Amazon FBA Business: 7-Step Guide from Amazon Expert
Have you been thinking about getting into eCommerce? Then you should definitely consider an Amazon FBA business. With this model, you ship all your inventory to Amazon and then they’ll take care of the rest.
Many entrepreneurs are running profitable businesses this way, including successful seller Alex Shelton. Keep reading Alex’s story to learn his tips and tricks.
7 Proven Steps to Start an Amazon FBA Business
How I started an FBA Business with just £1,000
My background is in Marketing. Eight years ago, a client came to me looking for help marketing the launch of their new product. It happened to be a brilliant product in an excellent niche.
After a few meetings with the client, we decided that I would sell the product in my own right, and my exciting Amazon adventure began. My thoughts at this stage were “OK, I know a lot about selling through websites, I can do that. I have excellent skills when it comes to social media advertising, but what about Amazon?”
I wasn’t unhappy with my life before getting involved with selling on Amazon, but I knew that there was more. More I could be doing, more than I had to offer, and more that I could be earning. I had already taken the step of working for myself and everything that comes with that, but selling on Amazon helped me get to the next step and beyond.
In fact, I discovered that earning £100k in just a few months is more than achievable.
My first order was around £1,000 but the investment was really time. Time to learn the platform, time to understand how everything works, the tips, the tricks, etc. I wish I had someone back then who could have made it easier.
One of the first things I did was register a company, as there are a number of advantages to this. I didn’t just want to dabble in this whole Amazon thing, I knew I was going to take this process seriously.
So, initially, I was a distributor, which meant that for my first order I didn’t actually label my products with my own brand (this came later on). If I could go back, I would have arranged for these items to have been labeled with my own brand (and trademarked my own brand) which would have come with many benefits, but it was all part of my Amazon journey.
The products were manufactured in central Europe and I arranged for these to be shipped over to my home address in the UK. This was before I discovered FBA (Fulfilment by Amazon). It also allowed me to inspect the products before selling them and being that this was my first order that was important to me.
I found out pretty early on that to be successful on Amazon, you should ideally have your own brand and products that are unique to you.
How long did it take to achieve a stable monthly income?
It probably took three to six months to achieve a stable income. There was so much to learn and take in. The seller platform isn’t as intuitive as you might think and I had no real plan or strategy. This is why creating an Amazon Growth Plan is now the first stage of my course. We set objectives and a strategy to achieve those objectives.
How much time do you spend per day/week on running your Amazon business?
Initially, I just ran my business during evenings and weekends. I was shipping products out myself from my garage which was very time-consuming. Then I discovered FBA, which was almost life-changing. My future orders were then shipped directly to Amazon’s Fulfilment Centres in the UK where Amazon took control of distribution and customer service.
7 Proven Steps to achieve £100k in just a few months
With a background in marketing and helping small businesses in the UK, I decided to share my experience with my clients. I started running training programs for small-medium-sized businesses looking to grow their online sales. This also led me to work with global brands that wanted to expand their presence on Amazon.
After helping hundreds of different businesses and working with many manufacturers I started to help new sellers create their very own Amazon business. My program begins by looking at the seven proven steps that helped me achieve £100k in sales in just a few short months.
Some of my clients are actually selling up to £350k a month.
Just take a look at the recent sales of a recent client:
Here are my 7 proven steps to start an Amazon FBA business:
Step 2. Setting up as an Amazon Seller
Step 5. Advertising & Branding
Step 6. Social Media Advertising
Step 7. Expanding Internationally
Here’s some more information on each of the seven steps below.
Step 1. Finding Your Products & Private Labelling
For me, I love to come up with my own ideas for products. Products are around us every day and we don’t really take notice of them. There are so many things you can sell on Amazon and all it takes is one product. I try to think of ideas, such as embarrassing items people don’t like to go into the shop for, eco-friendly products, everyday products that you can turn into something more, or even ‘bundling’ your product with another item to make it completely unique.
