How to start your business with Amazon FBA?How to earn money

How to earn money amazon FBA

Surely you have also ordered from the world’s largest online retailer one time or another and most of them now even have an Amazon Prime Account.

But have you ever played seriously with the idea of ​​selling something yourself through Amazon?

Perhaps you have already asked yourself who actually offers all the products and where the online retailers get them from?

What is AMAZON fullfilment?

Amazon certainly sells a large part of the offered goods itself, but has always also offered interested traders the opportunity to sell products through its marketplace.

To do this, you simply create a dealer account, create the product listings and are basically ready to sell them online. But Amazon goes much further with its service.

The magic word, which has been haunted the entire online industry for a few months, is Amazon FBA and means ” Fulfillment by Amazon ” – in English: “Fulfillment by Amazon”.

In addition to listing your products on Amazon, the Seattle company offers you the opportunity to outsource many other tasks. Amazon takes care of the entire logistics process for you – it can store, package, send and even process returns.

Conversely, as a trader, you only have to worry about the relevant issues. The core tasks that you should continue to do yourself are:

  • Creation of the product listing
  • marketing
  • Purchase of products
  • Shipping to Amazon
  • invoicing

This focus means that you do not build up a large budget and you can essentially run your business as a solo preneur from anywhere in the world.

In addition, various work steps can be automated.

Once you have found a product that sells well, you just have to send an email to your manufacturer and he will send the newly ordered products directly to the Amazon warehouse. Amazon in turn then sends these directly to your customers on your behalf.

At the same time, new customers can be found relatively easily with PPC (Pay Per Click) campaigns .

So you don’t even have to guide traffic to your offers in a time-consuming manner, but take some money in your hand and advertise purposefully via existing channels such as Google or Facebook. Your marketing is almost automatic.

Invoicing can also be automated with the appropriate software.

In 5 steps to your own Amazon product

Find the right product niche:

The big question that is all about is: Which product should I sell?

The product should meet the following criteria in order to be shortlisted:

  1. The price is between 15-50 € (you only need a manageable start-up capital and the price leads potential buyers to buy impulses faster)
  2. It’s light and handy (this keeps shipping and storage costs down the supply chain)
  3. It is robustly processed (In order to avoid returns you should not want to offer electronics, fragile objects or the like)
  4. There is enough demand and little competition (never rely on branded products from global players such as Addidas & Co.)
  5. It can be imported inexpensively (Always pay attention to the overall package so that there is enough margin for you – as a rule, the purchase price should not be more than ¼ of the sales price. If the production costs are too high, your profit margin is drastically reduced, since you still have the Shipping and paying the Amazon fees.)
  6. You know your way around it (at best, you have a certain interest in the product, because the more intensively you deal with it and can put together further offers or even create a new brand)

What makes a good product?

It is always the right way if you can further improve existing products with a new offer.

To do this, you can search the Amazon marketplace very well for products that are already selling well, but which are not yet well marketed or for which the quality can be further optimized.

Another option is to look abroad for well-running products that are not yet available in Germany. Use, for example, the research on the international website Amazon.com.

Searching is relatively time-consuming, but once you get the hang of it, you quickly get a feeling of what can work in this country and what you shouldn’t do.

Always keep in mind that the first or second product must and will not normally be perfect. It’s not bad either.
It is much more important that you stay on the ball and dig deeper into the business.

Only if you are constantly looking for more products, ordering product samples and later sourcing them, will you internalize the processes and be successful in the business.

This is how the research works in detail

After identifying your niche, find the product with the best market opportunities by monitoring the competition directly on Amazon.

Suppose you chose the niche sport lacrosse and want to start with a ball. Then search for “Lacrosse Ball” on Amazon and check out the most popular products.

You have to check which bestseller rank (BSR) other products have and how much they sell. The previous top seller should have a BSR of less than 1000 and items in the other places should still sell well with a BSR <10000.

The strength of the competition is then checked. The competition is too strong if the top product in the niche has more than 1000 reviews or if the top 3 products each have more than 500 reviews.

1-3 star reviews from competitors also give you information about the improvements your product should have.

Tool tip for product research

To make it easier for you to search for products, a whole range of tools has been created around the Amazon FBA business. Jungle Scout is probably the best known tool when it comes to analyzing Amazon sales and rankings. The tool presents exactly the products that really bring you money on Amazon.

