Amazon. It’s the largest store in the world. A behemoth by all rights. It has pervaded the very fabric of our society, piercing through the fiber of commerce in America and far beyond. In fact, according to the Philadelphia Inquirer, for every dollar that’s spent online in the US today, 50 cents of that runs through Amazon. Yes, it’s that big.
But while many might know how to easily buy on Amazon, most people ask the following question: How do you actually make money online selling things on Amazon through its FBA (Fulfilled by Amazon) program? How do you tap into the potent power of this innocuous platform that’s become a way of life for hundreds of millions of its customers?
Everyone knows how easy it is to buy on Amazon. It’s simple. Straightforward. Direct. Oftentimes, it’s through a single click. One click can get you the item you need almost instantaneously. But while many might know how to easily buy on Amazon, most people ask the following question: How do you make money online selling things through Amazon’s FBA program?
Now, before I answer that question, you likely have plenty of others as well. The good news is that a large number of the answers to the most common questions about selling on Amazon FBA are simple and straightforward.
- How much money do you need to get started selling on Amazon FBA?
- Can you sell products on Amazon even if you don’t live in the US?
- Where do you source products from to sell on Amazon’s platform?
- How long does it take to make money selling through Amazon?
- What’s the process to sell private label products on Amazon FBA?
- Are products you sell on Amazon immediately available as Prime?
- How much money can you make selling on Amazon’s platform?
Okay. Okay. I know there are more questions. But these are just some of the most popular questions that I receive from you guys literally on a weekly basis. I get it. It’s enticing to sell on Amazon and have access to nearly limitless demand for all types of products. But like anything else, it’s probably overwhelming. Where do you start? How do you begin? Is it easy to make money on Amazon or will it take you ages?
Look. I’ve been doing this for some time now, and I wish I had a guide like this to help me navigate the stormy seas of Amazon’s Seller Central. I wish I knew the best practices and the potential pitfalls when I got started. But the good news is that you now get access to all the information that I’ve used to build a massive business selling private label products on Amazon FBA.
What Does Selling On Amazon FBA Actually Mean?
We all know that Amazon is the world’s largest ecommerce giant. It features tens of millions of products in every category imaginable. But did you know that Amazon doesn’t actually sell all of the products it offers itself? Yes. In fact, it encourages other retailers to sell those products on its platform through its Amazon FBA program.
So what does it mean to sell on Amazon FBA? It simply means that the products are Fulfilled by Amazon. There’s a distinction between Amazon FBA and FBM. Amazon FBM means that the products are still sold on the Amazon platform, but those orders are fulfilled by the merchant. That’s when the merchant receives the order and ships it out. Alternatively, FBA is when Amazon ships those products out from their warehouses.
However, with Amazon FBA, you can actually make money selling products and allowing Amazon to actually fulfill them and ship them out from their own warehouses around the country. The best part is that it’s not too complicated to do, but it will require time, effort and money to secure the inventory, create the brand and get everything off the ground.
How much money do you need to get started selling on Amazon FBA?
Okay. First things first. The most common question that most people ask me is how much money do you actually need to get started on Amazon FBA?First of all, the answer to that question is highly subjective. But don’t think for a second that you’re going to pull this off with just a few hundred dollars. You need some money, but not a small fortune.
So how much do you need exactly? The amount can vary. But you should plan for at least $3000 to $5000 to get things off the ground. Yes. I know. It’s a fair amount of money. In fact, it could end up costing you more than that. Why so much? At the end of the day, keep in mind that you’re shelling out But once you realize all the related costs that are involved, you’ll understand that selling on Amazon FBA does require a bit of upfront capital.
But here’s the thing about that. Yes. You need some upfront capital. The truth is that there are very few businesses in the world where you would need absolutely no upfront capital. In fact, in many businesses out there, you need to invest hundreds of thousands of dollars and wait 2 to 5 years before you can even recoup your initial investment. Franchises, for example, can cost upwards of $500,000 – $2.5m dollars and require serious capital expenditure beyond that.
Can you sell products on Amazon even if you don’t live in the US?
Yes. You can. However, there are some limitations depending on what country you’re from in terms of seller registration. You’ll need to go through an extensive process to sell on Amazon that includes a verification of your identity. So which countries are accepted by Amazon for seller registration? You can view the list of approved countries that appear on Amazon’s website by clicking here.
You will need a variety of documentation in order to setup your seller’s account so that Amazon can verify that you’re who you say you are. Not only do you have to be a resident of one of the approved countries, you’ll also need to have an internationally chargeable credit card included in the following list:
- American Express card
- Diner’s Club credit card
- Discover card
- JCB card
- Visa card
However, you should understand that living in another country won’t hold you back from selling on Amazon. However, if you’re trying to sell on Amazon US, you will need to ensure that you have a US based corporation and tax payer ID (also known as an EIN) setup. Where do you source products from to sell on Amazon’s platform?
Where do you source products from to sell on Amazon’s platform?
Let me explain. Tony Robbins says that success leaves clues. Meaning, if you look at the most successful people in the world, you can often reverse engineer how they attained success. By tracing their steps, you can come up with a proverbial formula for what works and what doesn’t. This doesn’t mean you copy what they’ve done. You simply model.
