If you’re wondering how to start an Amazon FBA business, you’re not alone. While it’s true that all the information is readily available online, the amount of time you have to put in to learn the ins and outs of Amazon selling may easily scare you. The good news is that we did the heavy lifting and compiled all the information you need to kickstart your Amazon journey. In this article, we will discuss everything you need to know about Amazon FBA. Read on to find out more!
What is Amazon FBA?
If you’re new to eCommerce selling, the “FBA” in Amazon FBA means Fulfilled by Amazon. What this means is that you send your products to an Amazon FBA warehouse and Amazon stores your inventory for you. And, whenever you receive an order, Amazon processes it and handles the packaging and shipping. Using Amazon FBA not only lets you take advantage of Amazon’s amazing customer service, but you’ll also save a lot of money on storage fees.
How does Amazon FBA work?
This type of business model offers a straightforward method for online retailers to take advantage of Amazon’s fulfillment solution without having to worry about complex logistics processes. Amazon FBA is a cost-efficient way to make your operations leaner. Amazon will even handle the customer side of things for you too! The only downside? You have to forecast the demand for your products accurately and then buy the inventory long before you sell it since you still have to ship it to Amazon’s warehouses.
How do you make money using Amazon FBA?
Can you really make money selling on Amazon? The simple answer is yes, you can! However, it is important to note that making money on Amazon depends on a lot of factors.
- What items are you planning to sell? As with any business, your profitability all boils down to determining the best items to sell. Have you done your market research? Is there enough demand for your product to be profitable? What’s the competition like? Answering these questions would not only help you identify which products to sell but also help you better understand your target market.
- Deals, deals, and more deals! If you have a knack for deal shopping, then you have the potential to make a lot of money reselling items on Amazon. Making the most out of discounts and deals would let you maximize your profits regardless of the sourcing method you use.
- Do your due diligence. In any business undertaking, going in blind is a surefire way to lose money. Researching your target market, determining the best product to sell, mastering a sourcing method, and understanding all the fees and costs involved allows you to develop a strategy that guarantees profit and mitigates risk.
What can you sell with Amazon FBA?
Whether you’re an experienced seller or just starting out, finding the best products to sell on Amazon can be overwhelming. Fortunately, there are certain guidelines that you can follow to know what to sell on Amazon FBA.
- Choose a competitive item – We cannot reiterate this enough, choosing a competitive product to sell on Amazon means you’ll likely keep your inventory moving at a steady pace. Make sure to put in the work and determine a product that fulfills a particular need. The more in demand a product is, the easier it is to sell.
- Choose an item that’s small and light – It should come as no surprise that the heavier and the bulkier the product, the more complicated the logistics will be. Simply put, having a larger product would mean extra storage and shipping fees charged to your Amazon business.
- Choose an item that’s easy to source – Regardless of the sourcing method you choose, offering an item that’s easy to source means lowering instances of stockouts. In this way, you can focus less on the sourcing process and more on growing your brand.
How do you obtain inventory for Amazon FBA?
As mentioned above, one of the most important things to consider when starting an Amazon FBA business is choosing the best sourcing method. While it may seem complicated, obtaining inventory for your Amazon business is simple. The main thing to remember is that your sourcing method should align with the type of product that you are planning to sell. Here are some of the best ways to obtain inventory for your Amazon business:
- Retail Arbitrage – Simply put, retail arbitrage means purchasing discounted products from a retail store and then reselling them at a higher price on Amazon.
- Private Labeling – Private labeling is the practice of sourcing a product from a third-party manufacturer and then selling it under your own brand. With private labeling, you have complete control of a product’s design and specifications.
- Dropshipping – Dropshipping is a business model that allows businesses to meet demand without having to carry inventory or ship goods. Essentially, a third-party supplier takes care of shipping the product to the customer – eliminating the need to store products in your own storage facility.
- Online Arbitrage – Online arbitrage, much like retail arbitrage, is a sourcing method that involves businesses buying products on online marketplaces and flipping them for a profit.
