In this article, we’ll see how you can build an Amazon FBA business, from scratch. Let’s start from the basics.
What is an Amazon FBA business?
Being an Amazon FBA seller means that you are selling products on Amazon while letting Amazon take care of all your shipping, storage, and handling needs. It is an extremely attractive business model due to the fact that you don’t have any fixed overhead costs.
Learning how to start an Amazon business is not difficult at all, but mastering the art of selling on Amazon is a bit more of a challenge. You don’t have to hire people or rent warehouses; you can do it all from the comfort of your computer while Amazon does all the heavy lifting for you. You do have to pay Amazon per every product that is stored and sold. However, it’s much cheaper than it would cost you to do on your own. An additional benefit to this business model is that you can pretty much scale it infinitely.
The benefits of this business model are that it doesn’t take much time to run it, and you can start with a relatively low investment. However, it does take hard work to make a lot of money as an Amazon seller. This business model poses many challenges, as with any other business. You need to sell something that people want to buy and find a way to let people know you are selling it. The main benefit is that you can basically focus on that while all other aspects of the business are handled by Amazon‘s logistics and systems. So, what do you have to do in order to sell on Amazon, and to do it well?
The first thing you need to figure out is what you are going to sell. This is not exactly easy to figure out. On the bright side, you can basically sell anything. In this day and age, you can simply go online to find suppliers that can make any product. On the other hand, you need to do some research and find out what is selling on Amazon. Of course, it’s not just about what is selling. It’s also a matter of things like:
- How much competition are you going to have if you sell a certain product?
- What are your margins going to be?
- How much will it cost to manufacture and ship it?
- Can you customize the product?
- How many can you expect to sell?
Answering these questions is never easy, and finding the right product to start with is extremely important. Picking the wrong one can doom your business before it even starts. Of course, there are no guarantees that you can find a 100% fail proof product, but you can do your best to minimize your risk of failure.
This is why most sellers use market intelligence software like AMZScout in order to get as much information as possible, as well as to quickly get many viable product ideas . Of course, you can do the research without the software- it would probably just take longer, and you would be relying on luck and personal hunches more than you should. This is not the smartest business practice, especially if there are ways of working around it.
Finding a supplier and getting samples
Once you find your first product idea, or several ideas, the next step is to find someone to make it for you. You can find suppliers very efficiently on platforms like Alibaba.com, and during this stage of building your Amazon business, you should try and get the following information:
- The manufacturing price per unit, based on different order quantities
- The same prices, including shipping, to your market country
- The supplier’s ability to customize the product and packaging to the way you need them
- Ordering samples (or prototypes) of your first product and stress testing them
After you go through this, you will have your product in your hands, and if all goes well, you can make your first order. You should also take the opportunity to take product photos, which will be necessary for the next step. Before ordering your prototype you should also come up with a brand name, and make sure you register a domain for that brand name. This is not something that Amazon requires you to do, but it will be something that you will need to do as your business grows.
Creating your listing on Amazon
The most optimal time to start working on your listing is while you are waiting for your first shipment of items to arrive. The listing has several components:
- Listing images
- Product title
- Bullet points
- Product Description
- Back end Keywords
There are rules when it comes to each one of these components. All of the components, except for the images, are subject to Amazon‘s own SEO, which is guided by the A9 algorithm.
This where keywords play a huge role. You need to do keyword research in order to include the most relevant and searched for keywords that are related to your product. This will eventually get you higher in those searches. There is no way around doing this without software.
This is why tools such as AMZScout’s Keyword Explorer and Keyword tracker are so essential in this stage. You need to identify the right keywords for your product, and find a way to include them in your listing copy. You need to present them well to your potential shoppers, and you need the Algorithm to pick them up and index you on the searches.
When it comes to images, you only need to do your first image- called the title image- on a white background where the product covers the majority of it. You can have more freedom with the rest, but focus on highlighting the features of your product. The images have no bearing on the SEO. When it comes to your listing you can always find ways to adjust it and find new keywords. However, it’s important that you have the best setup you possibly can from the start, so that you can hit the ground running.
Launching your product and Amazon Advertising
Launching a product on Amazon includes a lot of different elements. The most important one is Amazon sponsored products, or Amazon Pay Per Click advertising. Amazon has its own advertising system, and arguably it’s the most potent and cost-effective one you can find anywhere on the internet.
After all, unlike places such as social media sites, Amazon is a place where people are coming with money in their hands with the intent of buying something. This is once again a place where keywords come into play. In order to get your product as much exposure as possible over time, you need to advertise the keywords that are in your listing. The more products you sell as a result of someone typing in a keyword in a search bar, the higher you get in those searches.
At first, all of the sales you get will be through Amazon PPC, until you get high enough in the searches for your listing to show up organically. This is why PPC is instrumental to any product launch, and it doesn’t ever stop being relevant. Apart from PPC, you can also try social media promotion with discounts and giveaways. Those methods are a little less cost-effective, but they can help get your product out there. However, PPC is a must. The rest is optional.
After you launch your product, you will have a living and breathing business that will need constant tending. An Amazon business is a very time efficient business to run. However, just because it can be run with only a few hours of time per week, it doesn’t mean that it will run itself.
There will always be opportunities to better advertise, optimize, and position your product, as well as add new products. Growing, adapting, and finding new opportunities is what selling on Amazon is all about. In fact, just deciding to become an Amazon seller is acting exactly in accordance with these principles.
Read more about Amazon:
- Amazon Business Model
- What Is the Receivables Turnover Ratio? How Amazon Receivables Management Helps Its Explosive Growth
- Amazon Case Study: Why from Product to Subscription You Need to “Swallow the Fish”
- What Is Cash Conversion Cycle? Amazon Cash Machine Business Model Explained
- Why Is AWS so Important for Amazon Future Business Growth?
- Amazon Flywheel: Amazon Virtuous Cycle In A Nutshell
- Amazon Value Proposition In A Nutshell
- Why Amazon Is Doubling Down On AWS
- The Economics Of The Amazon Seller Business In A Nutshell
- How Much Is Amazon Advertising Business Worth?
- What Is the Cost per First Stream Metric? Amazon Prime Video Revenue Model Explained
- Jeff Bezos Teaches You When Judgment Is Better Than Math And Data
- Alibaba vs. Amazon Compared in a Single Infographic
- Amazon Mission Statement and Vision Statement In A Nutshell
- Google Vs. Amazon: The Latest Move For World Domination
- Google Q1 Profit 2020: Mobile Traffic, Youtube Ads, Youtube Memberships, And Cloud Saved The Day (For Now)
- Third-Party Sellers And Amazon’s Platform-First Business, Will It Last?
- Business Strategy Examples