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.
Amazon FBA: What is Amazon FBA and How Does Amazon FBA Work
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.
What is private label?
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.
Why sell private label versus the other methods?
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.
How much money can I make selling private label?
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:
How much work does the private label method take?
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!
How do I create my first private label product?
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:
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What is Amazon FBA
It’s no secret: At Amazon, we obsess over customers. And our customers want a trusted destination where they can purchase a wide variety of goods—which is what makes sellers like you so important. We’re always looking for ways to add value for our customers and be Earth’s most customer-centric company. As an Amazon seller, you take part in offering those customers better selection, better prices, and a top-notch customer experience.
What is Amazon FBA
When you start selling on Amazon, you become part of a retail destination that’s home to sellers of all kinds, from Fortune 500 organizations to artisan vendors who make handcrafted goods. They all sell here for a reason: to reach the hundreds of millions of customers who visit Amazon to shop.
What is Amazon FBA
With two selling plans (they’re called Individual and Professional, but you can think of them as standard and premium), Amazon offers you the flexibility to sell one item or sell thousands. Before you begin registration, decide which plan is a better fit for your business.
What is Amazon FBA
The Individual plan costs $0.99 per sale, while sellers using the Professional plan pay $39.99 per month, no matter how many items they sell. If you sell more than 40 items a month, the Professional option makes a lot of sense. Whichever plan you select, don’t worry about making the wrong choice—you can change plans at any time.
How Does Amazon FBA Work
In order to complete your registration, make sure you have access to your bank account number and bank routing number, a chargeable credit card, government issued national ID, tax information, and phone number.
There are a few different types of selling fees you might pay, depending on your selling plan and the types of products you sell.
FBA fees
For products that Amazon fulfills for you (known as Fulfillment by Amazon, or FBA), there are fees for order fulfillment, storage, and optional services. (More information can be found on the FBA pricing page.)
How Does Amazon FBA Work
Once you register as an Amazon seller, you’ll have access to your Seller Central account. Think of Seller Central as your go-to resource for selling on Amazon. It’s a portal to your Amazon business and a one-stop shop for managing your selling account, adding product information, making inventory updates, managing payments, and finding helpful content to help you navigate your Amazon business. It’s also where you list all your products.
Below are a just few of the things you can do from Seller Central.
1. Keep track of your inventory and update your listings from the Inventory tab
2. Download custom business reports and bookmark templates you use often
3. Use customer metrics tools to monitor your seller performance
4. Contact Selling Partner Support and open help tickets using the Case Log
5. Keep track of your daily sales for all the products you sell on Amazon
The Amazon Seller app
Did you know you can keep track of your Amazon business even while you’re on the go? The Amazon Seller app lets you analyze your sales, fulfill orders, find products to sell, manage offers and inventory, respond to customer questions, capture and edit professional-quality product photos, and create listings—right from your mobile device. Never be more than a swipe away from your Amazon business.
How to list products
Listing your first product
To sell a product on Amazon, you must first create a product listing. Either match an existing listing (if somebody else is already selling the same product on Amazon), or create a new listing (if you are the first or only seller).
How Does Amazon FBA Work
The specific way sellers upload and list their products varies depending on their selling plan. To put it simply: Sellers using a Professional seller account have the option of listing their products in large batches using bulk uploading or inventory management with third-party systems, while Individual sellers list products one at a time.
The product detail page
A product detail page is where customers view a product sold on Amazon. If you’ve shopped on Amazon, you’ll probably recognize the product detail page. It’s where customers can find all the relevant information about a particular item.
When multiple sellers offer the same product, Amazon combines data from all the offers into one product detail page (so we can present customers with the best experience). You can propose product information on a product detail page, along with other sellers and manufacturers, and request detail page reviews if you think the information is not correct.
As you’re building your product detail pages, try to think about what will best help customers find your products, discover answers to their questions, and make a purchasing decision. Aim for the ultimate customer experience by making your listings concise, accurate, and easy to understand.
1. Images of the product (make sure they’re at least 500 x 500, and boost that size to 1,000 x 1,000 to increase the quality of your listings).
2. The title of the product (use 50 characters, maximum, and capitalize the first letter of every word).
3. Any variations of your product you have available, which may include things like different colors, scents, or sizes.
4. The description, which can be optimized for search engines using keywords to improve the reach of your product listings.
5. The Featured Offer, which is the section of the product page where customers can add items to their card or “Buy Now.” If you’re one of multiple sellers advertising the same product, research strategies for “winning” the Featured Offer to improve your overall sales.
6. The bullet point information, which should be short, descriptive sentences highlighting the products key features and differentiating characteristics.
Amazon Brand Registry
If you sell your products under a registered trademark, you may be eligible to enroll in Amazon Brand Registry at no extra charge. Brand Registry gives you control over product detail pages that use your brand name, and lets you add more rich media (like videos and enhanced text information) to your detail pages.
