Amazon has experienced exponential growth since its launch in 1994. In fact, it’s the leading online retailer globally, going by its latest financial reports. As a result, Amazon is the preferred e-commerce site for earning affiliate income or selling goods and services online.
However, things aren’t as rosy as they may seem to be. Thanks to the massive competition from small and established businesses. Newbies are trying to answer the question—what is Amazon FBA. Meanwhile, those already leveraging Amazon successes wonder whether Amazon FBA is a worthy course in 2022.
Either way, you’ve landed at the right place. This article will dissect everything you need to know, from answering questions—how to become an Amazon seller, what is FBA Amazon to showing you why FBA Amazon is worth a trial and even sharing a step-by-step procedure of how to sell products on Amazon.
What is Amazon FBA?
If you’ve ever purchased from Amazon, you must be familiar with the straightforward procedure. The easy steps include entering the product’s name in the search box. Then, scroll through the variety available and identify the best fit. Click ‘buy,’ and that’s it! Sit and wait for the item to be delivered.
Meanwhile, the vendor will be earning income and organizing for shipment. Alternatively, Amazon can handle the logistics on behalf of the vendor. In that case, goods are stored in Amazon’s warehouses, also known as Amazon fulfillment centers.
After receiving an order, Amazons’ staff proceed and pick, pack, and organize for shipment. Further, Amazon also provides excellent customer service, including:
When that happens, a vendor is said to be using FBA (Fulfillment by Amazon). In other words, the FBA program takes the burden off an Amazon seller and makes the selling process super easy. Remember, utilizing the FBA program from Amazon attracts some fees. So, it’s vital to consider those costs before plunging into Amazon’s FBA business space.
Why Amazon FBA Business is A Good Investment
The Amazon FBA business has been around since 2006. However, the e-commerce giant has been making continuous changes in order to adjust to the ever-changing business environment. That way, Amazon has met and surpassed its customers’ expectations. Little wonder the retailer has been leading the pack.
In the US alone, Amazon records an average of 215 million visitors a month. So, selling to Amazon exposes your business to free traffic and increases your chances of making more sales and profits. Still in doubt? Here are stats showing how much you can make when you become an Amazon FBA seller.
- 68% of Amazon FBA sellers post over 10% in profits
- 36% of Amazon sellers post minimum of earnings of 20%
- 20% of Amazon sellers have made at least $100,000 on the site
Further, tracking the performance of your Amazon FBA business is easy. Although there are many tools to help you accomplish that, you may want to consider readily available options inside an Amazon seller’s account.
The Amazon seller app is one of the tools you wouldn’t want to miss out on. It helps Amazon FBA sellers to monitor inventory, view sales performance, and edit product photos. Moreover, it’s easy to calculate product profitability using the Amazon FBA calculator.
How to Become an Amazon Seller
To this end, you already have an answer to the question, “what is Amazon FBA.” You also have the figures showing that FBA Amazon can give you an edge. The next step is to understand how you can be an Amazon seller to enjoy benefits bundled up in the FBA Amazon program. That said, here are guidelines on how to start an Amazon business:
Step 1: Finding the Right Product
Just like traditional businesses, finding the right product determines whether you’ll be a successful Amazon seller. You’ll want to avoid these two common pitfalls when selling to Amazon:
Products that don’t solve your customer’s problems: The thumb rule in the business world is first to identify a need then try to provide a solution. The strategy enables you to find a ready market that’ll be more than set to buy your product.
It also helps you develop a unique product to set you apart from the competition. Remember, the lower the competition, the higher the sales volume. Lastly, confirm that the product is readily available from wholesalers to avoid cases of stock out.
Failure to understand product demand: This might sound straightforward. Sadly, it’s a common mistake, especially for newbie Amazon FBA sellers. To avoid this pitfall, consider the level of competition for the product you intend to sell to Amazon.
The market size and product demand are other essential considerations. In hindsight, make sure to work around your budget limits and revenue goals too.
Just like you can easily track your Amazon FBA business performance, you can rely on tools to find valuable data. For instance, the Viral Launch is pretty reliable when researching a product on Amazon. You can use it to find more about a product’s search volume, which reveals the number of customers who’d be interested in buying the item.
You can also use it to determine the average sales a specific Amazon FBA seller is making. Lastly, you can depend on Viral Launch to check out product reviews and establish products that you can easily compete with.
Step 2: Buy in Bulk
While fulfillment by Amazon can ease the burden of handling logistics, it’s not an assurance of a successful e-commerce business. You’ve to put in the work and be consistent.
