How to start an Amazon FBA Business

If you want to start an e-commerce business online, Amazon is currently your best option. As an e-commerce expert, I have successfully launched many online businesses for myself and my clients.

I have launched e-commerce businesses on Amazon, Walmart, and Shopify, but I prefer Amazon. Here are the reasons why:

Why Amazon Is the Best Place to Start an E-commerce Business?

Amazon has 310 million active buyers who spend $1.4 billion every day. Isn’t that enough sales potential to choose Amazon as your marketplace?

On the other hand, Amazon has 9.7 million sellers, but only 1.9 million generate sales and profits. On average, each active seller makes $736 daily. This is a substantial amount to start an e-commerce business, and it’s growing every year.

If you follow the right track and put in some extra effort, you can also create a successful e-commerce business that will give you back your freedom and time.

 

What Business Models Does Amazon Have?

Amazon mainly offers two business models for their sellers:

1. Amazon FBA (Fulfillment by Amazon)
2. Amazon FBM (Fulfillment by Merchant)

What is Amazon FBA?

FBA means Fulfillment by Amazon. In this model, you send your inventory to Amazon’s warehouse. Amazon will store it and deliver it to the customer when you make a sale.

There are also two parts to FBA:

1. Private Label: In the private label business model, you list new items with pictures, titles, and descriptions and can also build your own brand.
2. Wholesale: In the wholesale FBA business model, you can sell any brand or previously listed items if you get approval to resell their brand or products.

What is Amazon FBM?

FBM means Fulfillment by Merchant. In this model, you store your inventory and deliver the items to customers when you make sales.

There are also two parts to the FBM model:

1. Arbitrage: You can buy from any retailer and, when you make sales, send the items to the customer.
2. Dropshipping: In the dropshipping model, you don’t need to buy any upfront inventory. When you make sales on Amazon, you send the customer information to the supplier, who will send the item to your customer.

 

 

What You Need to Start an Amazon FBA or FBM Business

Don’t be afraid; this is not rocket science, and you don’t need a huge investment to start a business on Amazon. There are many opportunities to start with low investment, and Amazon even has options where you need zero investment to start a business.

So, why risk your entire life savings to test this business? I will share how you can start or test this business with minimal investment.

You need six things to start a business on Amazon smoothly:

1. A registered business
2. A bank account
3. A debit/credit card
4. An active Amazon seller account
5. Some software/tools
6. Inventory

A Registered Business

You need a registered business from your country, such as an LLC, LTD, etc., because once you create an Amazon seller account, you can sell worldwide from that single account.

A Bank Account

You need a bank account to receive your funds from Amazon. It can be your personal or business bank account, but the business bank account should match your Amazon seller account.

An Active Debit/Credit Card

You need an active debit/credit card to create an Amazon seller account because Amazon will charge their monthly fee or other fees.

An Active Amazon Seller Account

You need an active Amazon seller account to start a business on their marketplace.

Some Software/Tools

You need a few software and tools to make many tasks easier, primarily for researching items. A well-researched product can lead to success in a very short time.

Inventory

You need only a few inventory items to start an Amazon FBA business. You don’t need thousands of units; you can start and test with a few bucks. Amazon also has many opportunities to start a business without inventory, but in this article, I will share only the Amazon FBA and FBM business model.

Step-by-Step Guide to Starting a Business on Amazon

I will try to share an A-to-Z guide to starting a business on Amazon using all the models mentioned above.

1# Guide for Amazon FBA Private Label

If you want to build your brand and create an entry barrier for your business, you should go with the private label business model. Here, you will list your item with your brand so no one else can resell your item in the future without your permission.

Product Research for FBA Private Label

A common step in each model is researching the best product that has the potential to bring sales and profits. You need to give 99% of your effort to research the best product. If it is perfect, you won’t have any trouble with the next steps.

There are many good tools to research items for Amazon FBA private label. My favorites are Jungle Scout and Helium 10.

When researching your product for Amazon FBA Private Label, keep the following in mind:

• Price: Aim for a price between $30-60.
• Keyword Search Volume: 300 to 1,000 search volume is good for new sellers.
• Sales: Your competitors should have good sales, at least 300 per month.
• Competitor Reviews: Your competitors should have good reviews but not more than 1,000 reviews.
• Listing Quality Score: If your competitors have low-quality listing scores, that’s a good sign for you.
• Amazon Fees: Try to find lightweight products so Amazon will charge you lower storage fees.

Finding a Supplier for FBA Private Label

After researching products, find the best supplier who can source the items at the lowest price and fastest delivery. You need to check the product quality before ordering in bulk. I recommend finding 3-4 suppliers and ordering 1 sample from each. Manually check their product quality, then choose the best one for the bulk order.

For the private label business, most Amazon sellers choose China to source their items because China provides the cheapest prices and fastest shipping. Alibaba is the most popular Chinese supplier for Amazon’s private label businesses.

Listing Your Product on Amazon for FBA Private Label

In the Amazon private label business model, you list your own new product on Amazon. You need to work carefully and in detail on each option.

I recommend creating a brand name before listing the private label product on Amazon and setting that brand with the listing so no one can resell your item in the future without your permission.

Purchase the UPC barcode for your product. Amazon requires a unique barcode for your listing.

