Confused about how to start an Amazon FBA business?
Selling on Amazon can seem overwhelming as many tutorials include complicated guidelines and tips about starting an FBA.
However, the actual FBA start-up is much simpler than that.
This post will provide you with a simple 5-step framework to set up and run a profitable FBA business.
- How Profitable Is Owning an Amazon FBA Business?
- What You’ll Need to Start an Amazon FBA Business [& Associated Costs]
- Why You Should Consider Starting an Amazon FBA Business as a Side Hustle
- How to Start an Amazon FBA Business in 5 Simple Steps
- Things to Consider When Building an Amazon FBA Business?
- INSPIRATION: Amazon FBA Business Ideas
- Frequently Asked Questions?
- Similar Businesses to Consider Starting
- Wrapping Up: How to Start an Amazon FBA Business?
How Profitable Is Owning an Amazon FBA Business?
Half of Amazon FBA sellers make at least $1,150 in revenue for each $1,000 they invest in the business.
This is a minimum of 15% profit margin, according to the 2023 Jungle Scout Amazon seller report.
The same report stated that more than 55% of sellers achieve monthly sales of over $5,000.
Additionally, around 8% of the sellers make more than $50,000 in sales a month.
Given that, lucrative opportunities await you if you run your FBA business effectively.
Still, the exact profit your FBA business can make varies based on many factors, like your products and operations costs.
What You’ll Need to Start an Amazon FBA Business [& Associated Costs]
You’ll need around $3,500–$4,000 to start your FBA.
This isn’t a fixed number; it’s an average for a private-label FBA business.
According to your business model and the other costs you might require, you may need less or more than this amount.
Here’s a break-down of costs you can expect when starting a private label FBA business:
- Product Research Tool ($50 a month): Product research tools will make picking a winning product much easier and more accurate.
- Products Testing ($150–$500): To pick the best quality product and the most reliable supplier, you need to test different product samples from various suppliers.
- Inventory Cost ($2000–$2500): Given that you’ll sell a simple $4-5 product and order 500 units, you’ll need around $2,000.
- Starting a Professional Seller Account ($40 a month): A professional seller account gives you more valuable features than an individual one.
- Shipping to Amazon ($600–$750): After labeling and preparing your products, you’ll contact a carrier to ship them to Amazon warehouses.
- Private Labeling Expenses ($500): If you choose a private label business model, you’ll need a logo, packaging, and professional photography for your product.
- GS1 Barcodes ($30 per product): To generate a barcode for your private label products, you’ll pay $30 for each item you sell.
- Advertising Costs ($200–$250): You should set a simple advertising budget to boost the sales of your products.
Do I Need a License or Certificate to Start an Amazon FBA Business?
Selling on Amazon as an individual doesn’t require a business license, especially if you’re selling a few numbers of products.
However, as you grow, your Amazon business might need a sales permit according to the state you’re residing in.
Why You Should Consider Starting an Amazon FBA Business as a Side Hustle
Starting an Amazon FBA as a side hustle is perfect for generating additional income for multiple reasons.
Here are a few of them:
- Amazon is a 2-billion monthly visitors market: With this immense number of potential buyers, picking a good product will bring you satisfying profits.
- Low-cost business: You need only a few hundred dollars to start selling your first product.
- You only do half of the work: With Amazon responsible for packaging, shipping, and tracking orders, you don’t have much on your plate.
- Flexible working hours: With FBA business, you’ll set your working schedule according to your goals and availability.
How to Start an Amazon FBA Business in 5 Simple Steps
There’s a multitude of ways to start your FBA business.
You don’t need to follow advanced and complicated methods to get started.
A private label business is a suitable approach for a new seller. It’s less costly than wholesale and more sustainable than arbitrage.
Here are beginner-friendly steps to kick-start your private label FBA business:
1. Find a Profitable Niche and Winning Product
Picking a winning product is a significant factor in your FBA business success.
By ‘winning’ we mean that it can generate good profits.
We recommend using product research tools to make the process of choosing the best products easier and more accurate. Try Jungle Scout or Helium 10.
We also suggest you select a product you are passionate about.
Choosing a product category you have a personal interest in will make the process of marketing and selling much easier.
For example, if you’re tech-savvy, you’ll find selling tech gadgets or accessories simple.
There’s no hard rule for determining the ideal product.
Though, to maximize the chances of achieving high sales, you should pick products with the following characteristics:
- High Demand
- Moderate Competition
- Decent Profit Margin
2. Select a Reliable Supplier
Once you’ve chosen the first product for your FBA, you’ll need to find a reliable supplier to source it.