I take a product idea and I can use the AMZScout tools to find out if it has private label potential. Private label products are branded with your own logo. I focus on these types of items because they’re unique to you and your business.
Make sure to work with suppliers who understand the private label and FBA process. When it comes to creating a label and a brand, if you have the skills that’s great but if not you can work with a freelance designer to create something special and unique.
When choosing a product I tend to look at the following areas:
Search Volume (how many people search for your product)
Amazon Sales (use AMZScout to find out what a product is generating in revenue)
Healthy monthly sales all year round
Competition Levels (how likely you are to get the product to page one)
Availability (how easy it is for you to get your hands on the product and how easy would it be for someone else to copy it)
Size and weight (important for FBA)
You can also use AMZScout Tools to do some in-depth product research. For example, after installing the AMZScout Pro Extension you can see average monthly sales, a number of reviews, sales trends, competition levels, and more for any product on Amazon. All you have to do is search for a product you’re interested in and then open the extension.
I love the AMZScout Pro Extension. The information it displays is invaluable to any new startup or existing seller looking for ideas. I also have to say I love the ‘Niche Idea’ button. A lot of my students who are starting from scratch often don’t know where to begin with their product research.
The Niche Idea tool means that AMZScout can think of unique niche ideas for you.
You can then use the FBA Calculator to work out your fees. Simply navigate to a product’s Amazon listing page and open the calculator to see your FBA costs. This tool will also tell what your profit margins will be for each sale.
When you’re happy and ready to go ahead you can then list your product in your chosen Amazon marketplace. It’s so important to do your keyword research and include the right search terms. After that, you’ll need to think about the promotion of your product and how you’ll get your listing to page one for your desired keywords.
What’s the average time you need to find a new product using AMZScout tools?
This is a very difficult question to answer, as I’m constantly using these tools to find new products.
Product research never stops, I love it!
I’m forever coming up with new ideas or spotting different products, and when you know the areas you need to look out for you almost get a gut feeling telling you that you’ve found your next product.
You could also spend hours and hours doing product research and never taking that leap. AMZScout tools are great at helping you improve your research skills. The bottom line is don’t jump into anything too quickly, but you also need to believe in your judgment, believe in yourself, and take the leap.
Step 2. Setting up as an Amazon Seller
If you’re taking Amazon seriously then I would recommend going for a Professional account. You have access to Amazon’s advertising platform with the Professional account and it can be a very powerful tool to generate sales for a new product.
While this type of account comes with a $39.99 subscription fee each month, it doesn’t include the $0.99 charge you have to pay for every sale when you have an Individual account. That means if you sell more than 40 products a month you actually save money with a Professional account.
Go to this page and click “Sign Up” to open your account. Follow the directions to complete the application. You’ll need a piece of ID, a credit card, and your tax information, so have those ready.
Step 3. Learning the Amazon Seller Platform
This was the biggest frustration for me when I was first getting started. So many ‘experts’ were telling me how great they were but none of them actually showed me HOW TO SELL ON AMAZON. Whether you have your products ready to sell now or not, you need to understand where everything is on Amazon.
The key areas include listing your products effectively, Amazon SEO, Amazon Deals & Vouchers to promote your products, and competitor analysis and A/B Testing.
It’s also really important to have an understanding of what’s possible with Amazon. Your business may change in the future. For example, you may add more products or create a store to showcase your range. If you know what your options are you can plan your business growth.
Step 4. Fulfillment by Amazon: Making your Products ‘Prime’
Before discovering the power behind FBA I was shipping products out of my garage. Orders were going well but FBA took things to the next level. When using this program your items become ‘Prime’ products and Amazon handles the distribution and customer service for you, which saves a lot of time.
This means you can concentrate on the marketing of your products and all the other fun stuff, like thinking of new social media ads, new promotions, and new product ideas. Honestly, that’s the side I really enjoy.
Step 5. Advertising & Branding
Amazon has its own professional advertising platform built into the Seller Central account that you can use to help increase your sales when launching a new product. It’s also great for giving products a boost from time to time.
