There’s an assumption that you have to spend money to make money in business. However, Amazon sellers will tell you a very different story from that. In fact, 50% of Amazon’s sales come from third-party sellers.
Amazon has grown massive over the past several years. New sellers can leverage this dominance to grow a profitable business. Below, you’ll find the steps you need to take to make a successful Amazon FBA business.
What is an Amazon FBA business?
An Amazon FBA business stands for “Fulfillment By Amazon.” Fulfillment refers to the shipping and storage of products. So, “FBA” lets you hand these logistical duties over to Amazon.
Amazon does not handle inventory management or product sourcing under this model. You’ll also be responsible for quality control. However, Amazon’s customer service team helps you in managing some customers.
Handing these duties to Amazon allows you to focus on business growth. Rather than bothering with logistics, you can focus on better marketing material and inventory management. Successful FBA sellers use their expertise.
Can you make good money in 2022 on Amazon FBA?
Experienced Amazon sellers can make upwards of $25 thousand per month. These sellers know how to work the platform and have established processes for doing so.
Most average sellers make between $1 and $5 thousand. If you want to sell on Amazon and make a profit, it is crucial you pay attention to your profit margins. Profit margins refer to the amount of profit you make during the time of sale – after deducting expenses like inventory costs and commissions.
In an ideal world, margins sit at about 50% (50% expenses and 50% money earned). However, many sellers can make solid profits dipping around 30%. Anything lower than 30% is dipping into dangerous territory. That’s why its always prudent to work with an ecommerce accountant who knows how to make sure your business is financially healthy.
The step-by-step process for establishing a successful Amazon FBA business
All good Amazon sellers follow a process. Whether you are a new or veteran seller, a process through Amazon FBA can help you find better success.
Using these five steps, you’ll be on the right track to a successful FBA business.
1) Find good products for Amazon
Good products make any business successful. Without this basic building block, your business will struggle. But you might consider finding excellent products to be a struggle.
How to pick excellent products based on criteria
Before you find products, you need to establish product criteria. These criteria should provide product features you can apply to any niche. Here are some things to look for:
- Lightweight products (ideally below 2 lbs)
- Everyday use products (those your customer uses throughout the year)
- Products without mechanical features (moving parts mean they are easy to break)
- Trending products (you want products that have a proven track of popularity)
- Moderate pricing (avoid cheap products below $10 and high-priced products above $75)
- Competitive landscape (big name brands typically involve tough competition)
Research tools you can use to find excellent products
The list above can help you filter products that aren’t likely to work. But how do you find this data? Below, you’ll see a list of the most popular research tools you can use:
- Google Trends. Lets you see trending products and historical data. This data applies to the entire eCommerce industry, not just Amazon.
- Amazon Trend Report. Allows you to see overall trends for the entirety of Amazon. This data is great if you want to research popular niches.
- Best Sellers List. Allows you to see the most popular products sold on Amazon. Sort through categories to find something useful to you.
- Movers & Shakers. Lets you see product changes within 24 hours, offering great potential to identify potential trends.
- Third-party analytical tools. Tools built to navigate vast amounts of Amazon data (like AMZScout or Helium10) can help you simplify your research process.
Research is the difference maker, creating major differences between successful sellers and mediocre sellers. Be sure to gather all you can when choosing your best product.
2) Register for an Amazon account and create your listings
How to register for an Amazon Seller Account
Amazon requires you to go through a detailed account creation process. Start by visiting the website to become an Amazon seller. From there, click the sign up button and follow these steps:
- Enter all requested information (name, address, email, etc.)
- Send a front-and-back copy of your identification (driver’s license or state ID)
- Provide a banking statement
- Schedule a call to confirm your identity (they will ask you to present your banking statement and ID via video)
Amazon’s last step in account creation is to send you a postcard. The postcard contains a code Amazon uses to verify your physical address. It will take about two weeks to reach your address.
You’ll also have your choice between creating an Individual or Professional Selling Account. Individual accounts cost $0.99 per listing and are better if you sell fewer than 40 items. Professional accounts cost $39.99 per month, waive the per-item listing fee, and provide better selling tools.