Okay. To understand how this works, you have to understand what private labeling means. At its essence, Amazon is a platform to sell just about anything. But, creating a product is difficult. It takes time. Especially if you’re trying to create it from scratch. The one thing you must learn to do is to model the success of others.
So, how do you model success on a platform like Amazon? Simple. You find products that are in high demand, and you target those. Now, everyone and their mother is going to tell you how, specifically, you can do this by using the latest and greatest tool. But no matter what tool you use, keep in mind that they’re just data aggregators and not a direct pipeline into Amazon.
Conducting Researching On Amazon
So, to truly make money selling on Amazon FBA, you need to do some research. The best way to do that is to use Amazon’s own results. Simply put, you scour the categories to find the best sellers and figure out how you can create a better offer. Mind you, I said better offer. I didn’t say you should undercut your competitors by selling an identical product for less.
If you try to undercut your competitors by copying their products and selling it for less, you’re not modeling. You’re copying. And that will just result in two things. A race to the bottom, price-wise. And potentially legal problems. You don’t want that. What you want is to figure out how you can give more value to the consumer.
Using Jungle Scout To Determine Demand
Jungle Scout is one of the more popular tools you can use to determine demand on Amazon. Simply enter a keyword to see just how many people are searching for it. Again, keep in mind that this data is not bulletproof. Companies like Jungle Scout have to build their datasets behind Amazon and it is not 100% accurate. But it does paint a good picture of demand.
Once you determine whether a product has high enough demand, you can move to stage 2. In this stage, you have to analyze the competitive landscape. That involves checking out who’s selling those products and just how popular they are. When I say popular, I’m referring to two things:
- Total number of product reviews – Reviews are important because you want to determine just how much competition you’ll be facing. Now, some people will recommend that you don’t enter a market when there are competitors with more than 100 reviews, but I vehemently disagree with this. You should still enter a sub-market as long as you’re not competing against multiple products with 1,000 reviews or more.
- Amazon best seller ranking – Another thing you need to understand how to analyze is the Amazon best seller rank. This appears on the actual product page. The best seller rank will help you determine just how much money a particular product is making. Keep in mind that this is not an exact science, but it does give you a fair ballpark range to determine how much money you could potentially make selling your products through Amazon FBA.
Analyzing Product Popularity
While there are plenty of tools that will help you determine the Amazon Best Sellers Rank conversion to actual sales numbers, Jungle Scout has a nifty little tool located here. All you have to do is plug in the Amazon Best Seller Rank, select “United States” if you’re selling in the U.S., and then pick the category. Afterwards, Jungle Scout will spit out the total number of estimated sales per month.
Now, please keep in mind that this is not bulletproof information. The numbers are simply estimates from Jungle Scout. But if this holds true, think about this for a moment. That collagen product is selling 23,670 units per month. Yes, per month! That means, that single product is making roughly 23,670 * $27.95 = $661,576.50.
Even if it’s off by a bit, that’s an astronomical amount of money. If you multiply that out for the entire year you get: $661,576.50 * 12 = $7,938,918. That’s nearly $8 million from a single product. Yes, from a single product. Of course, it would be hard to compete if you go head to head on pricing here. However, if you create an irresistible offer, you stand to make a significant amount of money.
How long does it take to make money selling through Amazon?
The question on how long it takes to make money selling through Amazon is highly subjective and based on a few criteria. If you select a high demand sub-market and you create the right product with the right branding, that’s how you dominate this game. And you should estimate anywhere from 3 to 6 months for you to start making any real money.
Prior to that period, you’ll mostly be investing in what’s called pay-per click (PPC) advertising so that you can get your product(s) off the ground, and into branding, manufacturing, and so on. Keep in mind that this is literally a real business, except for the fact that there is very little traditional direct response marketing required when you sell directly on Amazon.
What’s the process to sell private label products on Amazon FBA?
There’s a rather long process involved here with many steps along the way. Things like setting up your LLC, getting your EIN, setting up a bank account, creating an Amazon FBA seller’s account, and more. Of course, that’s only the beginning. You have to do product research, identify a profitable sub-market and niche, then actually go about sourcing and selling those products on Amazon.
Are products you sell on Amazon immediately available as Prime?
Yes. According to Amazon, “Qualified FBA listings are displayed with the Prime logo, so customers know that Amazon handles packing, delivery, customer service, and returns.” As long as you’re in control of the buy box, you won’t be competing with others who are selling identical products, making it less qualified as an Amazon Prime item.
How much money can you make selling on Amazon’s platform?
While I did show you one example, that doesn’t mean you’re going to make any money at all. Like any other business, this takes real serious commitment for success. You can’t just expect that you’re going to be a millionaire overnight. Expect to put in real hard work in order to taste sweet success.
So, to put it bluntly, you could end up making nothing on Amazon. Or, worse. You could end up losing money if you give up halfway through the process. But, on the other end of the spectrum, you could make thousands, tens of thousands or hundreds of thousands of dollars per month or more if you play your proverbial cards right.