You might not use these paid ads all the time. They’re often used to get your product seen ahead of the competition, to start generating some sales and to increase the number of reviews your product gets which helps with search rankings.
This important advertising tool is available to you through the Seller Central platform and is called ‘Sponsored Ads’. This basically means that your ‘Sponsored Ad’ could appear at the top of a search for a specific keyword or phrase. Why would you do this? Well, for example, when you first launch your new tennis racket onto Amazon, you might be on page three for the term ‘tennis racket.’ But with sponsored ads, you could be seen on the first page immediately.
It’s very important to keep an eye on your Advertising Campaigns and check that they’re actually generating sales and making you money.
You can do this through the ‘Advertising’ Section in your Amazon Seller Central Account. The key thing to look at here is your ACOS (Average Cost of Sale).
The ACOS is calculated through this formula: ACOS = Ad Spend divided by Sales x 100 (%)
So, you want to generate a lot of sales, but you also want a low ACOS to make sure that you’re still making a profit.
For example, after your Amazon fees and shipping costs are deducted, let’s say you’re left with a profit margin of 40%. Depending on the client I’m working with we would typically aim for an ACOS of below 10%.
You can see an example of a good ‘ACOS’ below:
Step 6. Social Media Advertising
Before discovering the power of Amazon, my area of expertise was always social media advertising. I still absolutely love this form of advertising from a marketing point of view and have integrated it into many of my Amazon client’s businesses.
Social Media advertising can be a cost-effective way to launch a new product and increase your Amazon sales. I primarily concentrate on Facebook and Instagram Ads. Facebook owns Instagram, so you can run paid ads on both platforms from the Facebook Ads Manager.
You can then target people with these ads based on their demographics and interests (basically what they get up to online). These ads appear in their Facebook or Instagram newsfeeds with an image or video of your product, and a direct link to your Amazon listings.
The key is to consider who you’re going to target.
I recommend creating multiple ‘pilot’ campaigns with very small budgets and monitoring each campaign to see which one performs best.
If managed correctly, Facebook Ads can be very cheap. If you get your targeting right (and the target audience is clicking through) then the cost per click for these ads can be very low (even as cheap as £0.01 a click).
Take a look at an example of a pilot campaign with a small budget below:
Step 7. Expanding Internationally
So, if sales are going well on Amazon that’s great, but what about taking things to the next level? What about expanding across Europe? When you sign up to be a Professional Amazon Seller in the UK you should also have access to key European marketplaces like Germany, France, Italy, Netherlands, and Spain.
I started out selling in the UK and then followed the exact same steps above when launching in each new European country. After six months I was selling in a number of European marketplaces and Amazon was handling all the distribution for me through FBA.
Use the AMZScout Tools to find out if there is a demand for your product in other countries. Just think about how many people you could be selling your product to across Europe. Or how about the USA? Canada? Australia? Just remember to have your listings on Amazon professionally translated into the local language.
The great thing about being an Amazon Seller is that it doesn’t restrict you to just one country. With FBA, Amazon can be distributing your products for you across the globe and you can manage things from a single seller account.
Is Starting an Amazon Business Still Worth It in 2021?
Absolutely, maybe now more than ever!
Due to the pandemic, online sales are booming and it’s changed the way we shop completely. What you don’t want to be doing is wasting time learning the hard way. I did that, at a time when it was probably OK to do that, but I wish I had someone to guide me through the process back then. It would have made a world of difference.
I’ve been through this process. I love to see other people’s businesses thrive and that’s what I want for you, to help you achieve your goals and see your new business achieve success.
Let me just ask you one quick question: What’s your end goal? Is it to make £100,000 in sales in a few months? Is it to pay off your mortgage? Is it to sell your Amazon business? Is it to create something you can be proud of? Whatever your end goal is, make a note of it.
If you’re serious about achieving your goal and are looking for an experienced Amazon consultant to work with then just book a call and get in touch with me directly.