How to Start an Amazon Business If You Are Just a Beginner
Suppose you’ve ever thought of starting your own online business. Out of all the options you have, starting an Amazon FBA business is one of the most dominant options. The profit potential is enormous, and you can quickly scale and grow it once you become established. But what if you don't know how to start up an Amazon business?
Many beginners go it alone and find the process can seem daunting. However, when you break it down, it's not as complicated as it looks. If you follow the proper steps and put some time in, you can start a successful business on Amazon. You may even be able to quit your job and work from home full-time, giving you plenty of flex time.
If you're wondering about starting an Amazon business, you've come to the right place. We've created this complete guide to give you the best instructions and help you on your own business journey.
Building an Amazon Business Step-By-Step
Amazon Business Models You Can Choose From
Before you get into Amazon sales, you need to select how you plan on approaching it. Also, if you want the answer to "how much does it cost," choosing a suitable business model will vary your initial spending.
There are four popular business models to choose from:
Dropshipping (Can Cost Nothing)
Instead of purchasing inventory in bulk, you can choose to dropship. The company holds your inventory and ships items to your customers when sold in this business model. So you don't need much of a budget to start. You can also begin for free with many dropshipping suppliers.
Dropshipping is an excellent method to start with if you have no dollars in the bank.
However, Amazon's dropshipping policy dictates that you are 100% responsible, which can be an issue when you have no way of checking the products personally.
When dropshipping, be sure to be picky about your chosen dropshipping supplier. Check online reviews and experiences from fellow sellers to ensure the products your customers get will be quality.
To ensure quality, you might consider selling T-shirts using Merch By Amazon. Print-on-demand businesses are one form of dropshipping that's easy to get into. Regardless, dropshipping is one of the few places where you can start with no money.
Retail or Online Arbitrage (Costs starts at $100)
Arbitrage involves buying products from online (online arbitrage) or retail stores (retail arbitrage) for reselling them on Amazon. You can find discounted products through local ads or follow online stores to see your options.
Arbitrage is a good strategy for those with little money to spare for their resale desires. However, it does require a high time commitment, given the amount of regular research necessary.
Getting your supply sources is 100% up to you.
You don't have to sort through suppliers and speak with manufacturers, so it is a relatively low risk. However, you run the potential of buying products nobody wants, so be sure to research market popularity before buying.
Wholesale (Costs start at $500)
Wholesale companies and vendors buy products in bulk from manufacturers. You'll be able to purchase them much cheaper than retail stores. However, wholesalers have high minimum order quantities, so you'll be paying more money upfront.
Wholesale also involves sharing product listings with many other sellers. So when picking an initial wholesale target, try to avoid marks with low monthly sales or a high number of sellers.
Given you are essentially the courier for their goods, you don't always get support. However, you might get some advertising material, so don't be afraid to ask the wholesaler for resources.
Private Label Products (Costs start at $1000)
These are products created by third-party manufacturers with your brand name. You can create a unique version of existing products or come up with new products. You can even trademark these products if you want so that no one can copy you.
Building a brand and products means less competition, and if you come up with something new that everyone wants, you'll be able to generate a lot of sales.
However, trademark costs and negotiating with manufacturers typically mean you'll need to start with more money.
Regardless of your choice, starting an Amazon FBA business is usually more profitable and easily scalable. This article is built for you if you want a guide specifically for building your private label business. Below is includes what you need to get started.
Building a Business Step-By-Step
1. Finding a Product to Sell
There are a lot of products on Amazon. They sell books, shaving kits, beauty products, jewelry, and other personal goods. Also, most of them are already sold by someone else. So, how do you know what items to pick for your business?
What Should Your Product Be?
Start by setting initial product requirements based on proven success and low barriers to entry. This ideally will result in lower-risk scenarios, so here are some general guidelines:
Pick products priced between $15-100. Any time you sell on Amazon, they'll take a commission. So, avoid cheap items that have low earnings potential. You'll also want to avoid expensive items since they don't sell as much as lower-priced items.
High demand. More sales equal more profits. If you can, try and stick with listings and niches that have more than ten thousand sales. If you struggle at this level, reduce your count by increments of one thousand until you find a viable product.
Choose small and light products. Remember, when you purchase your inventory, you'll need to ship the package for storing in FBA warehouses. This can be incredibly pricey if you plan to import from China or India. Stick with small items that are below two pounds.