Also, factors like buying in bulk can help you cut costs and maximize profits. That said, the initial step is to source a reliable product supplier. There are several ways to find one:
Overseas: These days, most businesses are sourcing products from China. It’s a renowned source of quality items at low prices. You can decide to fly and get stock yourself. Alternatively, you can buy it online. If you opt for online purchases, make sure to research to avoid falling prey to scammers.
Using Alibaba’s certification and star rating can help you identify a reliable supplier. Also, you can request the supplier to send you a sample of the product. Next, pay just 30% after pressing your order.
Then, you can find a reputable inspection agency that can visit the company and verify the state of your inventory. Once they give you an ok, you can now settle the balance and wait for shipment. Since Amazon will fulfill you, the goods will be stored in Amazon warehouses and wait for customer orders to start streaming in.
Trade shows: Local trade shows are a host to industry leaders. You’re sure to find seasoned suppliers who’ll sell you quality goods sans problems that can be costly, like long turnaround time. Upcoming trade shows are often featured in newspapers and some magazines. Searching online can also give you valuable leads.
Source locally: Instead of buying from the overseas market, you can promote local manufacturers. It’s easy to test the product, the logistics part of the buying process is pretty manageable, and you’ll also help to promote the local economy.
Step 3: Branding
Branding sets you apart from the competition. It also helps potential and existing customers to identify your business quickly. Here’s how to launch a unique brand:
Find a suitable name: You can have a list of desirable names for your business—the internet is an excellent source of ideas. Then, brainstorm to find a suitable one. The best option would be a name that’ll remain relevant in the near and far future. Next, register your domain name.
Create a unique logo: Similarly, your brand logo helps to identify your business. You can hire a designer or DIY if you’ve got the skills. Please keep it simple, though, to avoid steep printing fees. After all, you’re starting and keeping the costs to the bare minimum is critical.
Choose suitable colours: Brand colours help to identify your products. Remember, colours are powerful communication tools and help set specific moods in any environment. So, you’ll want to give this careful thought. Moreover, you’ll be crafting a catchy tagline at this point.
Register your business: To claim ownership, registering your brand is critical. Otherwise, people can exploit the opportunity and copy your business name, tagline, and logo.
Step 4: Open an Amazon Seller Account
To list your merchandise on Amazon, you’ve to create an account on the site. You can opt for a professional account or an individual Amazon seller account. The professional account has monthly charges, while the individual option is often free. So, proceed to sign up from this link and remember to add FBA.
Step 5: Product listing
Product listing means creating a product page. It’s more like arranging items in a brick-and-mortar store. The goal is to attract customers through a perfect display of inventory. Likewise, you’ll want to create a unique page to compete favourably. Here’s what to include:
- At least seven professional photos: Use clear images and ensure they showcase the item’s quality, use cases, and benefits.
- A killer copy: The description should feature sufficient but relevant keywords to help rank your page on the site.
- Product price: It’s best to consider the market average before pricing your commodities. Otherwise, you might lose customers to the competition.
- Product code: This helps to identify items on the site. It can be ISBN, GTIN, etc.
- An SKU: The sole purpose of an SKU is to help with tracking your commodities during shipping. It’ll also help you track inventory levels and identify which items are selling faster.
- Buyer Description: This is part of the product description. It includes the price, shipping options, and the number of items left in your stock.
- Listing is also a straightforward procedure. Nonetheless, make sure to purchase UPC (Universal Product Code) since it’s among the mandatory details you’ll be required to fill in.
- Click on the drop-down menu from your Amazon seller’s account, then choose to add a product.
- Click on create a new product listing
- Select the appropriate product category
- Fill in the required information, including the UPC
- Click on finish then, save
Step 6: Preparing and Shipping Your Merchandise
Preparation includes printing and sticking Amazon shipment ID labels. Also, carefully pack your items to ensure they reach Amazon fulfillment centers safely.
Next, prepare your shipping plan to send the package yourself or hire shipping services like Stallion Express.You’re free to start marketing your Amazon FBA business after Amazon confirms receipt of your commodities.
If you choose social media-a potent marketing tool, make sure you create fun and exciting content. Similarly, you’ll want to create enticing pop-up ads if you go the Pay Per Click Program (PPC) way. By the way, Amazon FBA consultants can also help upscale sales by sharing valuable ideas.
Done. You’re now a fulfilled Amazon FBA seller. You’re free to navigate to the Amazon seller sign-in tab to access your account and check on your stats. Also, your page will be bearing the Amazon prime badge—a mark of reliability.