Once you’ve gone through creating your Amazon account, you can list your products. To list your products, you’ll want to go to the Amazon Seller Central dashboard, click the “products tab” and choose “add a product.”
From there, you can enter important information about your product. This includes the tracking numbers, purchase price, and product name.
Creating effective Amazon product pages with listing optimization.
Beyond entering basic information, you’ll also want to optimize your listing. An optimized Amazon listing provides these benefits:
- It ensures you follow Amazon’s product detail page rules.
- You get better exposure by targeting specific keywords.
- Your listing looks incredibly engaging and professional.
Optimization applies to the entire listing page. This optimization applies to images, product descriptions, and titles.
Starting with your title, you’ll want to do a bit of keyword research. There are two tools you can use for keyword research:
- Amazon PPC (Pay Per Click). A higher cost per click (CPC) often shows a more competitive keyword because more people are driving up the bids.
- Third-party analytical tools. Third-party analytical tools (like AMZScout or Helium10) have specific keyword research features. You can also use these tools to see what keywords your competition targets.
You’ll give yourself the best chance to rank higher if you target long-tail keywords. These keywords are three (or more) words and better describe your product (Example: toaster vs blue toaster with bagel features).
You’ll want to use these keywords throughout your title and product description. You’ll want to make sure your title describes what your product is, its brand (if applicable), and its most important features.
Product details should take deeper features and tell customers how those features turn into benefits (Example: the bagel setting allows you to make tasty bagels without burning the edges).
Images should follow all technical requirements. The first image needs a white background of only the product (no optional accessories). Secondary pictures ideally should include the product in use, infographics, and professional photographs. Check out what your competition does for inspiration.
3) Arrange shipment in a way that suits your business (FBA\FBM)
If you want to be an FBA seller, use Amazon FBA. The “FBA” means Amazon is handling all your logistical stuff, as we described at the beginning.
FBA allows you to take time to focus on other business aspects. Marketing, product sourcing, and branding are all duties you’ll have more time for.
The sacrifice is that Amazon will take a larger portion of your profits. Amazon’s FBA revenue calculator can help you figure out the impact.
The alternative is FBM, or “Fulfillment By Merchant.” Merchant is a term Amazon uses to describe you, the seller. So FBM means you handle 100% of shipment and logistics.
If you ship large and heavy items, your company might specialize in a unique shipment process to save money. This option is also ideal if you want to grow the logistical part of your business.
However, you likely won’t be able to outperform Amazon’s process. It is one of the largest shipping empires in the world. Also, Amazon has a strong preference for FBA products, meaning you’ll have to work harder to compete.
4) Establish accounting procedures for tracking your finances
Ecommerce accounting is tracking your business expenses and earnings related to what you sell on Amazon. Without proper business tracking, it’ll be harder to make wise financial business decisions, and you might run afoul of your local tax rules.
Familiarize yourself with federal regulations. Most countries require you to make quarterly payments to stay in compliance. It’s a good rule to estimate at least 25% of your income will be taxes.
5) Advertise and market your products
Advertising is the only way for your business to gain exposure, especially if this is your first product. Your competition already owns the top slots. It’s your job to market your business so you can overtake them.
Your most effective form of advertising will be through Amazon PPC, or Pay Per Click advertising. PPC allows you to pay to rank for important target keywords.
When starting, it’s important to run multiple campaigns at once. These campaigns need to target different keywords and use different advertisement types to get the best return on investment.
To start, stick with PPC advertising on Amazon. As your Amazon advertising works, you can expand to other platforms like Facebook, Twitter, or Google.
Ultimately, the more sales you get for a particular keyword through PPC the higher the likelihood Amazon will rank you for that keyword organically too. The combination of ad-driven and organic sales can help drive significant revenue.
But Amazon PPC can be a very tricky tool to use effectively as there’s a lot of competition. In that case it can be helpful to work with and Amazon Marketing Agency to get the best results.
To start an Amazon FBA business, you need to have a defined step-by-step process. Using the steps above, you can clarify what that process should look like for you. We’ve provided some guidelines to help you get started.
So, take these tips and use them to grow your Amazon FBA Business. When your Ecommerce empire explodes, be sure to tell them UpCounting helped you get started.