Stick with low competition areas. Try to avoid niches with too many reviews (over 100 per product). As a private label seller, you’ll want to focus on that low review count, as it's incredibly challenging to compete as a new producer in a heavily competitive market.
Be careful with gated categories. A "gated product" requires additional certifications, licenses, or trademark ownership to sell within the product listing. Using AMZScout's tools, you can quickly identify these products and factor in the extra effort to determine whether it is worth selling.
Be careful about seasonal products. Historical sales data (which you can find using AMZScout's tools) is essential when determining your potential sales. Keep these fluctuations in mind when choosing products and inventory levels.
Use the AMZScout Product Database to Get Niche Ideas
You could search for product ideas on Amazon, eBay, Etsy, Shopify eCommerce sites, blogs, and farmer's markets, but it will take longer to find items that meet your parameters. Using the AMZScout Product Database streamlines the process.
You can start with these steps:
1. Open the AMZScout Product Database, which is included when you get the AMZScout Seller's Bundle. 2. Log in to start.
3. Set product criteria. Use the search filters to define your criteria. For example, you can choose to filter by the number of sales. Try the ready-made options from Product Selections first if you don’t know where to start.
4. Get your results. Click Find Products.
5. Choose your favorite products to check with the AMZScout PRO Extension.
The development of a successful business depends on your ability to offer products that people actually want to buy. The following tool can help with choosing the right ones.
Use the AMZScout PRO Extension to Analyze the Profitability of Products and Niches
After selecting a few product ideas, it's time to analyze them with AMZScout PRO Extension. This tool will let you know how profitable a specific product or niche is and help you determine whether it's worth selling.
Here are the steps you need to take:
2. Open AMZScout PRO Extension.
Amazon.com will open immediately after the installation.
Search for a product or niche found on the AMZScout Product Database.
When the results appear, click the AMZScout icon (found in the top right corner of your browser) and open the extension.
3. Analyze niche and product profitability. See important information (like the net margin, estimated sales, and revenue) at the top of the screen or for each product in the results table.
4. Analyze niche demand. Click Niche Score to see an analysis of the market for the entire niche.
5. Make sure demand is high consistently. Check the Niche History to see historical data (sales fluctuations depending on the season).
6. Analyze the potential for the particular product. Click the Product Score rating next to an individual item to see how well the product will sell.
Once you've gone through the steps above, you'll be able to determine a list of prospective niches and products.
However, if you plan on creating branded products (now or later), you will need to improve your offer.
2. Making Your Product Unique (Product Development)
To remain competitive on Amazon, you need some way to make your product stand out. When creating branded products, this is more effortless than you might think.
To start, you need to base your product modifications on what people are looking for. You can do this through the following advice:
Look at what reviews say in response to products. Use that feedback to create a better product.
Make exclusive propositions by creating unique designs.
Ask people who regularly use these products about how they would improve those products.
Look for consistent trends among suggestions (through reviews and surveys).
Use unique resources to make your product difficult to duplicate.
You can find a great example of how this works in practice from Bermet, who doubled their profit after adept product research. Bermet is a successful FBA seller and uses AMZScout regularly.
They made their product unique while following suggestions to keep it light and straightforward by modifying a cork coaster. The cork was inexpensive but had a unique mandala design that stood out at the time.
Bermet could do this by purchasing a stock image and contacting a few manufacturers on Alibaba. The one mistake? The design was easily duplicated but still set a new trend on Amazon, displaying how unique product creation can boost sales. Bermet used their experience to offer more compelling products in the kitchen niche.
3. How To Estimate Profits
Having a unique product is only part of the process; you also need a product you can earn money from. While using the AMZScout PRO Extension can help you understand whether a product sells, you also need to perform profitability analysis.
A profitability analysis refers to you putting together a document that estimates your costs against sales. Ideally, this should give you an idea of how much you can earn based on how much you sell your product.
Going back to Bermet’'s excellent sales example, here's a list of potential costs to run through:
Manufacturing costs (the costs necessary to make your product)
Shipment costs (how much it costs to send your product to various locations)
Amazon's commission (how much Amazon will take from you for listing your product)
Advertising costs (for creating a PPC campaign)
Here is how Bermet calculates their costs:
This data all comes out to net margin, which means your earnings minus all the above aspects. Breaking it down on a per-unit basis will give you a good picture of how many units you need to sell before revenue equals total costs (or your break-even point).
