Simplified Guide on How to Start an Amazon FBA Business
Are you looking for a decent side income to boost your wages? Do you want to start an online business? If yes, this step-by-step guide in starting an Amazon FBA business will help you.
To begin, let’s talk about what is Amazon FBA business, and how does it work.
If you are new to this business concept, FBA simply stands for Fulfillment by Amazon. The Amazon FBA business refers to the business model, where you have the leverage to the customer base and distribution network of Amazon.
Unlike other online businesses, you can run your business without the headaches. Your focus is on searching for profitable product items and then, leave everything to Amazon.
Amazon FBA Business Selling Process Overview
First, you need to send your products to Amazon, and they will store them to their fulfilment centres or massive warehouses that are run by robots and Amazon employees. Your products will then be inventoried and sorted. Amazon will reimburse you the full retail price in the case for damaged products.
Once the customers placed an order for your product on Amazon, the business platform will handle the automated process for you. Then, the products will be picked on the shelved, packed, and shipped to the customers on your behalf.
Lastly, Amazon will follow up with the customers after your products arrived at them. That is to ensure that everything is fine with your products. In case for customer concerns, Amazon will also handle that for you.
Benefits of Amazon FBA Business
The main benefit of joining the FBA business is that you can ship your products to the warehouse of Amazon, and they will take care of the rest. Besides, you can also experience the following benefits:
- Freedom to focus on conversion rate optimization, new market development, and targeted marketing
- Plenty of perks like free shipping, quick shipping, credit card handling, and customer service
- Growth opportunities
- Lower expenses
Are you now excited about this kind of online business model? Then, keep reading the following step-by-step guide on how to start your own Amazon FBA business.
How to Start an Amazon FBA Business
- CREATE YOUR AMAZON SELLER ACCOUNT
Now that you are ready to explore better business opportunities and get registered as an Amazon seller, you need to know the easy steps on how to set up an Amazon Seller Central account.
To get started, simply go through the following self-service options:
- Go to http://services.amazon.com/ and click the “Sell on Amazon” box or the “Sell on Amazon” link
- Go through the Sellercentral.amazon.com and click on the “Selling on Amazon” link
- At the top of the Amazon.com homepage, click on the “Sell” button
Take note that it does not matter which of the above pages you will choose to start the registration process because it all lead you the same process.
Amazon offers a very straightforward registration process where you can accomplish in less than an hour. To streamline the process, you need to provide pieces of information such as:
- Legal business name, address, and contact details
- Valid email address to be used in the company account
- An internationally-chargeable credit card along with valid billing address
- Existing phone number
- Tax identity information (company’s Federal Tax ID number or Social Security number)
To submit the tax identity information, your tax information will be submitted and verified through the “1099-K Tax Document Interview.” That is because Amazon is required to collect the tax ID information by the IRS for them to get notified about your taxable earnings through the Amazon account if any.
After providing the above information, you are them registered as an Amazon seller. Then, Amazon will encourage you to list your products to become a “Launched Seller,” instead of “Registered, Not Launched Seller.” However, if you are still undecided about your product listing, you can remain as “Registered, Not Launched Seller” and Amazon will send you emails encouraging you to list your products.
Meanwhile, you need to make a decision about whether you want to create an individual or professional account. In the individual account, you do not need to pay a monthly subscription feel, but there are plenty of limitations involved. As for the professional account, there is a monthly subscription of $39.99, and the first monthly subscription is free and no need to worry about limitations.
- CHOOSE YOUR NICHE
You may find this part challenging, but you can follow the structured approach to pick your niche.
- Create a List. Think of the areas you are most passionate or interested about and list them down. You can consider your special skills, hobbies, professional experiences, or anything you have read or researched on a lot.
- Brainstorm the Possible Products. From the areas you have listed, brainstorm any possible products or product lines that you may offer.
- Narrow Down the List. Try to narrow down the product lists into specific niches. If you are into fashion, you can go for “designer bag for women” or “men’s streetwear.” You can narrow down a list of niches up to 5 areas.
- PERFORM A PRODUCT RESEARCH
Although you have a passion for your products and niches, doing business out of your products to your target customers is a different story. That is because you need to conduct product research about your chosen niches and interests on your lists.
- General Product Search. Perform general searchers on how your products are represented in the e-commerce world. You can begin by conducting a search for your products on Amazon and other major retail outlets or even do a Google search your products to determine which retail outlets are handling your chosen products.
- Use Keyword Tools. Keyword tools like MerchantWords and Jungle Scout are necessary to determine the demand level of your products. Utilize these toils in identifying how often your selected products are included in the keyword searches and determining if there is a good market to what you will sell.
- Consider the Best Seller Rankings. You can check out for the first 3 to 5 products found on the BSR within the different niches and categories where you narrow down your list. Take note that when products have a low BSR in a specific category, expect that is an extreme competition on that category.