With a simple push of a button you can see, for example, the estimated monthly sales, the best seller rank, the sales revenue and other important criteria to identify profitable opportunities.

Another exciting tool is Marketplace Analytics. This is the first Amazon optimization platform in Germany. Through them you will find out how you can be listed with the right terms on the offer pages of the market place at the top.

Source the desired product

You have found a product that meets all of your criteria. Then comes step two: You have to find a manufacturer for this product.

There are a variety of different strategies, which of course offer different advantages and disadvantages. The most important aspects in this regard are briefly addressed.

Local vs. Global sourcing

Local sourcing (usually from German production or sales) enables the goods to be viewed on site, fast delivery, no language barriers (after all, they speak the same language) and known forms of payment. The higher prices usually have a disadvantage.

In this country you can find something for example in hardware stores, discounters or wholesale markets. Especially at the change of season, the inventory there is regularly sold at a discount.

Other opportunities are offered at flea markets, or when selling residual items or factories.

These are the playgrounds of retail arbitrage traders . Profits are achieved because there is a price difference between retail (ie department stores, discounters, hardware stores, etc.) and the selling prices on the Amazon marketplace.

Global sourcing is cheaper in many parts of the world due to lower production costs. On Alibaba.com you will find thousands of manufacturers who produce almost everything.

There, however, the goods are usually offered in larger quantities, which is why a little more start-up capital is needed there. Alternatively, to get samples, your gaze should always wander with on Aliexpress.com. This is Alibaba’s little sister portal and is primarily designed for the B2C sector.

The main disadvantages of global goods procurement are the difficult communication and the quality of the products. Under certain circumstances, this cannot necessarily be equated with Made in Germany. In addition, less popular, high-cost payment methods are usually required.

If you’re happy with a pattern, you’ve found your first manufacturer.

FBA – this is how shipping with Amazon works

In short, Amazon makes its warehouse capacities available for retailers, takes care of the entire shipping process and provides its customers with extensive services.

What do the logistic processes at FBA look like?

As a registered Amazon dealer, it is best to use a data feed to transfer all product details. The following video shows you exactly how this works.

If your products are sold on Amazon, the shipping giant also takes care of returns and complaints. The fact that you as a dealer do not have to have any storage capacity available is certainly one of the biggest advantages of the FBA program.

The fact that the goods are delivered from Amazon’s own storage space enables you to offer your products free of charge if your customers use Amazon Prime.

Since customers like to search for “Prime” products due to the enormous delivery speed, these are easier to find and a true sales turbo develops for you and your business.

Of course there are not only advantages. The FBA service naturally costs money and there are also a few details that need to be considered.

All items must be appropriately labeled before posting.

In addition, own branding is not possible, because the goods are shipped with packaging material from Amazon. At first glance, Amazon is the sender for your customers.

Not every retailer likes to step back in the customer’s perception and refrains from knowing that their brand is optimally staged.

There are also a number of technical considerations.
It is therefore not easy to intervene in the ordering process. Further services for regular customers or special agreements are therefore not possible.

The ERP system used must also be able to fully compare the data of the products stored in the dispatch center. It is important to avoid having products with the status “out of stock”.

If this is the case, your rankings go down faster than you can react. Because nothing is for Amazon and a bigger disaster than showing Out of Stocks.

That costs you Amazon FBA

In the first step, the costs of transporting the goods to the dispatch center are for you as a dealer. Amazon also asks you twice for your wallet for its services – for shipping and storage.

The shipping costs are graded according to product type, size and destination country. There are detailed price tables for this.

Storage becomes more complicated. These costs are calculated by cubic meters. The larger and heavier an item, the larger the total cost pool.

That is why many of the professional sellers rely on small and handy products.

The Amazon Listing – you should note that

In stationary retail you can not only look at interesting products. You can also feel and smell them in a store of your choice.

At Amazon FBA, as in other online shops, things look a little different. Your customers cannot touch, smell or taste your products …

You can convince yourself with your product listing alone.

This is responsible for your conversion rate and this describes the percentage of visitors who become customers. After all, money is only earned from sales in the end.

So use all imaginable possibilities for an optimal product presentation.