How to deliver products
Selecting the right fulfillment option
Amazon sellers have two options for getting shoppers their stuff: You can do it yourself, maintaining your own inventory and shipping products to customers (merchant-fulfillment), or have Amazon take responsibility for packaging, labeling, and shipping products through Fulfillment by Amazon (FBA). Each method has its own set of benefits—you just have to decide which one is right for your business.
If you’re fulfilling your own orders
Merchant-fulfilled just means you store and ship products directly to customers yourself. Amazon charges shipping rates based on the product category and shipping service selected by the customer, then passes the amount on to you in the form of a shipping credit.
Set shipping rates apply to all products sold with an Individual plan, so it’s important to determine if you can still price items profitably. Amazon’s Buy Shipping tool can help you get a great deal on shipping labels with Amazon’s trusted network of shipping partners, ship and confirm your orders, and track your shipments.
The benefits of Fulfillment by Amazon
Around the world, Amazon has more than 175 fulfillment centers which contain more than 150 million square feet of storage space. With FBA, you get to store your stuff on those shelves. You also get Amazon’s world-class customer service and returns, along with other advantages (like automatic Prime eligibility and Free Super Saver Shipping) that help you scale your business—fast.
Fees for using Fulfillment by Amazon (FBA)
There are two types of FBA fees: fulfillment fees (which are charged per unit sold and include picking and packing your orders, shipping and handling, customer service, and product returns), and inventory storage fees (which are charged monthly, and are based on the volume of inventory being held in an Amazon fulfillment center).
1. Ship your inventory to Amazon. It will be scanned and made available for sale.
2. With each order, Amazon packages and ships the product directly to the customer.
3. Amazon collects payment from the customer and pays you available funds every two weeks.
4. Amazon’s customer service team handles questions, returns, and refunds.
Performance metrics (and why they matter)
Amazon sellers operate at a high standard so we can provide a seamless, delightful shopping experience. We call it being customer-obsessed, and as an Amazon seller it means keeping an eye on these key metrics:
- Order defect rate (a measure of a seller’s customer service standards): < 1%
- Pre-fulfillment cancel rate (initiated by the seller before shipment): < 2.5%
- Late shipment rate (orders that ship after the expected date): < 4%
You can keep tabs on your performance and make sure you’re meeting your targets in Seller Central.
Customer reviews
Customer product reviews are an integral part of the shopping experience on Amazon, and they benefit both customers and sellers. Make sure you’re familiar with the right way and wrong way to get more product reviews and avoid policy violations.
Opportunities for business growth
This is only the beginning
The moment you’re selling on Amazon is the moment you can start growing your Amazon business. Once you’ve launched your business, Amazon has tools in place to help you take your business to the next level (or the next couple of levels).
Advertising
Amazon’s advertising solutions create new ways for you to reach and engage shoppers, regardless of whether they’re just starting to compare products, or ready to make a purchase. Ads show up right where customers will see them (like the first page of search results or product detail pages).
Amazon offers three advertising solutions, and all of them are accessible through Seller Central.
1. Sponsored Products
Sponsored Products are ads for individual product listings on Amazon, so they help drive product visibility (and product sales). They appear on search results pages and product detail pages.
2. Sponsored Brands
Sponsored Brands showcase your brand and product portfolio. They’re search-result ads that feature your brand logo, a custom headline, and up to three of your products.
3. Amazon Stores
Stores are custom multipage shopping destinations for individual brands that let you share your brand story and product offerings. (And you don’t need any website experience to use them.)
Promotions and coupons
Customers want to save, and promotions are an incentive to make a purchase now. There are three types of promotions: money off, free shipping, and buy one get one free. You can also offer percentage or money-off discounts with digital coupons.
FBA Export
At no extra charge, expand your FBA business to more than 100 countries—minus the complexities of international selling. FBA Export allows international customers to purchase export-eligible ASINs from your selling marketplace.
Global expansion
Selling globally is a huge milestone for any business. It means hundreds of millions of new customers and the potential for a big boost in sales. Global expansion has a lot of moving parts, but with Amazon Global Selling, you get to use Amazon’s global infrastructure to get your products in front of a worldwide audience.
When it’s time to take your business to the next level, use Amazon Global Selling to list and sell your products on any of our online stores in North America, Europe, and Asia.
What makes a great seller?
A checklist for growth
Opportunities for growth are all around you—but here are a few things to try in your first 90 days as an Amazon seller.
Keep an eye on your account health in Seller Central
Use Fulfillment by Amazon or Seller Fulfilled Prime
Advertise your listings or offer deals and coupons
Enroll in Brand Registry and create enhanced brand content
Expand your selection by listing more products
Use the Automate Pricing Tool in Seller Central
Your first 90 days
The first three months after you launch your Amazon business are an important time for establishing practices that will boost your performance from there on out.
