This is one of the popular money making method on Amazon right now. For those that are willing to put in the effort needed to get setup, the rewards can be extremely powerful. Most people will try to create their own products (private labeling) and sell them on Amazon’s marketplace.
What is Fulfillment by Amazon?
Fulfillment by Amazon (FBA) is method for you to store your products in one of Amazon’s warehouses and Amazon will handle shipping the products to customers for you. All you have to do is manage the sourcing, marketing and customer. The whole logistics part of shipping to your customer is handled by Amazon. This saves a lot of time and money in the long run by having this part of your business outsourced.
This is the way to sell your own brand of products on Amazon. Creating your own products to sell on Amazon eliminates the middle man fees of drop shipping or reselling. Almost anything can be created if you are familiar with sourcing. For example, a ton of money has been made with the banana slicer.
How Does Amazon FBA work?
Understanding how the Amazon FBA process works will give you a broad overview of where you’ll need to acquire more knowledge and where you may already have some expertise to sell.
- You source a product
- You send it to the amazon warehouse
- You create a product page on the Amazon Marketplace
- People visit your page and buy
- Amazon get’s their commission, you pay your fees and keep the rest.
- When your product runs out of inventory, you do this again.
The Pros of Using Amazon FBA
Customers will know when you have items in stock immediately on Amazon. There are many non-FBA sellers that will cancel orders at the last second because they don’t have enough stock available.
Eligible for Amazon Prime specials
Prime members spend more than regular customers. Having the ability to be linked to prime member deals is an added advantage of using FBA.
Customer service is simplified
You won’t need to set up an outside customer service management system. Your customer service is handled within Amazon. If a customer has a problem or complaint about an order, it goes through Amazon first, then relays to you.
The Cons of Using Amazon FBA
Need to source a product
You will be responsible for selecting and sourcing a product that you will sell. Most times you will want to create your own brand of product to maximize profits.
This also means it could take a while for your product to get to the amazon warehouse.
Need to establish a brand
It will take some time to establish your brand as you make sales. This won’t be an instant achievement.
Need money to buy the first round of stock
You must invest in your own stock to get started. This can be a problem if you don’t have a lot of money to invest. If you don’t make any sales, you could spend more money to keep the product in Amazon’s warehouse.
Steps To Sell Your First Products on Amazon
Step 1. Identify a product that has good potential
This is probably one of the most challenging parts of the process. You want to find a product that you are interested, that other people are buying and has low enough competition for you to enter the market. A good way to start looking for possible products to sell is to check out the Amazon Best Seller list.
You’ll know that these products are selling well. Find something that would be easy enough to create a generic brand for and still sell. Don’t look for items that are probably popular because they are have a popular brand name.
Some things you’ll want to look for in a potential product:
You don’t want anything too big. Big products will add extra shipping costs. Extra shipping costs may disqualify the product from Prime or the free shipping options on amazon. A good best practice is to find a product that is less than one pound. You can find this info in the product information.
Find a product that doesn’t need too much consideration in terms of price. People will usually buy something between $5 and $50 dollars without much hassle.
Step 2. Identify the keywords for your potential product
Once you identify the potential product you’ll want to identify the right keywords that customers may use to buy. Amazon makes this easy with suggestion keywords. If you start typing in the search bar it will pop up with suggested words you might want.
Our keyword research tool makes it easier for you to get a list of keywords from just a seed word or two. Then you can use our keyword tracking tool to see some of your competitors’ rankings of their products.
Step 3. Validate that there is a good market for your product
Validating that your product will have a good chance of selling is a mix of art and science. There is no definite way to know that you’ll be able to sell. In order to validate you product you want to look at Best Seller Ranking and Reviews. You can find this information under additional info for each product.
Best Seller Ranking
Best seller ranking (BSR) tells you how well this product is doing. In addition to the top 100 product you want to find similar products that are also selling well. See if you can find similar products under different brands that have a BSR higher than 500 but less than 3000. If you can find 3 like this there might be some good potential. Also make sure there aren’t too many of the same product in this range. If so, the market might be oversaturated.
