How to Build Amazon FBA Business in 7 Steps in 2023
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 to start an Amazon FBA Business with just £1,000
Eight years ago, a client came to me for help marketing the launch of their new product. After a few meetings, we decided I would sell the product on Amazon. 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 before selling on Amazon, but I knew there was more I could earn.
Selling on Amazon get into the platform and helped me understand that earning £100k in a few months was achievable.
My first order was around £1,000, but my real investment doing business was the time to learn how the platform worked. First, I registered a company for various advantages. I wanted to take this seriously when asking myself “what is the process” for building my Amazon business.
Initially, I was a distributor, which meant I didn’t sell my brand. If I could go back, I would have trademarked these items and labeled them with my own brand, which would have come with many benefits. These first products were shipped to my address from Europe (before I discovered I could be an FBA seller), which let me inspect the products (very important for your first order).
I found out pretty early that you should set up a unique brand and products for Amazon FBA (Fulfilled By Amazon), as it is the best way to sell on Amazon.
How long did it take to achieve a stable monthly income?
It took three to six months to achieve a stable income. 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 the first stage of my course. We set objectives and a strategy to achieve those objectives to better use the Amazon FBA program.
How much time do you spend per day/week on running your Amazon business?
Initially, I ran my business during evenings and weekends. I shipped products from my garage (making me my own fulfillment seller), which was very time-consuming. Once I discovered I could make a business with Amazon FBA, I sent them to Amazon so they could handle storage, shipment, and customer service for my FBA store.
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-to-medium-sized businesses looking to grow their online sales. This also led me to work with global brands to help expand their presence on Amazon.
My experience with suppliers and sellers let me help new people with selling on FBA. I worked with them and taught them how to build an Amazon business. My Amazon FBA for Beginners tutorial with a proven step-by-step guide shows you how I achieved £100k in sales in a few short months so you can sell this platform. By using Amazon FBA and my tips, you can make some real money.
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, the number of reviews, sales trends, competition levels, and more for any product on Amazon. Here is how it works:
Open the AMZScout PRO extension after registering with your AMZScout account.
Open Amazon and search for the items you are interested in.
Open the extension. On the results page, find and click the AMZScout icon in the top right corner of your internet browser.
Check niche performance. Niche and product scores are based on the levels of demand and competition, telling you instantly whether an item is worth selling. A score over seven means it has the potential to be profitable for your business.
Check product demand. Click on the Product History icon to see how the product has sold over the last year. This will help you determine whether it’s trending up or down. It will also let you know whether its sales fluctuate throughout the year or stay fairly consistent.
Get more information to make the right decisions. In addition to historical sales trends, you’ll also be able to see monthly sales, reviews, average sales prices, and more.
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 a 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 advertising service that's part of the Seller Central platform. You can use Amazon’s paid advertisements to get people to your listings and increase your sales, especially when you’re first launching a product.
Once your business is well established, you may not need to use these paid ads as much. They’re mainly used to get your products placed above the competition when your listings do not have enough sales to rank for keywords. As you start to gain sales from the ads and get reviews for your products, your search rankings will improve to start generating organic traffic.
All the advertising features are available from your Seller Central account by going to Advertising > Campaign Manager. The main type of ad you will use is called Sponsored Ads. These ads do not require you to design any creatives as they simply use the product’s featured image. This helps the ads blend in with the organic results.
Sponsored Ads can appear at the top of search results, in the related items section on product pages, and in lower positions in search results. With a Sponsored Ads campaign, you can manually choose the keywords to target or you can have Amazon choose the targets automatically.
When you run ad campaigns, it is essential to monitor their performance. A product with no prior reviews may not be profitable to start, but once you start to get ratings on the listing, the ads should net you money.
There are several key metrics to look at in the Campaign Manager dashboard. The most important is ACOS (Advertising Cost of Sales). This metric measures the efficiency of your campaigns. It is the ratio of your ad spend and revenue and is calculated with the following formula:
Ad Spend ÷ Sales from ads x 100 (%)
A lower ACOS means a more profitable campaign. Ultimately, you need your ACOS to be lower than your profit margin for your business to be profitable. For example, if your profit margin is 40% after deducting Amazon’s fees and shipping costs, with an ACOS of 20%, you’ll have an ending net margin of 20%.
Depending on the client I am working on, I generally aim to see an ACOS under 10%. Below is an example of a good ACOS:
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 2023?
Absolutely, maybe now more than ever!
Online shopping has been booming in recent years and it has completely changed the way we shop. 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.
If you’re serious about achieving your goal and are looking for a comprehensive solution for Amazon product research then try AMZScout tools.