10 Things to Consider When Getting Started with Amazon FBA

 

 

Starting an Amazon business can be tough, especially when you’re unfamiliar with all the specific terminology involved. There are strategic and logistic hurdles to be handled along with compliance with Amazon’s policy. But where to start? It is important to get the basics down first and determine if and how you should sell on Amazon.

 

 woman working on laptop

 

What is an Amazon Third-Party Seller and why is it useful?

 


An Amazon third-party seller is someone who has chosen to list their inventory on Amazon Marketplace. These sellers can range from individuals selling a few products a month to large companies generating hundreds of thousands of dollars in revenue in a week.

 

In both cases, these sellers pay a fee to have their goods on the site. Listing on Amazon gives you access to 100 million Amazon Prime Members who are looking for good deals, fast delivery, and strong customer service. This article will give you a few tips on how to get started on your Amazon journey.

 

Enter a Product Category that Interests YOU

 


According to ScrapeHero, there are nearly 600 million items listed on Amazon. While this means there is plenty of competition, it also means there is a ton of opportunity. In each category, there will be chances for sales and growth. So why not find one that interests you? Pick a category that sparks joy when talking about it with your suppliers and other sellers. Some profitable categories to consider are Beauty, Cell Phones, Grocery and Gourmet Food, Health and Household, Home Improvement, Home and Kitchen, Kitchen and Dining, Pet Supplies, Sports and Outdoors, and Toys and Games.

 

Branding and Shipping

First things first: are you going to sell branded goods or will you create your own brand? Each choice has its merits. Existing brands may already have a following which means you will attract returning customers looking to purchase goods from that specific brand. The sales have the potential to be high, but you may also be in competition with a high number of sellers providing the same brand of the goods.

 

Private labeling, on the other hand, will have far less competition on a listing, but your sales rank will not be as strong in the beginning. With a private label, extra investment in marketing tools and activities might be needed. This means that it will take more time until you see a return on your investment since you have to spend more time (and money) building a reputation for your brand.

 

Now it’s time to tackle the big stuff: shipping. Many people choose Fulfillment by Amazon as their method of dispersing products. Fulfillment by Amazon (FBA) means that the products being sold will be stored in Amazon fulfillment centers. Amazon will provide all the necessary packing and shipping services for these products.

 

If you do not have your own warehouse, becoming an FBA seller is likely the better option. Even though the fees are a bit higher, FBA can help sellers scale up their business and reach more customers.

 

 

man doing project

 

 

The Next Steps

So you have your product category, brand identity, and shipping and storage methods set. Now what?

 

Check out some tips that will help you move forward with your selling journey:

 

1. Find Your Opportunities

You want to find a product with a balance of higher demand and lower competition. A place to start your product search is Amazon Best Seller Rank ( BSR). A good rule of thumb is a BSR below 5000 is considered good.

 

Also, take a look at the number of reviews: products with more than 500 reviews are very competitive. If you are able to find a product below 5000 BSR with just a few reviews, you might have a winner on your hands, as it is popular but not competitive.

 

2. Consider a Repricing Solution

With the fierce competition to win the Buy Box, a repricing solution is an essential part of an Amazon sellers’ eCommerce strategy. This will help you stay competitive and boost your margins and profits. It’s important to find a repricing solution that suits your needs. You can learn more about how to choose a “repricer” here.

 

3. Diversify Your Listings

Take into account buyer behavior; a year-round selection of goods should be offered. If your store sells outdoor items, make sure you have other items to sell during the winter time when your beach mats are not “in season.”


Once you’ve decided on your products, it’s time to calculate the potential profit for each one. To get an idea of the profit margin, subtract the cost from the product price on Amazon. Aim for a margin of at least 25%. To get a more accurate number, use Amazon’s Revenue Calculator for an estimate of profit after Amazon fees, inventory, and shipping (necessary costs).

calculator

 

4. Stay on Top of Your Bookkeeping

When you open your Amazon store, take into account expected and unexpected costs. These costs include everything from your Seller Central fee, the postage for sending in your items to the fulfillment centers, and the Amazon specific label maker you didn't know you needed. You can avoid unexpected Amazon Prep Fees by preparing ahead.


Final Thoughts

It is easy to get caught up just talking about selling on Amazon. A lot of people get stuck and delay developing their strategy. Remember that selling on Amazon is a journey and there is always room to grow, change, and adapt to your company’s needs. Join groups on social media, such as the Amazon Beginner Master group on Facebook or the FBA Amazon Seller, Amazon FBA Competitive Edge group on LinkedIn for a community to get insight and support from.


Still feeling stuck? There are plenty of solutions for selling on Amazon and companies who will provide you support to get there!

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