- Use Other Market Research Tools. There are plenty of tools that you can use to perform more comprehensive market research, including AMZ Scout, AMZ Base, Sonar, Watched Item, and Unicorn Smasher.
- Determine FBA Fees. You can consult Amazon’s resources to identify the level of FBA fees being associated with specific products. The FBA fees will depend on the different variables that are related to the size, weight, shape, special handling or storage of the product. Then try to keep minimal FBA fees to maintain low expenses.
- BUILD YOUR PRODUCT SOURCING
Without establishing your product sourcing, you still do not have a product to sell. You may find this process time-consuming because you need to ensure that you will be getting the most reliable provider along with the highest product quality.
Test the Products. You do not need to test the products if you have already used them. If not, make sure to conduct product testing to ensure that you will be offering those with the best quality to your prospect customers. Before getting a product sourcing, obtain some samples of the products.
Seek for a Supplier. The cost will help you identify which supplier best suits your product sourcing needs. Then, you can use various avenues to find a particular supplier such as overseas suppliers, local trade shows, clearance and bulk items from local retailers, and local manufacturers.
When you source from the overseas wholesaler, you have a better chance for broader profit margin like Alibaba where you can purchase products in bulk at 25% or less retail price than the retail price.
Through local trade shows, you can find industry leaders who provide those products you are sourcing at a wholesale price. However, if you prefer a short-term sourcing, clearance, and bulk items from the local retailers work best for you. In case you want to market products that are products locally, you can opt for local manufacturers when sourcing your products.
Identify Shipping Costs. When selecting your supplier, make to consider the shipping costs because it may eat up your profit margin despite having low wholesale prices. Take note that if you will ship your products from overseas, expect that there are plenty of taxes, rules, and regulations attached to the shipping.
Ship Your Products. After determining the supplier, you want to source your products, the next task you will do is to purchase and ship your products orders. Besides shipping the products to yourself and prepare them to ship Amazon’s fulfilment centre, you can also ship them directly to Amazon’s fulfilment centre from the supplier. You need to follow the specific guidelines provided by Amazon on how you are going to prepare and ship your product orders.
- BUILD YOUR BRAND
Since you need to wait for the first batch of your products, take an opportunity in building your brand. When building a unique, recognizable brand, you need to follow several steps to ensure that your brand will clearly identify you and your products.
- Name Your Brand
- Analyze Several Brand Names
- Perform some Google Searches
- Consider Brand Names with Available Domain
- Design Your Brand Logo
- Create Tag-lines and Brand Themes
- Register Your Brand Name and Logo
Keep in mind that when building your brand, you need to showcase your creativity and create unique and compelling content. That way, it becomes easier for you to grab the attention of your target audience.
- CREATE THE PRODUCT LISTINGS ON AMAZON
You can create product listings that will both appear interesting and appealing to your target customers and offer them a lot of information to boost their buying decision. In fact, this process will help you determine what will be your income level.
Include Professional Product Photos. In your product listing, you must include professional photos of your products displaying the variety and important features.
Keep in mind that product photos with poor quality will fail to convey the product value to your customers. You can work with a professional photographer who can produce high-quality product photos that you can use in your product listings.
Create Well-detailed Product Titles. To draw attention, you need to create product titles. Make sure that these titles are unique, clear, and informational. You can try doing on Amazon search within your category and take a look at other listings to determine how others list their products.
Write Concise Product Descriptions. When writing your product descriptions, make them concise, and your customers must get all the necessary information they are looking for. To help you begin creating your product descriptions, you need to define your ideal buyers and read some product descriptions from other Amazon sellers.
Besides, you have to establish the tone or personality of your product, where it needs to be informative, exciting, friendly, lighthearted, and professional.
Take advantage of the highly sensory words that can stir the imagination of your customers. You need to make sure that you will alter the beginnings of the paragraphs as well as the bulleted lists with creative words or phrases. Ensure to highlight the benefits and best features of your products and anticipate different doubts or concerns from your customers. Then, you must set up the descriptions of your products in short and easy to read paragraphs.
Complete Amazon’s Product Description Form. With the help of Amazon’s product description form, it becomes easier for your customers to acquire all the necessary information about the particular product and provide them with an informed purchase. So, it is essential for you to complete the information like colours, sizes, product dimensions, weight, warranty information, product specs, and installation guides.
- CREATE YOUR FBA SHIPPING PLAN
When starting a new Amazon FBA business, you have both zero sales and zero customers. In fact, you still have no Amazon seller ranking. So, your target customers still have no reasons to trust and purchase your products.
Since you still have no sales and customers, so your job as a new Amazon seller is to create an FBA shipping plan. Then, you also need to optimize your product listing and automate your Amazon FBA business.
Here’s how you can create your FBA Shipping Plan:
Set the Quantity. This is where you need to fill in the quantity of all the inventory in stock, and you want to send. Then, you may receive different notifications like Information required, Removal Required, Action Recommended, and Excess Inventory.