Using the AMZScout Free FBA Fee Calculator, you can make this process simple. It is another Chrome extension where you can input essential data. You can follow these tips to start:
Install the Free FBA Fee Chrome Extension.
Open it on a product page to see an example of this in use.
Manually enter essential data (i.e., taxes, product, shipping, and CPC Costs).
You can set estimated monthly sales or put in your own numbers.
Use this information to determine whether you can earn a profit.
Be aware your estimated monthly sales aren't going to be the same, so you might run a profitability analysis at multiple sales levels to determine your options. Consider this some form of bookkeeping, only for prospective earnings and fees.
If you have less money to work with, you might have a lower risk tolerance dictated by potential monthly sales. Using this data, you can quickly determine whether a product meets your comfort levels.
Keep in mind that this tool is for FBA Sellers. You'll need to account for this using the Bermet example above to handle your shipping and warehousing.
4. Finding Suppliers and Sourcing Products
Once you've decided on which product to sell, your next important step is finding your source for that product. Working with local suppliers is one of the best approaches because this method will save you time and shipping costs. Learn how you can find high-demand items from local suppliers and earn $8500, by watching this video below.
Or you can also try Alibaba as a tool for finding a supplier.
How To Find a Supplier on Alibaba
Alibaba is an excellent website for linking sellers and suppliers. This website integrates across our tools, making for a streamlined process. Here's how you can get started:
Use the search bar to find products you identified through the AMZScout PRO Extension.
You can also click on the Find on Alibaba button from the PRO Extension from searching on Amazon.com.
From Alibaba.com, click on Contact Supplier and send them a message expressing your interest in buying their product.
The left half of Alibaba's search will enable you to select suppliers based on location. To reduce risk, stick with verified suppliers or those who have trade assurance, as they are subject to Alibaba's service guarantees.
Negotiating With Suppliers To Produce Your Product
When reaching out to suppliers, you should go ahead with the understanding that both of you generally want the same goals. However, your goal should be to try and get the best possible rate.
With this in mind, you should consider multiple suppliers selling private label products. This way, you can use a rate comparison to give yourself some leverage during negotiations. Of course, spending more capital in exchange for more stuff is one way to get a discount automatically.
Try and get the best possible rate without compromising quality. Please pay particular attention to the materials used in the process, researching those materials to determine their durability.
You might also ask deep questions about their manufacturing process. If their answers are vague, be willing to walk away. Walking away sometimes gives you greater leverage in making deals, especially if you provide them with a competitor's quote when leaving.
Ordering A Sample
You are encouraged to order multiple product samples as you decide upon your options. These samples are accurate quality confirmations, enabling you to ensure good manufacturing practices and materials.
Ordering a sample is incredibly important when defining who you select. Anybody resistant against sending you samples should be avoided altogether, don't bother with someone who wants to hide their products.
Shipping Products To An FBA Warehouse
This guide assumes you want to be an FBA Seller, so after confirming the quality and making your deal, your next goal should be to ship to an Amazon Fulfillment Center. This is known as Fulfilled By Amazon (FBA) and is a great way to handle delivery to customers.
You can decide to ship the product to yourself instead. However, most people lack the space and the capability to handle shipping and selling themselves. Amazon FBA sellers receive higher listing priority and optimize their listing and market their products.
Ideally, you'll want to work with a supplier who knows how to work with Amazon. Those who don't know how to meet a fulfillment center's high requirements will struggle, often dealing with returned goods.
Working with someone who has less experience is an option but it might result in significant shipping delays. If you want to hit critical sales times like Black Friday, Amazon Prime Day, or the holiday season, you'll want someone who knows how to meet Amazon's shipping requirements.
5. The Advantages of Creating a Brand on Amazon
We mention the power of private label selling a few times throughout this article. Much of this delves into the power of creating a brand from Amazon's Brand Registry.
The Amazon Brand Registry is a program for professional sellers to create unique storefronts and apply more effective analytics tools. You'll have to contest with monthly fees of $39.99 for a professional seller account but no longer have to pay a per-item listing fee (typically making the monthly costs worth it).
Joining can give you numerous advantages through these features:
Amazon Brand Analytics provides you with more data about people visiting your overall brand and store page.
