In 2020, US Consumers spent a mind-bending $861 Billion online. Most people know that e-commerce is exploding in popularity. You may not know that side hustlers and entrepreneurs can take advantage of this massive trend and make money by selling products online through e-commerce. In this post, we’ll cover exactly how to make money with Amazon FBA.
The only thing more impressive than the total amount of money spent online in 2021 is the fact that more than ⅓ of that figure came from a single e-commerce platform.
Is that a drumroll I hear?
You guessed it. Amazon.com did $386B in online retail sales in 2020.
Again, Amazon’s popularity is probably not a shock to you. But what you may not know is that Amazon makes up over two million 3rd-party sellers.
Continue reading this article created with the assistance of Charles Camisasca that will help you understand how to make money with Amazon FBA. About Charles: Charles Camisasca helps aspiring entrepreneurs and small business owners to start and grow their e-commerce stores. He is passionate that anyone with a wifi connection and a willingness to work hard can start a successful online business. He’s the founder of The E-Commerce Boardroom and the creator of the 4-Step Process for launching a successful product on Amazon.
That’s right, businesses large and small can and do list their products on Amazon. And countless solopreneurs are doing too, with smashing success.
According to Jungle Scout, 43% of sellers have reached $100k or more in sales on the Amazon platform. By our count, that’s over 860,000 sellers.
The goal of this post is simple: I want to teach you how to become one of those third-party sellers that is killing it on the Amazon platform.
Let’s learn exactly how to make money with Amazon FBA.
What is Amazon FBA?
Let’s start with a simple definition.
Fulfillment by Amazon (or FBA) is an e-commerce business model allowing sellers to send their products to an Amazon Warehouse and list the items for sale on the Amazon website. Amazon stores the seller’s inventory, delivers the products to customers via Prime 2-day (or next day) shipping and handles all customer service.
Hopefully, the immediate benefits of this are clear. For one thing, you get to list your product with the most dominant e-retailer on the planet. The typical e-commerce problem of “traffic” practically vanishes with the FBA model. People are naturally picking up their phones or laptops and shopping on Amazon all the time. You don’t have to convince anyone to do it.
Of course, you still bear some responsibility. Succeeding with FBA is not automatic.
But let’s stop beating around the bush and talk about exactly how to make money with Amazon FBA.
The 4 Steps to Making Money with Amazon FBA
Winning on Amazon is all about the product.
The vast majority of sales on Amazon are reactive. What I mean by that is this. People open their Amazon App because they are in the market to buy. They are looking for a specific product or hoping to solve a particular problem that they are experiencing.
You have to be a problem solver with a great product to succeed on Amazon.
With this product-centric perspective in mind, let’s look at the 4 Steps to launching a profitable product.
Master these, and you will know precisely how to make money with Amazon FBA.
- Find it.
- Make it.
- Ship it.
- Sell it.
Replace “it” with “the product” if you prefer. Find the product. Make the product. Ship the product. Sell the product.
The fun stuff comes with all of the sub-processes you need to learn to accomplish all 4 steps.
Let’s dive in.
Step 1: Find the product
Yep, the very first step is to come up with a fantastic product idea.
My recommendation is to start by making a list of the product markets about which you already have a good understanding. Look no further than your very own hobbies, interests, and skills. Although many don’t think about things in this way, each one is a product market!
I recommend you start here because you’ll have a good understanding of the pain points, or problems that need solving, within each market.
But don’t stop there.
Now, you need to back up your ideas with real, cold, hard market data.
There are many great tools online for Amazon product research. Jungle Scout, Helium10, and Viral Launch are a few of my favorites.
These software tools enable you to view data from real Amazon sellers and products. You get to analyze the total number of orders, real sales dollars (revenue), and customer review counts and ratings of your competitors!
It almost doesn’t seem fair.
But it’s part of the game of how to make money with Amazon FBA. Use these software tools to look for profitable markets with low customer satisfaction (review) ratings. Estimate your earning potential before you even spend a dime.
In the next step, we’ll talk about taking these ideas and turning them into a reality. Let’s learn how to improve upon the products currently being offered in your niche so that you can capture market share and drive sales.