Prepare Your Products. You need to prepare your products based on the standards set by the Amazon. In case you prefer not choosing Amazon to prepare your products, you have to follow all the necessary FBA preparation requirements. To save money and time, you can have your freight forwarder.
On the Prepare Products page, you can find products’ preparation guidance, where you may require to use different shipping materials such as tape, opaque bags, bubble wrap, and poly bags.
Label Your Products. Since Amazon is using a barcode system for putting away and tracking products, you need to ensure that your items are properly labelled. There are different labelling options you can choose, including the use of EAN barcode or existing UPC for eligible products, adding the Amazon barcode to your packaging or product, paying the per-item label service fee, and allowing Amazon to apply the barcodes for you.
Review the Shipment. To review your shipment, you need to pay attention to the shipment ID along with the destination fulfilment centre code. After the shipment approval, a View Shipments page will appear, and your shipment will be sent to the Amazon fulfilment centre.
Prepare the Shipment. At the Prepare Shipment page, simply select your desired shipping method and carried. You need to identify the number of boxes necessary for shipping and then, schedule and pay the shipment. Make sure to print box labels properly.
Review the Shipment Overview. To find the overview of your shipment, go to the Summary page. This page will also display the available tracking tools and receivement status of the shipping plan. When your product is already in the received status, it will be part of your listing and becomes available for purchase. Then, the order fulfilment will be taken care of by the FBA team of Amazon.
Guide to Product Listing Optimization
Once you optimize your product listing, you can create a huge impact on your sales. Besides, you will also rank higher, and if it happens, you will sell more!
And, here’s how you can make it happen:
Consider Keyword To help your customers find your products more quickly, you can use keywords. Your goal is to pick the exact keywords that your prospects will type into the search bar. You might like to use tools like BuzzSumo or SEMrush to help you determine the terms being most relevant to the audience.
Create a Great Detail Page. Another way to optimize your product listing is by creating a great product detail page. This is where you need to pay attention to the keyword-rich title, five bullet points highlighting the essential product features, and well-detailed product description. In the product title, you need to incorporate as many relevant keywords as possible, while in the product features, make sure to make it easy to read and straight to the point. As for the product description, it is the section where you can expand the features, unique characteristics, and benefits of your products.
Acquire Positive Reviews. Through positive reviews, you can generate more traffic and make more sales. To boost product reviews, you can encourage and elicit your customers to post their reviews about the product with the help of your fulfilment documents. Besides, you can invite people to try your products and write some reviews about them. You can even try offering your products at discounted prices and secure reviews.
Use Professional Product Image. Amazon has product image requirements that you need to follow, including the photo must be professional without illustrations or drawings, should be on a white background, must fill 85% of the frame, should be 1000×1000 pixels, and there must be no text in the image.
You can also include images like product in use, lifestyle shot, packaging shot, features, product information, and unique selling propositions.
How to Automate Your Amazon FBA Business
If you want to increase the efficiency of your workflow while putting your cash flow on the autopilot, it is necessary for you to automate your Amazon FBA business. Besides, it helps you to generate a passive income.
Create More Professional Listings. To create professional listings, you can use online platforms like Free up and Upwork to find Amazon sales copywriters and product photographers. You can also hire reliable freelancers who utilize a variety of advanced strategies and methods for creating optimized listings.
Consider PPC Management. When managing your PPC campaign, you can take advantage of PPC management software. By going so, your bids for various keywords can be adjusted automatically while helping you to seek new, highly converting keywords. You can also hire an experienced PPC management freelancer to deliver a regular tweak on your settings.
Consider Inventory Management. An inventory management software will help you acquire accurate estimates on how many units you must order or when you should order. This software will also help you prevent stock-outs that can limit your profits or even damage the organic rankings.
Use Bookkeeping Software. When automating your finances, it is ideal for you to use bookkeeping software like Quickbooks or Xero for an accurate record while reconciling your expenses and revenue. Using a bookkeeping software will also help you process your tax returns more quickly, as well as keep track of your business growth.
The automation of your Amazon FBA business is all up to you since you can choose on the above automation options. Make sure to choose an option that is applicable to your business needs.
How To Start Amazon FBA Business: Conclusion
Amazon FBA business is an outstanding option if you want to enter the world of e-commerce, and you want to start an online business that can bring you to quick scalability. This business model is among the best ways you can try to make money effectively because it allows you to focus on the core competencies as well as leverage your business knowledge and skills.
Once you start an FBA business, it means that you are also accessing the unbeatable fulfilment knowledge, experience, and technology of Amazon.
With an FBA business, you are actually leveraging the power of warehousing as well as the fulfilment functions of Amazon so that it becomes easier for you to build and grow a profitable online business.
You have the best opportunities to create a satisfying income, depending on your time, capital, and effort. Once you become an Amazon seller, you are free to create more business opportunities.
All you need to do is to maintain your passion and dedication in growing your business and do not be afraid to try new things. Always be optimistic and creative!