You can pay for Sponsored Brands advertisement to sell an entire product line through a single ad (instead of one product)
Amazon Stores enable you to create a unique storefront on Amazon that contains all your products.
Using A+ Content makes your products more attractive and engaging to visiting customers.
You have brand protection by joining the registry (Amazon will remove people trying to steal your trademark)
You get better access to new features (like Amazon Posts)
To apply for the Amazon Brand Registry means you are giving yourself ample protection, better advertising, and more information. Creating a unique brand can also make you more memorable to customers, resulting in more consistent sales.
You also don't have to share your listing with other sellers, a significant disadvantage of dropshipping, arbitrage, or wholesale business strategies. Overall, having a professional account on Amazon and being a member of the registry is definitely worth the extra steps for registration. Please find out more about registering through this Amazon Brand Registry Guide.
6. How To Optimize Your Amazon Product Listings
Another phase you'll need to familiarize yourself with is the creation of product listings. However, it isn't enough to create those listings; you also need to optimize them.
Optimization is the process of making your listing most appealing to Amazon's search engine. This process makes it more attractive for users, increasing your ranking for specific keywords.
But before you can optimize for keywords, you need to know how to find them. To do that, you can use AMZScout's Keyword Search and Reverse ASIN Lookup Tool. Here's how you can get started:
1. Find the product ASIN (Amazon Standard Identification Number) of your competition (you can find this on their Amazon Product Page).
2. Enter the ASIN in the Reverse ASIN Lookup search bar. This tool comes with the comprehensive AMZScout Seller’s Bundle.
3. Specify the number of words you want in a keyword (optional).
4. Choose your search volume (for example, if you only want keywords that get five thousand or more searches).
5. Look at the keyword results.
Pay particular attention to long-tail keywords that have four or more words within. You'll want to use the long-tail targets that best describe your product. This is known as keyword relevancy, and it is essential when finding the shortest way to express your product through how your customers search. Long-tail keywords also include shorter keywords, giving you dual ranking potential if your product gains more popularity.
You'll also want to go through the complete listing optimization process found in this guide.
7. How To Run Effective Advertising Campaigns (PPC)
The keyword research process seen above isn't just for optimizing your listings. You can also use it for the next aspect of getting more sales, product advertising.
The most popular form of Amazon advertising is PPC or Pay Per Click. PPC advertising is when you pay to appear in an exposed search results area, encouraging potential shoppers to click your product. The term PPC refers to the situation where you only pay when someone clicks on your ad.
Using PPC campaigns can provide you with some valuable advertising data:
If you get no clicks, that might mean there is something off about your advertising method
If you get clicks but no conversions, that might mean your product page is missing important information
If you get clicks and conversions with no reviews, that might mean you need to start asking people for reviews
While these are just a few examples, it reminds you of selecting the right keywords, having engaging ad copy, and making a great customer experience. AMZScout's keyword research tools provide you with excellent targets.
It is also ideal to start with smaller investment numbers across multiple keywords to test your options. It would be best to eliminate ad campaigns that aren't getting the results you want, a form of A/B testing. Knowing what works is a system of trial and error. However, AMZScout's keyword research tool will narrow your options by using competitors' information.
Conclusion - Is Starting An Amazon Business Worth It?
So, is an Amazon business worth it? In the end, it will be up to you to decide whether this type of venture is right for you.
Here are some compelling reasons to start:
High-Profit Potential: Of all the online business opportunities available, Amazon has the highest potential earnings. You can grow to incredible heights with the right strategy.
Access to Lots of Customers: Amazon is the largest eCommerce platform in the world. There are nearly 150 million Prime accounts (and growing) that buy everything from groceries, rentals, and more. This gives you more potential customers than you could ever imagine.
Limited Marketing Needed: Amazon provides the website traffic you can use to draw people to your product listings. Through keyword research and the hiring of freelance writers, you don’t have to put as much effort into gaining product Awareness.
It can be Automated: There is a lot of software you can use to automate your process. An Amazon Business has high automation potential given its popularity.
As you can see, there are several benefits to starting this type of business. While selling products on Amazon isn't for everyone, if your goal is to create an online business, this is one of the best ways to make money.
To give yourself the best money-making chance, use AMZScout's lineup of tools for everything imaginable. These tools can simplify your product research and selling strategy.