How Much Investment is Needed to Start a Business on Amazon

Most people think they need a big investment to start an eCommerce business on Amazon because they lack sufficient knowledge. Amazon offers multiple options to start a business, and you can even start without any investment.

Amazon is the giant in the whole eCommerce world, so if you are interested in the eCommerce business, then you should definitely try the Amazon marketplace. Don’t hold back just because you think it needs a big investment.

In this article, I will describe all business options where you can start with a thousand dollars of investment or without any investment. This will definitely help you choose the business model that suits you best.

Amazon Private Label

This business model requires a significant investment to start but has the potential to build a million-dollar company. If you plan to start an Amazon FBA Private Label business, I recommend at least $5,000.

Costs Involved:

• Cost for Researching the Right Product: You need to invest in various tools to research the right products, and these tools charge between $50 to $100 monthly.
• Cost for Bulk Inventory: After finding the right product, source it from manufacturers, including shipping charges, product labels, designs, and packaging, depending on the product. Initially, you need to manufacture at least 500 units and keep money for another 500 units.
• Product Photography: High-quality product images are essential, costing around $200 for professional photos and videos.
• Brand and Trademark Registration: Registering a trademark with the USPTO can cost from $200 to $400, depending on the product category. This helps protect your brand from resellers on Amazon.
• Product Barcode Registration: Registering a GS1 U.P.C barcode costs about $30 per barcode, varying by product size, color, style, and packages. This barcode is essential for listing your brand on Amazon.
• A+ Product Listing: Enhanced content can attract more customers. Hiring an expert for this might cost around $100 per listing.
• Prep Cost: Preparing products for Amazon’s warehouse costs about $0.50 per item.
• Shipping Charge: Costs vary based on product weight, shipping carrier, and the distance from the manufacturer.
• Amazon Monthly Warehouse Storage Fee: Varies by product size and is divided into two parts: January to October and October to January.
• Product Marketing: Advertising costs can exceed manufacturing costs. If your budget is $5,000, allocate about $2,500 for advertising and product marketing.

Amazon Wholesale

For those who want to start a business on Amazon with less than $5,000, the FBA Wholesale model is suitable. This model requires minimal advertising investment since you resell products already listed on Amazon. A $2,000 investment is typically sufficient.

Costs Involved:

• Primary Cost: Includes monthly Amazon fees and business registration.
• Tools Cost for Product Researching: This is the same as mentioned for the Private Label model, costing $50 to $100 monthly.
• Inventory Cost: You have flexibility in inventory size. Start with bulk or minimum units, depending on supplier policies.
• Shipping Cost: Depends on product size and shipping carrier.
• Prep Cost: Similar to Private Label, costing $0.50 to $0.75 per item.
• Amazon Warehouse Storage Fee: Same as the FBA Private Label business model.

Amazon Retail Arbitrage

This model is ideal for those with a low investment budget. You only need to cover Amazon’s primary costs and can start with just a few bucks, even 4-5 units. Purchase items at low prices from other retailers, list them on Amazon, and ship them to customers when sold. You can start this model with as little as $500.

Investment Needed for Dropshipping Model

In the dropshipping business model, no upfront investment is needed. You can start without any investment in inventory or marketing. Just contact reliable dropshipping suppliers and list their items on Amazon. When you make a sale, provide customer information to your supplier, who will ship the items directly to the customer. You profit from the difference between your selling price and the supplier’s price.

Amazon Monthly Disbursement Funds

Amazon pays you every 14 days, so if your initial investment is $1,000, you can reinvest this amount twice a month. This effectively doubles your working capital monthly, significantly boosting your ROI. By frequently reinvesting, you can maximize returns and grow your business quickly.

Conclusion

Amazon is the best eCommerce marketplace and is open to everyone. With the right knowledge and implementation, you can start a business there with significant investment or without any investment.

I’ve explained all the business models and the minimum investment requirements. I hope this helps you choose the right path for your eCommerce journey on Amazon.