What are the Amazon FBA seller fees?
Before wondering “how to sell on Amazon FBA,” you should first understand Amazon FBA’s seller fees. If you’re still unsure about what to sell and are selling only a few items per month, it’s best to go with the individual plan which is priced at $0.99 per item sold. On the other hand, if your Amazon business is already selling more than 40 items per month, you may want to switch to Amazon’s professional seller plan. The professional seller plan is priced at $39.99 and gives you access to Amazon’s advanced selling tools. It also enables you to qualify for top placement on top product detail pages.
Is Amazon FBA worth it?
It depends on your perspective. Individuals looking to start an online business can take advantage of the many benefits that Amazon offers. From increased online visibility to streamlined order packing and shipping, Amazon FBA enables businesses to focus more on delivering their core expertise. Check out some other Amazon FBA perks:
- Does not need a ridiculous amount of startup capital
- Amazon handles logistics for you
- No need to store items in your home or a storage facility
- Automatically offer free delivery with Amazon Prime
- No overhead costs – run your business at home!
How can you fund your Amazon FBA business?
To kickstart your Amazon journey, you first need to raise enough capital to start your business. Fortunately, Amazon does not generally require an absurd amount of startup capital. Some of the financing options you can look into are microloans, short-term loans, lines of credit, credit cards, and crowdfunding.
- Microloans – This type of funding option can finance your Amazon business and even scale your growth. Microloans can also be used as general working capital to cover recurring expenses, purchase additional inventory, initiate expansion, and upgrade equipment and machinery
- Short-term loans – Often offered by traditional financial institutions, short-term loans can be easily acquired and without the need for collateral. However, note that short-term loans may not have the best interest rates and repayment terms as opposed to other types of business loans.
- Lines of credit – A line of credit is a flexible loan provided by a financial institution that enables businesses to access a revolving line as needed. Businesses can either repay the amount they have borrowed immediately or over time.
- Credit cards – If you need a quick funding source to pay for your Amazon inventory, credit cards can be a great option. The best thing about this funding option is that most banks offer cashback rewards that you can take advantage of as long as you pay your balance back in full and on time.
- Funding Marketplace – Amazon FBA sellers can make use of the funding marketplace as a way to purchase their initial inventory. This method of raising capital involves the collective effort of family, friends, and individual backers online. If you’re looking for an inventory financing method such as this one, explore Kickfurther.
How can Kickfurther help your Amazon FBA business?
Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules allowing your brand to scale quickly without impeding your ability to maintain inventory.
How we work:
Connect with an Account Rep
Create your business account at kickfurther.com and meet with one of our account reps to create a potential deal.
Link Manufacturer:
We pay your manufacturer to produce inventory.
Establish Sales Periods:
You don’t pay until you start making sales. You’ll outline your expected sales periods for customized payment terms.
Pay as you Sell:
At the end of each of your sales periods, you’ll submit sales reports to Kickfurther. You only pay for what you’ve sold during that specific sales period you’re reporting on.
For more information about Kickfurther, visit www.kickfurther.com.
How can an Amazon FBA business benefit from inventory financing?
You need a healthy amount of cash flow if you want your Amazon FBA business to remain competitive. If you are seriously considering inventory financing to fund your Amazon store, it’s important to take a look at some of its benefits to help you make an informed decision.
- Prepare businesses for peak shopping seasons
- Fund the development of a new product offering
- Allow businesses to take advantage of bulk deals and other time-sensitive discounts
- Fast application and review process
- No need to pledge personal assets as collateral
Wrapping Up
So is Amazon FBA still worth it? Once you get the hang of selling as an Amazon FBA business, it becomes pretty easy. Much of the work lies in studying the best products to sell and identifying the best sourcing method that aligns with your business. The most common reason why businesses choose the FBA model is the many benefits that come with it. It’s now up to you, the business owner, to take advantage of the many great tools that come with your Amazon FBA subscription and watch as your business grows!