In the following you will learn more about the individual components of the Amazon FBA listing and how you can optimize them.

pictures

Meaningful and professional looking images are the most important part for your Amazon FBA product listings. Because most interested parties usually only look at the pictures, the reviews and the sales price.

The first product image is particularly important, because users see this when scrolling. It has to get their attention. A well-presented main picture not only gives you a high conversion rate – but also more traffic to your offer.

Please note that only things that really belong to the sales offer are shown on the first picture. It must also have a white background. If an attractive packaging is also shown, this can certainly increase the sales rate.

title

When writing a sales title, you should make sure that you do not write it for an algorithm, but for your customers. KeyWords only belong in the KeyWord area in the backend.

The first word of the title should tell the customer something about the quality and encourage them to buy.

A good example would be “high quality”. The second word has to describe the product briefly and you attach the name of your brand to it.

To increase the conversion rate even further, it is always worth adding a small bonus on top.

Reviews

In addition to the product images, reviews of purchases already made are the number 1 resource for the conversion rate. Your average rating should never drop below four stars.

If you get less than four stars from buyers on average, your product isn’t really worth anything.

Always try to have more reviews than your competitor. For example, if a competitor has received more than 50 reviews, you should also have more than 50 reviews to attract potential buyers.

Facebook offers you support here, where reviews can be easily obtained via Facebook groups or services.

Bullet points

Bullett points must always be written in a solution-oriented manner. After all, he wants to buy the hole in the wall and not the drill.

Therefore, formulate it in such a way that it triggers head cinema at best.

Capital letters are an essential eye-catcher. Therefore, always try to capitalize the first words and then describe them in more detail.

It could look like this:

NOBLE DESIGN –
HIGH QUALITY –
BETTER COMFORT –
100% MONEY BACK GUARANTEE –

Product description

In fact, most users won’t really read your product description. However, it is important that you can convince potential customers if they read them.

Always keep in mind why a customer is really buying.

In the rarest case, the customer buys the WHAT – he usually buys the WHY.

TIP: Always go inside out: WHY – HOW – WHAT.

Always start your product description with this question!

price

Finally we come to the price. It is certainly the most important criterion for most buyers. Nevertheless, you should be careful not to call up a cheap price and never change it again.

It is much better to play with the price.

Because how do you want to know at what price your customer is really willing to buy your product if you don’t test it. It is not important to constantly undercut your competitors.

Your customer is not only looking for the cheapest price – he is also looking for the best offer.

The higher quality and more professional your product images are, the more money your customer will be willing to pay. Of course, the product itself must also be of good quality.

Start with a lower price than what you are aiming for and increase the price, for example, by 1 € / week. This is how you can see the relationship between price and demand. Then you adjust the price so that you get the greatest profit from this relation.

Create visibility

It is extremely important for both Google and Amazon to always see the relevant results at the top. However, unlike Google, the least number of retailers have optimized their ranking on Amazon.

Amazon must also be signaled that its own listing is important in order to be displayed in the search results in front of similar providers.

There are various options for this, which should only be touched upon briefly here, as this would go beyond the scope of the article.

The visible SEO points were already addressed when it came to optimizing the listing.

In addition, you can place internal advertising on Amazon, work with external traffic or deal campaigns. However, an important aspect should take into account the ratings of your buyers. So make sure to get a large number of positive applications through good quality and service. This increasingly puts you and the offer in the Amazon algorithm in focus.

It is also important that you create visibility for your own keywords on Amazon.

What you should consider with Amazon FBA – The 10 Amazon FBA Basics at a glance

  1. Start with the product selection through research (the decisive factor is best seller rank to ensure desired sales figures)
  2. Order samples of your desired product from Aliexpress or Alibaba
  3. Order a larger quantity of the selected and possibly customized product
  4. Create an optimized listing on Amazon while waiting
  5. Start a promotional phase with give-aways and review groups as soon as your product arrives at Amazon
  6. Buyers actively ask for ratings
  7. Place pay per click ads for targeted traffic
  8. Build an email list for follow-up products and your future brand
  9. Add more products to your Amazon portfolio
  10. Open additional channels to Amazon, e.g. your own online shop

You see, it’s only up to you to get off to a successful start – do it and start today!

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