How to Make Money with Amazon FBA
Fulfillment By Amazon (FBA) is an amazing service provided by Amazon. It allows retailers to save themselves from the hassels of packaging, shipping and storing their goods before they are ordered by customers. This brilliant program lets retailers ship their products to an Amazon fulfillment center, where they are stored in huge warehouses until they are sold.
You want this if you intend to make lots of profit in business but want it to be more passive and let’s hands on, outsourcing the customer service aspect to Amazon’s amazing team.
How to register with Amazon FBA?
You will need to ensure access to the following in order to register for FBA;
- Bank account number and bank routing number
- Chargeable credit card
- Government issued national ID
- Tax information
- Phone number
Now that you have these important items handy you can set up your Amazon FBA account in the following simple steps;
STEP 1. Set up FBA
Create your Amazon selling account, and log in to Seller central to set up FBA. Afterwards click on inventory and select ‘add a product’.
STEP 2. Create your product listings
In the next step you add your products to the Amazon catalogue, then you can specify FBA inventory.
Afterwards, search for the product you want to sell. If it tells you that the product you want to sell is restricted, click ‘Listing limitations Apply’.
Then click the ‘Request Approval button’. Amazon are in no hurry to add new sellers and they will take their time to give you the results of your request. In normal times they can take 30+ days to give you a response.
What products and categories fall in the restricted section?
Where and what marketplaces you are selling from plays an important role in identifying the restricted products for you. As a seller, it is vital for you to take such instructions carefully.
Ignoring them could end you up with listing cancellation, listing privilege limitations, suspension or even removal of your listing privileges. Its easier to follow the rules and where they can bend instead of trying to get your account un-suspended or un-removed.
Amazon has lifted the harsh restrictions to broader categories and has moved it closer to entry to sub-category niches.
These are the restricted categories on Amazon;
- Automotive and Powersports
- Collectible coins
- Entertainment collectibles
- Fine art
- Holiday selling requirements in toys and games
- Amazon Handmade
- Amazon Subscriptions boxes
- Made in Italy
- Music and DVD
- Personal safety and household products
- Streaming Media players
On the other hand, you can sell in the restricted categories if you so want. This would require you to get ‘ungated’, which basically means to obtain a special permission to retail in a category that does not allow sellers to simply sign up and start selling.
Each category has different terms of getting a seller ungated.
STEP 3. Prepare your products
You will need to make arrangements for the safe transportation of your products to the fulfilment center following the Amazon packing guidelines and shipping and routing requirements.
STEP 4. Ship your products to Amazon
You create your shipping plan and print the Amazon shipment ID labels, then send the shipments to Amazon fulfilments centers from where they will be delivered to your customers.
Depending on your selling plan and the nature of products that you sell, there are different types of selling fees that you might pay.
Subscription Fees vary depending on the selling plan you select; Professional selling plan costs you a flat fee of $39.99/Month and no per item fee. While on the individual selling plan you have to pay $0.99 fee for each item sold.
Until your business starts doing high volume, can begin with the per item fee and move to the monthly subscription fee later on.
FBA also known as Fulfillment by Amazon requires you to pay for order fulfilment, storage and some other optional services because these are services that Amazon fulfills for you, so you know they want their fee for it.
Signing Up for an Amazon Seller Account
Once you’ve determined what product you want to sell on Amazon and have found a supplier to order from, next you need to sign up for an Amazon seller account.
Amazon offers you two selling plans: a standard plan known as Individual Plan and a premium plan known as Professional Plan. Both plans give you the flexibility to sell one item or a thousand and that is the edge that you get only on Amazon.
You can choose this plan if;
- You are planning to sell less than 40 items.
- You do not need advanced selling tools or program
- You haven’t figured out what to sell
- You sell more than 40 items in a month
- You want to access APIs and more selling reports
- You want to sell with programs like Launchpad and Handmade
You can chose this plan if:
- You want to sell more than 40 items in a month
- You wan to advertise your products
- You want to qualify for top placement on product detail pages
- You wan to use advanced selling tools like APIs and reports
- You want to sell products in restricted categories.
Finding Products to Sell on Amazon FBA
A number of people often buy products for the first price they see first rather than actually searching around to get a better deal. It is easier to choose the top listing on Google, instead of looking through pages and pages of products to save a few dollars.
No matter what the price of an item is, there are millions of buyers on Amazon, because it is the most trusted marketplace with quality customer service and return policy.
Although the prices on Amazon are quite reasonable, they do not always offer the best price. It will happen that items will be sold cheaper at a lower price elsewhere than on Amazon.
This give you as a seller a great opportunity to buy for less elsewhere and sell for more on Amazon for a profit.