This can be a local or international supplier, according to the type of products you’ve picked.
There are multiple places you can go searching for a supplier:
- Global Sources
- Trade Shows
- Contact Local Distributors
When you’ve found a few trustworthy suppliers, you need to order a sample from each to test the product.
After testing different samples and determining the best supplier, order your inventory.
3. Set Up Your Seller Account and List the Products
Setting up your FBA account is a breeze.
You’ll only need to follow Amazon’s steps and instructions to do it quickly.
Once you have your new seller account, list your product on Amazon and price it.
A significant part of listing your products is to create an attractive title and description.
The product title should include keywords with a high search volume representing the product.
Additionally, take professional photos of the product and upload them to the product page.
4. Ship Your Products to Amazon
Prepare your inventory and label them and make the shipping plan.
Then, contact a carrier to deliver your products to Amazon’s warehouses.
Once the products arrive at the warehouses, they’ll be available for sale on the website.
5. Market Your Offerings
Listing your products, especially as a new seller, doesn’t guarantee that many buyers will see them.
You need to work on marketing your offerings and attracting potential buyers.
Depending on your product type and advertising budget, you may consider one of these tactics:
- Social Media Ads
- Amazon PPC Ads
Things to Consider When Building an Amazon FBA Business?
Here are a few tips to consider when kicking off your Amazon FBA business:
What Is the Best Product to Start With?
These are some characteristics to keep in mind when picking the first product.
The product should be:
- Easy to Ship: The product shouldn’t be easily breakable. That way, you avoid a lot of problems and high returns.
- Lightweight: This will decrease shipping and FBA fees.
- An Impulse Buy: This means products need to be below $50. The low price of these products makes it easy to sell quickly.
Can You Run an Amazon FBA Business by Yourself?
Yes, you can run your FBA business on your own. This is what most new Amazon sellers do.
You need to dedicate only a few hours a day to take care of the required operations.
This includes product research, inventory management running ads, and answering customer inquiries.
How to Get Positive Reviews as a New Seller?
There are many ways to get positive reviews as a new Amazon seller.
One of the most effective ways is to provide responsive customer service. Customers will usually leave you inquiries about many aspects of the product.
Remember to answer them promptly and honestly.
Good customer service will increase your chances of getting positive feedback and high ratings from buyers.
INSPIRATION: Amazon FBA Business Ideas
If you’re about to start your FBA business, here are a few ideas to get inspiration:
- Retail Arbitrage: This involves buying items from discount stores and reselling them on Amazon for a higher price. By doing that, you’ll achieve a decent profit margin without needing to work on the product yourself.
- Online Arbitrage: This is similar to retail arbitrage, but instead of getting your products from in-store retailers, you’ll buy them online.
- eBay to Amazon: You’ll buy a product with decent demand but is rare and available in limited amounts from eBay. Then, sell it at a higher price on Amazon. This can be vinyl records, DVDs, or even limited edition books.
- Amazon Homemade: Skillful at making any type of handmade products? Amazon provides a special community for artisans to sell their crafts.
Frequently Asked Questions?
Can You Start an Amazon FBA with No Money?
No, you can’t. However, you can begin with considerably little money following an arbitrage system.
Besides the inventory cost, you’ll need a few tens of bucks to set up your account.
You’ll also need some advertising expenses to boost your product sales.
Can You Make a Living Off FBA?
Many people have made a living off FBA. This isn’t to say you can do it easily.
Whether you can make a living off FBA depends on how you run your business.
Amazon FBA is like many other e-commerce business models.
It requires continuous research and improvement.
From time to time, you might experience product failure and incur losses.
If you have a flexible mindset and know how to handle loss, you can probably make a living off FBA.
Similar Businesses to Consider Starting
Online business models are countless.
Here are some guides for other similar businesses you may consider:
- How to Start an Ecommerce Business: Whatever the product or service you want to sell online, this guide will help you start your e-commerce venture.
- How to Start a Dropshipping Business: If you’re interested in starting a business without needing inventory upfront, this guide will assist you.
- How to Start an Import Export Business: If you want to set up your first international trade business, this guide is for you.
Wrapping Up: How to Start an Amazon FBA Business?
A successful FBA business starts with picking a winning product and a reliable supplier to source it.
You also need to dedicate some time and money to market the product to attract buyers.
Amazon will take care of all the other operations for you.
If you have any questions or thoughts, let us know in the comments.
Share this post with a friend who is interested in starting an online business.