Reviews are a general way to estimate how competitive it would be to get your product ranked higher on Amazon’s search pages. The higher the number of reviews, the more competitive it will be get ranked against a product. Look for something that is less than 100 reviews if possible. This will mean it has low competition.
Step 4. Find 3-5 possible sources that could manufacture your product
This is where the fun of sourcing begins. You’ll want to find a good manufacturer. A good source for this is Alibaba. If you go to this website and type in the same keywords you used for step 1 you will be able to find potential products.
Try out different manufacturers and request samples of their products. It will be useful to learn a little about Chinese business etiquette as many of the factories are in China. Build a relationship with the seller that you want to buy from.
Step 5. Choose a manufacturer and get all the details for purchase
After receiving your samples and testing them, it will be time to choose a manufacturer. Price is important, but responsiveness and relationship are also important. Make sure you choose a source that you will comfortable doing business with again and again.
It is also a good idea at this point to think about ways you can make your product a little bit different from all the others. This will make you stand out as a brand.
Step 6. Make estimates for getting your product to Amazon’s warehouse
In addition to actually paying for the products themselves, you will also need to add in the cost of getting your product to the Amazon warehouse. This can cost almost the same as the price of your product. Make sure the numbers work out in the end. Ask about import and export taxes and fees you might not be aware of.
Step 7. Open an Amazon Seller account
Once you’ve done all your calculations and order your product you are ready to get setup on Amazon. It’s very easy to get setup with your Amazon Seller account. Be sure to get your company documents and tax information ready.
Step 8. Setup your product listing for Amazon FBA
This part takes time to get used to. Follow the steps to setup your product listing for fulfillment by Amazon.
Step 9. Market like crazy
Tell everybody about your product. Consider running product sales and campaigns. Your main goal is to get your product sold and the number of reviews up in a short amount of time. This will make your product rank better. There are many strategies you could use for this.
Tips For Selling Physical Products on Amazon
Start your seller account on Amazon after your product is one the way to the warehouse
If you immediately sign up for a paid seller account on Amazon, you will be spending $40 a month from the beginning. The process of researching, selecting and sourcing a product will normally take about 60-90 days. You can easily save some money by waiting until everything is in order and then jumping into a paid seller account.
Choose a niche that you have an interest in
There is nothing worse than having a product that you have no interest in. It may sell well, but then you’ll be spending a lot of your time promoting something you don’t care about. That’s boring. Having some interest in the products will at least give you some motivation to do the research about specs and benefits.
Remember to plan for taxes and fees to get your product from the manufacturer’s warehouse to Amazon’s facilities
This is probably the most surprising part for a first timer. It will seem like fees will come out of nowhere. Do you research and avoid any surprises.
Check for patents
One thing you should ask a manufacturer – are there any patents in place for the product they are making? Something as simple as the a curve of the corner on a product could get you in trouble with a patent. This is something you don’t want to play ignorance with.
One case involved a woman that was selling a product similar to a popular brand’s product. She changed around the design a little to avoid patent infringement. Then her product was featured on a television show randomly. This media coverage boosted her sales enormously. She got so excited that she ordered double the quantity in her next shipment.
However, something took a turn. The popular brand company filed a complaint against her product. The product was frozen from being sold on Amazon. Now she had a huge stockpile of products that were stuck in the Amazon warehouse. Additionally, she has to continue paying the sellers fees.
Don’t get into this kind of situation.
Join a community or mastermind program
There is nothing more valuable than being around other sellers that have gone through the path you’re on. Someone that can make recommendations for vendors is priceless. This type of community can also give you insights into things that you may not have even thought about yet.
A friend once thought about selling inverted umbrellas as a potential product. He ordered some samples and was ready to make a first order. One of my community members asked him a question about the length of the umbrellas.
After doing some digging he found out that the length of the product was going to change the shipping cost, thus eating his profits. Finally, he decided to go for a different product instead.
Now you know how to get started on selling physical products on Amazon using FBA. It’s simple but not easy. It’s up to you to do the hard work to get the work done. Take it step by step. You might run into a roadblock or two. There is always a community of Amazon sellers who have run into the same issues you probably have. You can search for your problems and the respective solutions online when you do some digging. Take the first step and get started today!