If this is the first time you’ve discovered Amazon FBA, don’t worry. We want to make sure you understand how it all works. This guide will cover the basics of How to Sell on Amazon FBA.
Amazon FBA literally means Amazon Fulfilled-By-Amazon. In the Amazon FBA program, Amazon does all the hard work for you.
Here’s how it works:
- First, you send Amazon your products and they store it in one or more of their million acre fulfillment centers. The fulfillment centers are like massive warehouses run by robots and hardworking Amazon employees.
- Then, your products are inventoried and sorted. They are taken good care of. And if on the off-chance something is damaged in one of Amazon’s warehouses, Amazon will actually reimburse you the full retail price for the damaged good!
- When a customer places an order on Amazon for your product, Amazon handles the transaction for you. The entire process is automated.
- Next, your product is picked from its place on the shelves, packed into a box, and shipped to the customer on your behalf.
- After your product arrives to the customer, Amazon follows up with the customer to make sure everything is okay with the order. And, if any need to be made, Amazon automatically takes care of that, too.
If Amazon does all the work, what do I do?
Now you’re probably thinking, “Okay, that all sounds great! But what do I actually do?”
As an Amazon FBA seller you will have to:
- Pick the products. Amazon handles all the back end work, but you need to decide what to actually sell. I’ll tell you about a few different methods of selling products on Amazon in a moment.
- Keep inventory in stock. Amazon will let you know when inventory is running low. But it’s your job to make sure that the things you sell stay stocked up.
- Promote and advertise. Amazon is a massive catalog of millions of products. Therefore, you’ll need to do a little work to make sure people find your products. But don’t worry–it’s pretty easy!
What does it cost to sell on Amazon FBA?
Selling on Amazon FBA is very reasonable to get started with. In fact, if you’re selling products that you already own (like unwanted items around the house), you can virtually do it for free!
Individual and professional seller accounts
There are two types of Amazon FBA seller accounts: individual and professional. Individual seller accounts are free, but have higher sales fees. And professional accounts have a monthly subscription fee of $39.95, but lower fees. We recommend you get a professional account if you plan on selling more than 40 items per month. But if you want to start slow with only a few items, then individual may be better for you.
Amazon fees
Like many online marketplaces, Amazon takes out fees for their services, usually after a sale has been made. Here’s the quick version of those fees:
- Amazon takes a 15% referral fee on all sales for most categories.
- If you use Amazon’s FBA service, they take out fees to cover the shipping and handling costs for your products. However, these tend to be less than what it would cost to ship it yourself.
- Some categories, like books and DVDs, have an additional flat fee.
- If you sell on an individual seller plan (no subscription fee), Amazon charges an additional $1.00 flat fee. Hence why we recommend going professional if you’re going to sell 40 or more products per month.
- Keeping your inventory at Amazon fulfillment centers too long can result in long term storage fees.
If this sounds like a lot, don’t worry! The fees overall are pretty low and actually end up costing you a lot less were you to do all the work yourself.
Inventory costs
Depending on the type products you choose to sell on Amazon, your inventory costs will vary. We recommend the private label method which does come with a moderate investment upfront, but you might choose to start with just a few things around the house to get a feel for how to sell on Amazon FBA. It’s totally up to you!
Which is better to sell on: Amazon or Ebay?
This is a question that’s as old as ecommerce itself. And ultimately, it depends on you and what you want out of your business. Some people swear by Ebay. While others, like myself, think Amazon is the best place to start an online business. I think the best way to sum up the difference between the two marketplaces is like this:
- Ebay is like the world’s biggest flea market. You set up your “stand”, offer your products, handle transactions, shipping, and everything else. It’s 100% your responsibility. Therefore, you may end up putting more work into it for less profits.
- Amazon FBA is like owning a shelf at a very large department store. Your biggest job is to make sure that your shelf stays stocked and that it’s visible. Unlike ebay, however, the department store handles the transactions, shipping, and all the tough work. In my experience that equals less work and more profits.
What to sell on Amazon FBA
Another thing that’s amazing about this business model is that there’s no one way how to sell on Amazon FBA. Here’s a few of the most popular methods:
- Arbitrage Find low-priced items in retail stores or other online marketplaces to resell on Amazon at a higher value.
- Wholesale Buy bulk discount branded goods to resell on Amazon at a higher value.
- Used Book Sales Purchase used books at book sales, yard sales, or other places to resell on Amazon at a higher value.
- Private Label* Research and manufacture your own branded products to sell on Amazon FBA where you control every aspect of the product.
*This is our preferred method how to sell on Amazon FBA.
A private label product is manufactured by a contract or third-party manufacturer and sold under a retailer’s brand name. In other words, you take a product that already exists and manufacture it with your own brand and logo.
Most successful Amazon FBA sellers are private label sellers.
Private label offers a ton of advantages over the other methods. Here’s a few:
- Less work sourcing. You only have to source a single product in large quantities versus many small products like you would with arbitrage or used book sales.
- Price control. The Amazon listing for your product is under your control. Therefore, you don’t have to worry about underpricing your competition like you would with wholesale or arbitrage.
- Higher profits. In my experience, private label is the most profitable and predictable method of how to sell on Amazon FBA.
Of course, everyone’s success varies with private label. However, if you follow the basic steps myself and Lenny outline to creating a private label product, this is roughly what you can expect to earn:
Ever hear of the 4-hour Work Week by Tim Ferriss? It’s the idea that you can design the lifestyle that you want so long as you can put your income on autopilot.
And that’s pretty much what you’re learning when you learn how to sell on Amazon FBA. Once your product is created and live on Amazon, you don’t have to do anything else but check on your advertising and make sure your inventory is stocked.
Just 4-hours a week and you can earn an extra $3,000 per month!
It can be done in just five easy steps:
- Research high-demand/low-competition products.
- Source those products through Alibaba, a website that puts you in touch with 1000’s of manufacturers who are eager to do business with you.
- Create a brand new listing on Amazon. It’s so simple, you can do it in less than 40 minutes.
- Ship the products to an Amazon warehouse so it can be part of the Amazon FBA program and you won’t have to do all the back-breaking work.
- Launch and advertise your product using Amazon’s own advertising system which is as simple as clicking a few buttons.
Then, all you have to do after that is sit back and watch the profits roll in!
Get started now with Amazon FBA. Here’s a link:
Amazon FBA
I’m just starting out with Amazon FBA, thanks.
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