Amazon FBA is an excellent way for both new and experienced online entrepreneurs to sell their products to customers. Fulfillment by Amazon is abbreviated as FBA. Simply ship your items to the Amazon warehouse for storage.
When you make a sale, Amazon will ship your products to your customers. They are also in charge of customer service.
It appears to be a simple and convenient setup. After all, Amazon is the leading online retailer in the United States, with projected revenue of $314 billion in 2021.
But there’s more to it than meets the eye. To sell successfully on Amazon FBA, you must first understand the platform’s pros and cons, as well as how to stand out among a sea of competitors.
This article will go into detail about how to become a successful Amazon FBA seller.
How to Sell on Amazon FBA:
Fulfillment by Amazon (FBA) is an Amazon service that assists Amazon sellers in storing, packing, and delivering their products directly to customers.
Amazon warehouses can be used as extension storage centers for sellers to keep their products until they are sold. Amazon also provides sellers with numerous benefits, such as Prime 2-day shipping, which allows them to rapidly scale their business.
It is simple to begin selling on Amazon. If you already have a product to sell, simply create a seller account, market your products to your target audience, and then fill every order that comes in. Amazon handles the latter, allowing you to concentrate on marketing and brand development.
Business Models on Amazon
There are five different ways to sell and earn money on Amazon. Creating your brand is the most profitable and scalable (private label).
This entails developing your own product/brand. You’ll be selling a one-of-a-kind product because you’re the only one with that brand. This category includes influencer merchandise.
If you don’t want to create your own brand, you can buy products from other brands in bulk and at a discount, then resell them on Amazon for a profit.
If you are skilled at finding bargains, you can purchase these discounted items and resell them for a profit.
Dropshipping entails purchasing directly from manufacturers, who handle fulfillment to your customers.
Amazon also sells handcrafted goods. Handmade items are anything you make or craft yourself. This means you are the product’s manufacturer.
Selling Private Label Products on Amazon FBA:
This is also the most popular method used by Amazon FBA sellers.
To begin this path, you must first:
- Conduct thorough product research. Look for items that are in high demand and have little competition.
- Connect with the right manufacturer or supplier to create your product at the right price. They will also ship your items directly to Amazon warehouses.
- Create your Amazon listing and build your product’s brand.
- Advertise your products to stand out among the millions of product listings on Amazon.
- Track your inventory and sales as you continue to build your brand.
Product research and marketing do the majority of the heavy lifting in this business model. Amazon handles warehousing and fulfillment. Your manufacturer is in charge of production. Your job is to find a winning product and market it aggressively.
Amazon FBA vs Amazon FBM
Amazon Sellers have two options for fulfilling orders from their Amazon store: (1) FBA and (2) FBM. FBM stands for Fulfillment by Merchant. Sellers are in charge of inventory, sorting, packing, and shipping orders.
Aside from product research and marketing, sellers are responsible for ensuring that their buyers receive their items in good condition.
Here’s how Amazon FBA works in comparison.
The products are delivered to Amazon’s fulfillment warehouses by you or your supplier. Amazon accepts them and manages storage and inventory. They are dedicated to safeguarding your belongings. If anything breaks, they will refund the full retail price.
When a customer orders from your store, the order is processed by Amazon. They select the item, package it in an Amazon box, and ship it directly to the customer.
Customer service issues such as shipping notifications, tracking, reviews, and product returns are handled by Amazon.
The fulfillment process can be a real pain. Dealing with customer service when it comes to tracking shipments or product returns is never fun. Delegating these operational tasks to a partner such as Amazon frees up your time to focus on strategic business-building activities such as marketing.
Discovering the Best Amazon FBA Products
Having the right product is essential for a successful Amazon FBA business. These should be high-demand, low-competition items, which means that many customers want the item but only a few sellers sell it.
How do you locate such items? You must devote time to thorough product research. You should not sell a product simply because you enjoy it. When making decisions, you should rely on data.
Product research is time-consuming. Rushing it may cause you to make hasty decisions that you will later regret.
There are Amazon marketing tools that can mine the Amazon database and assist you in locating these high-demand, low-competition products. You can use these tools to help you with product research and decision-making.
Profitable, high-demand products with little competition
When conducting product research, three factors must be considered: profitability, demand, and competition.
Profitability is your goal as an Amazon seller. It sounds obvious, but it’s easy to overlook when you enter a competitive market and begin exhausting all available sales channels.
Profitability is simply revenue-less expenses.
To make a healthy profit, costs should always be lower than revenue. Amazon Profitability Calculators can help you figure out how much profit you’re making.
You can use the “rule of 3s” to quickly determine whether a product will be profitable.
According to this rule, the selling price of a product is divided into three equal parts:
- Costs of landing
- Platform charges
- Your gain
If your product costs $27, your profit should be $9. Less than that, and it may not be worthwhile to pursue.
Amazon products typically range in price from $20 to $70. Look for items that can be sold at this price point.
It is not recommended to sell products for less than $20 because you may not have enough profits after deducting all costs. It’s also not a good idea to sell anything over $70 because customers are less likely to buy expensive items from unknown brands.
When it comes to costs, there are three types to be aware of.
- Landed Prices
- These are the total costs you incur when shipping your products to Amazon’s warehouses. It includes the following:
- Inventory expenses
- Fees for inspections (if any)
- Shipping Fees (if any)
- Amazon Charges
Pro tip: Use SellerApp’s Amazon FBA calculator to check all the fees related to fba.
Product sales are important indicators of a product’s demand. When shopping for a product, look for something that solves a customer’s problem. Is the product meeting the needs of the customer? Can they use it to meet a need or to solve a problem?
Check the data once more to ensure you’re answering these questions objectively.
When conducting product research, it is also critical to determine how many similar products exist and how well they are rated. This will assist you in determining whether there is room in the market for a new player.
Competition is good because it indicates that there is a demand for a product. However, excessive competition should be avoided. It would be difficult to stand out in a crowded market.
Recommended Guide: Amazon FBA Product Sourcing Tips for 2022 sellers.