Selling on Amazon is an excellent opportunity for aspiring entrepreneurs. The FBA (fulfillment by Amazon) program can allow you to earn an income from the comfort of your own home, but the prospect of starting your own online business can be a little daunting. However, in this guide, we will provide you with all the details you need to have confidence moving forward.
What is Amazon FBA?
Amazon FBA is essentially like having your own online store, but as an Amazon seller, you can enjoy being a part of a large corporation. When you list products on Amazon, you will automatically gain access to millions of existing Amazon customers. Amazon FBA (Fulfilled by Amazon), means that Amazon will act as your fulfillment network, allowing you to sell an item and have Amazon ship it to your customer. This means that Amazon will pick, pack and ship your product, helping you to scale your business to massive proportions.
The Process of Amazon FBA:
If you are looking to get started selling on Amazon, the FBA program is a fantastic opportunity. Once you find and list a product to sell on Amazon, you can send the items to be stored in Amazon’s warehouse. At this point, Amazon will store your inventory and publish your product listing on the site. Amazon supports their FBA sellers by featuring your products as Prime Eligible purchases, encouraging buyers. Once a customer decides to buy, their order is packed and shipped by the Amazon team. While you will pay a percentage to Amazon and some shipping fees, with Amazon dealing with your order fulfillment, you can concentrate on selling more items.
The Benefits of Selling on Amazon FBA:
The biggest benefit of selling using the Amazon FBA program is that you don’t need to tie up your valuable time picking, packing and shipping products to your customers. While sending out one or two items a day may only take a few minutes, when you start to scale up your business, this can quickly dominate your day, directing your attention away from developing new product lines and expanding your business. Since Amazon FBA handles the order fulfillment, you will have free time to concentrate on increasing your business and boosting your profits. Another major advantage of the FBA program is that your products will be featured as Prime Eligible. Amazon spends a great deal of marketing resources encouraging people to join the Amazon Prime program. Customers spend an average of $100 per year to have access to unlimited “free” two-day shipping. This means that if you are a Prime customer, you are far more likely to choose FBA sellers over any Merchant Fulfilled products. Amazon has built a relationship of trust with their customers, and FBA sellers can benefit from this.
How to Choose a Product to Sell:
While there you can gain access to the whole range of Amazon support, having the right product is still vital for success. For aspiring entrepreneurs, finding a product to sell can be daunting. However, there is a checklist of requirements which can guide you through choosing your first product lines. Once you have developed confidence, you can start to experiment a little and expand your product lines. Ideally, your product should have a sales price of between ten and fifty dollars to allow you to obtain maximum profit. The product should also be as lightweight as possible to save on shipping costs. You will also need to research Amazon to see if there are comparable products. Similar products should have a 5,000 or smaller bestseller rank, less than fifty reviews over two to three similar products and no brand names within the niche or category. The product should also be durable and easily outsourced, available at a cost of 25-30% of the sale price for maximum profit. While you can develop a successful business with seasonal products, initially, you should look for “evergreen” products which are likely to sell all year round. You should also target products with the potential to expand into related products when you expand your range. For more information, you can consider taking one of many FBA training courses.
Sourcing from China
Finding a seller can be a little challenging. You will be faced with the choice of choosing between domestic and overseas merchants, which both have their own merits and disadvantages. While overseas sellers such as those found on Alibaba can offer some great deals, you will need to consider the shipping costs and lead times. There may also be a language barrier, which can add a layer of complexity to the process. You may find that a domestic supplier is easier to work with, even if you do need to pay a little more. If you do decide to go with the China route, you may need to go through the process of quality assurance (QA). This means randomly checking that your products are good quality and free from defects. As your business grows and you add new products to your Amazon business, you may want to consider making a trip to China to do a factory inspection and negotiate with the suppliers directly. Entrepreneurs with more design-creation chops may want to consider designing a custom product by working in cooperation with factory engineers in China. Just make sure to bring your own translator or a smartphone with a good translation APP + VPN (the Google-fied internet in blocked in China), as much will be lost in the language barrier. Alternatively, you may want to consider hiring a sourcing / QA expert who resides in China and can speak Chinese. Head over to Upwork.com and search for freelancers with sourcing experience in China. Hourly wages are typically lower in China so you can expect to pay about $15 / hour for a decent freelancer. These costs will more than pay for themselves as often your freelancer can directly negotiate prices with your supplier much more effectively than yourself.
Take the FBA plunge
Selling on Amazon is a great low capital business that you can get started in less than a month. Day-to-day duties are minimal as Amazon takes care of all the logistics, leaving you more time to relax and enjoy life. I recommend trying it out soon as the Amazon market is getting bigger and bigger everyday and it is only a matter of time before the market competition is saturated.
Rachel writes about business and life at Startup Living China