How to Make Money Selling Products on Amazon
Amazon is one of the most popular online retailers in the world.
It started as an online bookstore and now it sells everything that you can dream.
How Does This Involve You?
Amazon gives an opportunity to almost everyone to become entrepreneurs and sell products on Amazon.
Whether you’re working nine to five or are a housewife, you have all the abilities to make money and sell on Amazon.
The entire process of signing up with the FBA (Fulfilled by Amazon) program and making money with Amazon is so easy that even a teenager can do it.
Amazon Makes the Barriers to Entry Into Selling Online Smaller
If you’ve been thinking about owning a business for a long time, but were always left behind due to shortage of capital and marketing costs, then FBA will help you make money with the least capital involved.
However, you have to do some serious market research from your side about your niche industry and products.
This article will briefly guide you on the concept of the FBA business; ways of getting started with it; making money with it; and getting products to sell.
At the end, the article summarizes the entire process in brief so that you can keep it as a checklist while starting out with your own FBA business.
What is FBA (Fulfilled by Amazon) on Amazon?
The FBA model allows you to become a third party seller on Amazon.
The third party is responsible for bringing in products for selling on Amazon.
If you have good contacts with the wholesalers of your industry (or you may be a wholesaler yourself), you can get products for prices cheaper than the current industry standard retail price, and then you can confidently sell them on Amazon at market price for handsome profits.
Becoming a seller on Amazon feels much like operating your own online business except you don’t have to pay any overheads such as domain charges, SEO consultations, content marketing, etc.
Amazon already has a billion dollar website established for such purposes and all you have to do as a reseller is to sign up with Amazon for the FBA services.
Think about this for a moment: Giant multinational corporations spend a huge amount of their earnings on maintaining websites, employees, offices, etc.
With Amazon FBA you won’t have to do this in order to sell your products with them.
Amazon has everything covered for you.
All you have to do is supply Amazon with an inventory of products you want to sell online.
Amazon takes care of fulfillment when a buyer places an order.
If you already possess knowledge about internet marketing then it will be easier for you to expand your sales.
Amazon has the platform ready for you and you have to make use of it as much as possible for your own good.
Beginners often make the mistake of thinking that once they’ve put their product on Amazon; they don’t need to take any further steps.
You must be cautious about the fact that online selling is becoming more competitive with each passing day.
It’s a different thing though that Amazon already has a dedicated target audience (comprising of millions of buyers worldwide) visiting its website every day.
This is already such a competitive advantage you will have from others who do not leverage the popularity of the Amazon platform.
Let’s see the minimum requirements one must have to run an FBA business with Amazon to sell products.
The most basic prerequisite is to decide on what you want to sell.
How to Get Started with FBA
There are a few things you need to do before starting a business as an FBA seller on Amazon.
The first thing is selecting a niche.
Simply stated, a niche does not exist by default in any industry. A niche has to be created by continually reviewing current consumer demands.
For example: You want to sell dog shampoos on Amazon.
A quick search would yield thousands of products and you definitely want to stay ahead of the competition.
This is where developing a niche would help you and your business immensely.
Instead of going for the regular dog shampoos, you can try to source organic dog shampoos.
Pet owners love their dogs just like a child in the family.
They’d love to buy a product—even if it’s costly—that would be beneficial to their pets’ health and well being.
The prime focus of creating a niche is to target committed buyers.
Do you have any specialized skill in developing the products that you want to sell?
If so, then you can keep the wholesaler’s profit with you and increase your returns from Amazon at the same time.
Consider two situations: In one situation you are sourcing products of your industry in wholesale, and in the other you are manufacturing them yourself.
Let’s assume for a moment that the cost of a 4 FL. oz. dog shampoo is $100. If you are too lucky then you might buy a stock of five hundred bottles from a wholesaler at half the price.
A bit of the profits go to Amazon for providing you an online platform to run your FBA business.
However, if you could somehow install a small unit to produce a hundred 4 FL. oz. bottles every day, then you’ll be saving the wholesaler’s share of profit.
It might cost you only $20 to produce a 4 FL. oz. organic dog shampoo, giving you a profit margin of $80 for every bottle sold.
You must have product knowledge about the business you’re dealing with.
To spread awareness amongst pet lovers on organic shampoos, you must be able to explain them why the preservatives and other chemicals in commercial dog shampoos are bad for their dog’s health.
So essentially the first step involves selecting the products you want to sell!
How to Make Money through FBA?
There are two ways to make money through the lucrative online Amazon platform.
One is by being a “merchant fulfilled seller” and the other “FBA seller.”
We’ll digress a little bit here to define the merchant fulfilled selling process, after which we shall get back on track with FBA selling as that is the main subject of this article.
In the merchant fulfillment process, again, you need to find a product that you’d like to sell.
- You’ll then list the product on Amazon’s website.
- The buyer will then place an order to you via Amazon.
- After the clearance of the payment, Amazon will notify you to ship the product to the specified destination mentioned by the consumer.