This process is called Retail Arbitrage.
The Process of Retail Arbitrage
Simple steps to retail arbitrage on Amazon:
- Find a product on Amazon that sells well.
- Look for the same product in other stores at a cheaper price.
- Purchase the product for a low price
- Sell the product through FBA.
Amazon has set many storage warehouses up for retailers using their site to sell products. This is called Fulfilment by Amazon and it means that when buying and selling a retailer can send their products directly to Amazon’s storage spaces, saving them the need to package and ship products themselves.
When looking for products…
Follow these safety steps when looking for products;
- Find products that are prices at less than half of the price that they are listed on Amazon, because you will be paying for shipping and storage and you want to aim for a possible bigger margin.
- Attempt to find products that already have received a fair number of reviews demonstrating that they are selling well on Amazon. This will confirm that the products you are going to sell will be selling and assure you that you haven’t put your money down the drain in buying cheaper products. It is a good idea to look for products that you can flip quickly so you don’t have to worry about tons of orders at once.
- Try to find small size products as larger products will cost you more with shipment. It is always a good idea to minimize your fees as much as you can. Therefore, smaller objects will not only be easy for storage but it will naturally minimize the fees you pay to ship the product.
- FBA offers an FBA calculator that will inform you when you input your prices to calculate exactly the amount you will be paying for in storage and shipment fees.
Shipping Products to Amazon to Fulfill
When you have finally found your desired product that costs significantly less than Amazon price, have it shipped directly to you. After it arrives, it is crucial that you open the package to check it for any possible damage.
If the product is all good and clear, and it definitely should be if you are buying new, then your path is clear to send in to Amazon’s facility. If otherwise, return it to the supplier company and get your money back. It’s always a good idea to ask them to send you a sample for quality check before buying in bulk from the supplier.
Once Amazon has been sent the products, all you need to do is simply list it on Amazon’s Seller Central store.
Then choose the way you would like the item to be shipped to the customer (prime is preferred) and send it off to Amazon. Once the product has been collected at the fulfillment center, Amazon will do everything else for you.
Amazon will store the product and then have it boxed, and shipped straight to its purchaser when ordered, meaning that all you actually have to do is find, check and ship the product to Amazon from suppliers.
Amazon will deal with customers, billing and handling, all while you make a tasty profit for doing very little. Sound good? It’s unfortunately more difficult than it sounds. But you got this! Here’s some sales stats to motivate you further on how much money you can make selling on Amazon.
Monthly Sales for Amazon FBA
Many Amazon sellers get at least $1,000 per month in sales and some super-sellers make upwards of $250,000 each month in sales-that increases to $3 million per year
- About (44%) of Amazon sellers make from $1000-$25,000 per month, which means per year sales from $12,000- $300,000.
- One in five people (19%) make $25,000-$250,000/month, leading to annual sales between $300,000 and $3,000,000; alternatively 6% make greater than $250,000 in
- Only 26% of retailers make under $1,000/month in sales and 4% don’t know their monthly sales.
This idea of selling your products on Amazon is a fairly new one in ecommerce business, thus, a great number of retailers are new to it, yet this inexperience has not prevented them from making profit.
How Much Profit Do Amazon Sellers Make?
The first five years are the most important years for an FBA retailer. The higher the profit margin the better naturally, however, many small companies find it hard to achieve profitability in the first five crucial years in the business.
Contrastingly, Amazon sellers see relatively high profit margins.
- More than two-thirds of sellers (68%) see profit margins higher than 10%
- Better still, 36% see profit margins above 20%.
- On the other hand, 8% said their businesses are not yet profitable, and 8% did not know.
How to Create Product Listings on Amazon
First log in to your Seller Central account, then click on “Add a Product” under the inventory drop down menu. You need to upload products by clicking on “Add products via upload”. This technique is beneficial for various kinds of products,
Go to the ‘Add a product page’, you may choose from three methods; First, you can add product which is already on Amazon. You can do this by probing for the product by name of product ID.
Second, click on “Create a new product listing” just below the search box. You can use this, if you are uploading a brand new product that is not presently selling on Amazon.
Third, if you want to upload many products at once, you can use the “bulk upload” option found on the right of the screen.
When you click on “Create a new product listing” you will be asked to assign your product to an Amazon category. You may find the grouping one of two ways: using the search feature or by browsing the categories.
When you type your product into the search bar, you’ll be given all of the possible groupings for that specific product.
For example fot my water bottle, I am given 12 different choices in which my water bottle will fall your selection must be relevant to your product.
Fill in the catalogue info for your new product. On the next page, you’ll notice that your listing information is divided into 7 tabs: Vital info, Variations, offer, images, Description, Keywords, and more details.