Start selling today
Put your products in front of millions of customers that search Amazon.com every day.
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 my preferred method how to sell on Amazon FBA.
What is private label?
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.
Why sell private label versus the other methods?
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.
How much money can I make selling private label?
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:
How much work does the private label method take?
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!
How do I create my first private label product?
It can be done in just five easy steps:
- Research high-demand/low-competition products using our easy-to-use app called Scout.
- 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!
I know this is a lot of information to digest, but now it’s time to demonstrate how easy it is to find a private label product for you to sell.
This is an important part of selling on Amazon called “product research.” If that sounds like a lot of work, don’t worry. Believe it or not, Amazon actually offers up data on how well each of their products sell.
In fact, one of the key metrics that we use to determine a product’s demand is found right on the Amazon product pages: the Best-Seller Ranking (BSR).
What is the Amazon Best-Seller Ranking?
Each and every product on Amazon gets a BSR. The lower the BSR, the more sales the product makes. We can take the BSR and translate it into average monthly sales.
For example, if we want to see how well the same product above does in sales, we can take the BSR and put it into our FREE sales estimator tool. Check out what we get:
Of course, it only helps you learn how well one product is doing at a time. We want to see how multiple products in a single search (also called a ‘niche’) are doing and what their average is.
You could do all of that by hand on a spreadsheet, but it could take you hours. That’s what I used to do when I started, and I don’t recommend it!
Fortunately, I created a better way with Extension.
Extension
With the Chrome extension, you can pull up an Amazon search page and simply click the “JS” Chrome button to discover how profitable that product niche is. Immediately, the extension creates a spreadsheet that estimates the sales for each and every product on that page in 10-seconds or less.
Take a look at the results for yoga mats:
We can see that yoga mats on the first page of sales results are selling an average of XXX units per month. Plus, there’s other important information Extension provides:
- Average Best-Seller Ranking. The lower this is overall, the better it is for your future sales.
- Average Price. This shouldn’t be too high or too low. In fact, I like to look for products priced between $18-$60.
- Average number of reviews. This lets you know how competitive a product is. I aim for products with less than 100 average reviews.
- Opportunity score (Pro version only). This awards each product niche a rating from 0-10. 0 being the worst, and 10 being the absolute best.
Armed with this powerful tool, you can quickly search through multiple product categories in just a few minutes.
Here’s what else Extension does:
- Seller data. See who is selling the product: whether it’s another FBA seller, a merchant seller, or even Amazon itself.
- Historical rank and sales. Want to know how well the product has done over time? Clicking on the BSR and average sales for each product will tell you.
- Google trends. Is your product a seasonal product or is it popular year around? You can find that out, too!
- International compatibility. Extension works in all Amazon marketplaces worldwide (Australia coming soon).
Remember when I mentioned that the average private label product can earn as much as $3,000 per month in profits? That’s $36,000 per year. And all it takes is a few minutes of research to find your dream product.
Now that you know a little bit about selling on Amazon and we’ve shown you how to find a private label product using Jungle Scout, it’s time to consider the other elements of the Amazon FBA private label model.
How to source a product on Alibaba
Once you’ve discovered your product through research, you’ll need to source it through a manufacturer. There’s plenty of options out there, but your best bet is with Alibaba. We include, in detail, how to source products through Alibaba in this free guide: The Sourcing Ebook. You can also check out these two sessions from our Million Dollar Case Study series: Outreach to Suppliers, and Evaluating Samples.
How to build a killer Amazon product listing that sells
Then, after you’ve made a deal and your products are being created, it’s time to start building your Amazon product listing. This is an incredibly important part of how to sell on Amazon FBA, so we want to make sure you know all the best tricks, tips, and strategies to build a listing that sells. Make sure you read this guide, which is part of our infamous Million Dollar Case Study: How to Create an Optimized Amazon Listing.
How to ship your products from the manufacturer to Amazon
Next, you’ll need to ship your product from the manufacturer to Amazon. This might seem difficult, but we’ve actually got a few resources that can make this as easy as ordering a pizza! Check out this guide on how to ship your products to Amazon. Million Dollar Case Study: How to Import from China.
How to launch and promote your product
Finally, you will need to launch and promote your product once it hits Amazon. Again, this might seem difficult, but it’s crazy easy. In fact, once you knock this one out, there’s very little you’ll have to do beyond tracking ads and making sure your stuff stays in stock. In other words: congratulations! You’re at the finish line. Here’s another guide from the Million Dollar Case Study that shows you some tips and tricks to launching and promoting your product: Amazon Product Launch Strategies.
I’m just starting out with Amazon FBA, thanks.
This is a very detailed and informative article which is ideal for beginners who want to learn what amazon fba is all about. I will share this post with members in my amazon fba groups on Facebook here https://www.facebook.com/howtostartanamazonstore/.