- It’s now your responsibility to package the item and ship it.
- You will also need to purchase the Amazon shipping label that will be sent to the customer.
- Then schedule a pick up or drop off the package at the local courier service or post office.
- The item will then be shipped to the consumer within two to twelve days.
The merchant fulfillment will not be advised here as it brings along with it a lot of responsibilities.
The FBA selling model will give you more time in developing strategies to expand your business.
In FBA selling, your job ends after sending the package to Amazon for them to warehouse for you.
Once you’ve done your part, Amazon will take care of the rest, including the after sales customer service.
Where to Get the Products to Sell on Amazon through FBA?
The first thing you’d need to consider is whether you have the budget to buy products in bulk from the manufacturers.
This will reduce the cost per product, but will increase the minimum quantity to be purchased.
A manufacturer would be interested in selling the products in quantities ranging up to a thousand units or more.
If the budget allows then go for this option as this is the most lucrative but it also cost more money upfront.
Don’t be disheartened if your budget does not allow the bulk purchase directly from the manufacturer.
Distributors will gladly you sell you the items in quantities ranging to hundred units, but the cost per product will rise here as the distributor will take his part of the profit.
A small scale startup can afford a distributor without much hassle, but your profit margin per item will be less.
If you are planning to sell imported products through FBA, then you’ll have to get in touch with various importers of the product that you want to sell.
The manufacturers, distributors, and importers can be easily found online through a simple search. Go through the distributors’ website and read their terms and conditions, disclaimer, and policies on returns, damages, and backorders.
Make sure that they’ve provided their genuine contact information and have also mentioned their physical address where they exist in brick and mortar.
You must contact them personally through phone or email to know if they’ll be able to fulfill your orders in time.
If any contract is involved, then make sure you hire a professional lawyer before signing on any legal documents.
Your biggest source of suppliers’ information is the suppliers themselves. Apart from their business history and credibility, ask them for customer references.
Many people use Alibaba to find manufacturers who will sell to you wholesale. Many items manufactured in Asia are listed on this site.
If you need to buy in small quantities, you might check out AliExpress.
They are like Alibaba but allow you to buy in small quantities, but of course there is a price per item trade-off in the form of higher costs.
Tips on Reducing Your Wholesale Costs of Products
Let’s say you do not manufacture your own products and you are totally dependent on your wholesaler’s prices.
In such a case it’ll be advisable to follow trends.
Find out which times of the year the wholesaler gives the maximum discount.
Find out if the raw material prices are constantly falling.
Gather important data and information about the production of the product and then bargain with your wholesaler once every quarter to reduce the wholesale prices.
A little bit of work in this area would help you tremendously in increasing your profit margin.
Overview of the FBA Selling Process
In this article, you’ve learned how to make money through FBA and establish a business to sell on Amazon.
Now, it’s time to review those important points and see an overview of the FBA business on Amazon.
- Decide on your niche. Look for opportunities within your industry. A search engine when used intelligently can help you know what buyers are looking for in your niche.
- Once you’ve decided on your niche and know what your buyers want, it’s time to decide on a product. Do not make the mistake of starting your FBA business by selling ten different items at a time. Start with one or two products and get a feel of running a Fulfilled by Amazon business.
- After finding your product, sign up as a seller on Amazon and then subscribe for FBA. Then you will list your product on Amazon’s website.
- After listing the product on Amazon’s website, you’d need to ship a stock of your products to Amazon’s warehouses.
- Once the Amazon warehouse receives your product’s inventory, your product will go live on Amazon for sale.
- Amazon will then feature your product as a Prime Eligible purchase. This means members of Amazon's Prime service will receive Free 2 Day Shipping with no additional cost to you.
- Your target audience will place an order from you.
- Once the order from the buyer is confirmed, Amazon’s warehouse will look for your product and ship it to the concerned customer.
- Finally, your customer will receive your product in two days if they are a Prime Member of Amazon.
- The consumer, Amazon, and you will be happy after the sale is closed.
- Amazon handles the payments, packaging, shipping, and customer service related to the order, freeing you to find more products to sell.
It’s not enough to just close a sale.
In today’s economy, every business thrives hard to retain consumers for increasing repetitive sales.
To keep hold of your current buyers and to pull in new buyers would demand a website or blog where they could subscribe to your newsletter.
Making money on Amazon through FBA is really simple.
In the aforementioned list, your job as a seller ends at point number four.
Once you’ve sent the inventory of your products, you’ll just need to track your closed sales.
There are quite a few steps involved, but once you get a feel for it, you’ll understand that it is one of the most effortless ways of earning money.
The last piece of advice would be to share your product’s Amazon links on social media platforms.
This would increase your leads substantially.
Develop high quality content for your products and promote your Amazon links on every social media channel possible.
If required, subscribe to online forums and share your links there as well.
We hope this article helps give you an overview of the process for selling products through their FBA program.
Let us know your comments or questions!