easy-to-spot location. That’s assuming other companies have out-bid you for the spot.
Amazon Display Ads fulfill much of the exact requirements; only they play a video. Professional sellers have access to advanced versions of these ads, sometimes creating videos to feature their product for them.
You can also establish Programmatic advertising using Amazon DSP. These ad campaigns are responsive to changing elements in your industry.
For example, you can set a “maximum threshold” just in case someone steals your premium ad spot for display or sponsored locations.
If someone pays below that threshold (but above your current paying level), your ad buy program will automatically bump up above their bid. If your competitors bid above your threshold, they take over the top slot, and you receive a notification.
What are Amazon Sponsored Brands?
Amazon sponsored brands is another cost-per-click (CPC) feature that allows you to promote your brand. Compared to sponsored products, you are promoting a personal brand instead of advertising a product. That way, your brand receives more followers, allowing you more significant potential for sales from a long-term perspective.
Many of the same ad styles from PPC apply from above, so we won’t repeat ourselves here.
However, Amazon has pushed its sellers to become brands over individual or professional sellers. The brand push provides sellers with powerful new ad features and analytics tools.
We’ll discuss establishing a brand in the following section.
How to Create a Sponsored Products Amazon Ad – Step by Step
Thankfully, the process of creating a PPC campaign for a sponsored product is simple:
- Under the Advertising subheading, click on Campaign Manager
- Click the yellow Create Campaign button in the bottom left corner
- Click Continue under the sponsored products (or your preferred campaign type)
- Create a campaign name, choose your start date, select your end date, and pick a daily budget
- Choose your style of dynamic bidding (down, up and down, fixed bids)
- Select what products to advertise
- Select the default bid (usually the suggested one)
If you want to target specific keywords (like those found under AMZScout), Amazon will allow you to select manual targeting over automatic targeting. They will provide a suggested list of keywords to target, but you can insert your own if you feel they would be more appropriate.
Keywords are selected based on the existing product description and title.
You can also select dynamic bids, which refer to the amount you are willing to spend depending on Amazon’s perception of the potential conversion rate. Here are your options:
- Down lowers bids when they are less likely to produce a conversion (sale)
- Up and down will increase or decrease your offer depending on the likelihood of getting a sale
- Fixed bids stay the same regardless
Option two is typically the most dynamic. The more you bid, the higher your chance of being at the top of the sponsored product listing.
You can also choose between multiple or single products to be in this ad campaign. If you are first starting, try to limit your maximum spend to about $20 or $30, as this cost can get out of hand quickly for newbies.
Off-platform advertising can come in numerous forms:
Regardless of whether or not you pay for someone to look at it, self-promotion is a big part of what brings in potential sales. By expanding that promotion away from Amazon’s platform, you diversify your future potential. That means your sales sources can come from multiple areas.
There are also rumblings of Amazon’s new A10 algorithm providing extra promotion to those who bring people from off the platform. However, try not to worry too hard about meeting the algorithm’s demands, as your first job is to learn the basics.
Establishing Your Brand
From our brief earlier section, you already know that Amazon provides some extra bonuses to people who can establish a brand. Brands make Amazon look good, as it’s more impressive to be sold a product from “Prestige International” over “Tim’s Shop.”
Becoming part of Amazon’s Brand Registry gives you some extra power over the competition. That power includes the following:
- Showcasing a brand story
- Paying for sponsored brand advertising
- The ability to create a storefront on Amazon
- Detailed information through Amazon Brand Analytics
- Proactive brand protection against people who target your listings
- A 24/7 support team to address those issues
Many brands with easy recognition already understand this, as GoPro, Levi’s, and Garmin have Amazon Brand Accounts. To become part of the registry, you need to meet their eligibility requirements:
Amazon Brand Registry Eligibility Requirements
- You need to have a trademark in a supported country (US, Brazil, Canada, Mexico, etc.)
- The submission to the brand registry has to be done by the trademark owner
- The trademark needs to be active. You will need the trademark registration number.
- Your brand can also be pending registration (in some countries)
- You need to have an active Seller Central account
- You will also need a list of product categories where your brand should be listed.
If you haven’t already established an Amazon account, we also have instructions for that if you scroll up. Click the Enroll Now button on the bottom of the eligibility page to get started.
If you are a beginner to Amazon, we heavily recommend bookmarking this guide to provide a reference along the way. While Amazon has a solid bit of educational resources, it’s best to have a reference guide just in case something new comes up.
This guide will take you from creating the Amazon account to establishing yourself as a member of the Amazon Brand Registry. The result of following this guide can be getting you profitable products and your first Amazon product reviews.
We hope this guide helps you in the brainstorming process of finding your niche, your target audience, and a great way to make some (mostly) passive income. Thanks for reading.
Frequently Asked Questions:
Where can I learn how to sell on Amazon?
You can find free tips from experienced Amazon sellers on YouTube. There are also paid Amazon FBA courses such as Arturo Knight’s, Amz Limitless, and AmazonLit.
How can I get reviews for my Amazon store?
Use “Buyer-Seller” messages to communicate with your customer. You can also enroll in the Amazon Vine program and get reviews from trusted reviewers. But, most importantly, you need to sell a good product and provide excellent customer service.
What are the best sites to supply products?
The most common place to find product suppliers is Alibaba. You can also find cheap products at AliExpress, Taobao, SHIEN and many other Chinese marketplaces.
Are there any goods I cannot sell on Amazon?
There are gated Amazon categories such as Jewelry, Fine Art, and Collectibles. You need approval from Amazon to sell them. To ungate these products, you need to “Request Approval” and provide the necessary documentation in your Seller Central account.
What are the advantages of selling Private Label?
First, it’s usually more profitable than selling no-name products. There is less competition in the PL field. Also, you can customize and change your product however you like because you are building your own brand.
What tools do I need to create a perfect Amazon listing?
You need a keyword search tool to create a perfect Amazon listing. Use tools such as AMZScout Keyword tracker, SEMRush, or Google’s Keyword Planner tool. You can also use UpWork to find copywriters who specialize in writing Amazon product descriptions, and professional photographers to create perfect product images.
Why should I choose to sell on Amazon instead of Ebay or my own website?
It depends on your needs and wants. In some cases your own website is better. However, Amazon FBA is the simplest option for beginner sellers, because Amazon handles most of the processes. Also, Amazon has a bigger customer base than Ebay. In the case of your own site, you need to find customers on your own. Maintaining your own online store can also be more expensive.