Step 2: Make the product
Once you discover a product in high demand that has low customer satisfaction, it’s time to source your product. To find a supplier, I recommend using Alibaba.
Alibaba is the world’s largest global B2B marketplace. That makes it extremely easy to get in touch with manufacturers worldwide (note: Alibaba is a Chinese company, so most of the suppliers listed there are based in China).
On the Alibaba platform, you can request a quote, negotiate, and acquire free samples of the products you wish to sell.
I recommend you start by typing in your product keyword and reaching out to the top 10 suppliers of your product.
You want to get a sense of your overall cost, the product quality, and the timeframe required to get the product manufactured and delivered to the Amazon FBA Warehouse.
Additionally, an essential step at this stage of the process is to differentiate your product. How will you stand out from your competition in the marketplace?
Common differentiation ideas include:
- New product features that solve a pain point
- New colors or sizes
- Bunding products in unique ways
- Adding your brand logo to the product or packaging (known as private labeling)
Take a look at the negative (1-Star) product reviews of competing products. What are customers complaining about? Can you solve their problem with a new product feature?
Work with your manufacturer to tweak and differentiate their product. That’s a surefire way to capture significant market share.
Once you’ve done that – and you’re satisfied with the price point, quality, and timeframe for delivery, you are ready to place your order and move on to the next step!
Related Reading: How to get some freebies from Amazon
Step 3: Ship the product
I’m assuming for this step that you’ll be importing the product from overseas, as is usually the case for US based Amazon FBA entrepreneurs.
After you’ve placed your order with the manufacturer, the next step is to get your products to an Amazon Warehouse. To do so, you will need to ship them via Ocean Freight (by boat) or Air Freight (by plane).
You can’t do this yourself.
Instead, you’ll need to contract with a type of company called a Freight Forwarder. They will handle all of your required product preparation, customs brokerage, and delivery to the Amazon FBA Warehouse.
If this part sounds overwhelming… don’t sweat it.
It’s actually easier than it sounds. To get started, simply head over to a Freight Forwarding marketplace like FreighOS. They’ll walk you through every step of the process and ensure that everything goes smoothly.
Once your products arrive at the Amazon FBA Warehouse, your responsibilities (as they pertain to logistics, anyway) are done!
The product will automatically become “live” and available for purchase as soon as Amazon counts your inventory. As mentioned, Amazon then handles final delivery to the customer via Amazon Prime 2 day shipping, and takes on all customer service.
But if you really want to learn how to make money with Amazon FBA, don’t sleep on the 4th step…
Step 4: Sell the product
Here we go.
Your product has arrived at the warehouse. It’s been counted by Amazon’s team. You’re ready to start making sales.
But nothing is happening.
Well, Amazon is…among other things…a search engine.
Think about a brand new website that gets created. Does it suddenly show up at the top of Google search results? Of course not. Because Google has to index the site and determine whether or not people will actually want to go there. In fact, there is an entire sub-industry of digital marketing dedicated to “Search Engine Optimization.”
Just like a brand new website, your new Amazon product listing is not likely to get any visitors right away. But with Amazon, all you need to do is convince the algorithm that your product is awesome.
There’s a lot that goes into this endeavor.
However, here are the basics of Amazon marketing:
- Optimize your product listing. Ensure your listing has relevant keywords in the title, description, and bullets. Post top-quality product photos, including lifestyle photos.
- Boost sales with Amazon PPC. A shortcut to getting traffic to your product page is to use Amazon’s native Pay Per Click advertising tool. It is an absolute necessity in getting your first sales.
- Earn positive product reviews. These days, this is primarily done by ensuring that your product is terrific and provides each customer with a positive experience.
- Consider off-site promotions. You can create a website for your amazon brand, run Facebook or Google Ads to your product listing, pay influencers to promote your product, or get a prominent blogger to review your product.
Used in combination, the above tactics are a great way to boost your product’s ranking and organically start appearing on the top page of search results for your keyword.
Concrete Next Steps
I hope that this post provided you with an excellent overview of the Amazon FBA process.
This really is one of the most incredible business opportunities online today. If you want a deep dive into all four steps to make money with Amazon FBA, you can check out my free eBook, called Private Label Investing.
It’s the best shortcut I can think of for kickstarting your journey to Amazon success!