Often, sales determine whether your product ranks on the site. So, make sure to drive sales to rank faster. Further, Amazon FBA sellers get paid every fortnight via their preferred bank account. The giant retailer will deduct separate FBA charges then send you the balance.
Below is a breakdown of current FBA Amazon fees:
FBA Amazon fulfillment fees: If you can recall our answer to the question—what is Amazon FBA? You already know this concerns the cost of having Amazon handle storage, shipment, and customer service. The amount to be deducted depends on the product size. FBA sellers can always check related costs from the Amazon FBA fulfillment fees table.
Monthly subscription fees: While an individual plan is free, expect to pay $39.99 per month for a professional selling plan. The difference between the two plans is the probable monthly fees. Individual plans are for FBA sellers who can sell 40 items per month. You’ll pay for the professional plan if you plan to sell over 40 items.
Monthly storage fees: If you sell standard-sized items, expect to pay $0.69 per cubic foot. Oversized products attract a monthly storage fee of $0.48 per cubic foot (January-September) and $1.20 per cubic (October-December). Further, a $6.90 per cubic foot fee applies for items stored on Amazon warehouses for over 180 days. If the period extends to 36 days, you’ll pay $0.15 per unit.
Per term fees: The professional option is free. Individual sellers, however, part with $0.99 per sale.
Referral fee: This is often a percentage of the selling price. So, the amount deducted essentially depends on the item sold via the FBA Amazon plan. However, FBA Amazon sellers can always visit the Amazon list of referral fees to verify the exact cost.
Refund administration fee: You’ll be charged $5 or 20% of every refund made to a customer. Deductions are instant, and the charges are recovered from an FBA seller’s account balance.
Pro tip (how to sell on Amazon for beginners): Consider starting with a small amount of inventory. That way, you’ll be eligible for the individual plan. You can upscale to the professional option when the business picks up.
Keep Winning as an FBA Amazon Seller
Beyond creating a breathtaking product page and ranking, other strategies can help you remain at the top of the game. So, if you’re looking for ideas to help you sell more items on Amazon, the following are tried and tested ideas.
Consider checking on your inventory to avoid running out of stock. Otherwise, customers will hop to your competitor and buy from them. You’ll not only lose a sale but also lose a referral (from the customer) as well as a chance to rank on Amazon.
As a beginner on Amazon FBA, it’ll be necessary to put some considerable effort into marketing your product. Aside from paid advertising, an entry pricing strategy can help you entice customers. Also, once-in-a-while coupons, free shipping, and discounts are excellent ways of creating brand awareness and increasing sales. If you’re selling quality products, positive reviews will start streaming in. You can then move forward and increase your price with time.
This is pretty straightforward. Excellent products will give you positive reviews and massive sales too. That translates to higher profits and the possibility of ranking on the site quickly. Also, you’ll save yourself from refund requests and the related Amazon FBA refund fees.
Becoming a successful FBA Amazon seller requires lots of commitment. However, it’s easy to find yourself on the wrong side of Amazon if you violate their policies. The worst that could happen is losing your Amazon seller account. So, it is best to familiarize yourself with the site rules, especially their strict policy on customer reviews.
Just like other crucial aspects of life, it pays to allocate sufficient time to scrutinize your Amazon FBA seller account. Research more on the product and alternatives to the items you’ve listed on FBA Amazon. Monitor your store’s performance metrics while giving special attention to order defect rate and pre-fulfillment rate (rate of order cancellations). In other words, put in some effort to enjoy the benefits.
So, is it Worth a Trial in 2022?
Amazon FBA is a program reserved for businesses that sell to Amazon. When you decide to jump into that bandwagon, Amazon handles some of your business’s needs, including:
- Receiving and storing your inventory
- Receiving, picking, and packing orders
- Shipping procedures, including tracking of dispatched orders
- Providing after-sale services (Inquiries, returns, refunds, and exchanges)
Consequently, you’re free to focus on other business and personal responsibilities. You also get the Amazon prime badge. Therefore, the badge is synonymous with reliability, and it puts you ahead of other non-FBA Amazon sellers.
You’ll also enjoy free traffic since Amazon is the most visited e-commerce site in the world. However, it’s essential to ensure you’re selling killer products besides featuring them on an enticing product listing page. To achieve that, include professional photos and avoid overpricing your items. Else, it’ll be easy to lose customers to your competition.
Also, avoid a stockless situation and invest in paid marketing and advertising. In other words, an effort will be necessary, especially during the early stages of your Amazon FBA business.
Just like Jeff Bezos (founder and CEO of Amazon), and the 1.9 million active Amazon sellers, yours can be the next successful online business.