• Title: Focus on the title of your listing. It should be meaningful, short, and nice, explaining your product efficiently. Use keywords properly.
• Descriptions: Explain everything properly and nicely in the description. Share specifications and product features. Explain what problem your product solves and what value it provides to buyers.
• Images: You can use up to 7 images in your listing, and the first image should have a transparent background. Provide as many images as possible. Edit images nicely so buyers will be attracted to your product.
• Product Variants: Set your product variants properly so buyers won’t be confused.

Bringing Sales in Amazon FBA Private Label

In the private label model, you won’t get sales until your listing is ranked in Amazon’s algorithm. You need to rank your new listing first by bringing sales through your marketing strategy. Once it is ranked, you will start getting sales automatically.

There are many marketing strategies to bring sales at the start. Here are a few popular ones:

• Advertise on Amazon: Amazon has its own advertising section where you can run ads in the Amazon marketplace.
• Social Media Promotion: If you have an established social media account with followers, promote your Amazon listings to your audience. Or you can promote through ads.
• Google Ads: Run ads on Google.
• SEO: Create a website and start doing SEO so your listing can potentially show to customers.
• Influencers: Promote your listings through influencers. Amazon has its own influencer platform that you can use.

Pros and Cons of Amazon FBA Private Label

Pros:

• Passive income business model: Once it runs, you don’t have to do much.
• Scalable business: You can scale up your business significantly.

Cons:

• Need smart investment
• Need good research or risk failure

2# Guide for Amazon FBA Wholesale

Another method to start a business easily on Amazon is the wholesale model. You don’t have to create a new listing; you can start selling with existing listings. I like this method because you don’t have to invest in marketing. You just need to find a profitable item that is already selling on Amazon.

Step 1: Product Research for Amazon FBA Wholesale

Focus mostly on researching products. This is the key to your success. If you find a good product, your 99% job is done.

I suggest using Keepa for researching products, but follow some criteria to choose a product:

• Price: Choose a product priced between $15 and $60. You can go higher or lower, but this price range helps in many ways.
• Product Ratings: Choose a product with lots of customer feedback, more than 1,000, and an average rating above 4. This helps you understand the product’s popularity and customer reactions.
• BSR: Find low BSR (Best Seller Rank) items. Low BSR means high monthly sales volume. Less than 60,000 BSR is good to start.
• Lightweight Items: For starting, choose low-weight items to reduce shipping costs and FBA fees.
• Brand Items: Initially, you might not get approval to resell big brands, but many smaller brands will easily approve your application to resell their items on Amazon.
• Profit Margin: Choose a product that provides at least a 10% ROI after all costs, including FBA fees, shipping fees, and product costs.

 

Step 2: Find the Supplier for FBA Wholesale

Once you find the right product, start finding the supplier. If you choose a brand item, search for that brand’s website and contact them to source the product. Different brands have different criteria for reselling their products on Amazon. If you meet their terms and conditions, source the product and send it to Amazon’s warehouse.

If you choose non-brand items, you can go with distributors. There are many distributors where you can source products and send them to Amazon’s warehouse.

Here are a few popular Amazon wholesale distributor directories:

• wholesalecentral.com
• 4wholesaleusa.com

Step 3: Product Listing for Amazon FBA Wholesale

Listing products for Amazon wholesale is very easy:

1. Go to your Amazon Seller Central account and paste the ASIN number of the item you selected to resell.
2. Set your own pricing and quantity, then publish.

Step 4: Bringing Sales for FBA Wholesale

In the Amazon FBA wholesale model, you don’t need much effort to bring sales. If you choose the right product that is already selling well, you will also get sales with minimal effort. Just maintain the product pricing daily. Once you start appearing in the Amazon buy box, sales will start automatically.

Pros and Cons of Amazon FBA Wholesale

Pros:

• Easy to start
• No huge upfront investment
• Scalable business

Cons:

• Requires good research to avoid failure
• Handling customer support and returns

3# Guide for Amazon FBM Arbitrage

This is another Amazon sales model where you don’t have to source products upfront or send them to Amazon’s warehouse. It’s easy and cost-efficient to start a business on Amazon.

How Amazon FBM Works

In the Amazon FBM model, you list items on Amazon, create new listings, or join existing ones. When you make a sale, you are responsible for sending the products to the customer.

You can use any carrier to send items to customers or buy a shipping label from Amazon. You also have to handle customer returns and refunds.

Step 1: Research Products for Amazon FBM Arbitrage

Research products that are already selling well on Amazon. Find the correct listing, then locate the same product at a lower price from a local retailer. If you find it, list it on Amazon.

Step 2: List and Sell the Item

List the item on Amazon. When you get a sale, buy the product from your local retailer and send it to the customer using any carrier or Amazon’s shipping label.

Pros and Cons of Amazon FBM Arbitrage

Pros:

• Very easy to start
• No upfront investment
• Easy to scale

Cons:

• Requires manual work to find products at local retailers
• Amazon has strict monitoring and restrictions for FBM sellers
• Difficult to find products at low prices consistently

4# Guide for Amazon FBM Dropshipping

This model is very easy but comes with risks. I do not recommend starting with this model due to the high risk of account suspension, but it can be profitable if managed carefully.

Step 1: Find Products for Dropshipping

Find the products you want to sell, or contact dropshipping suppliers and ask for their product lists.

Step 2: List Items on Amazon

List the items on Amazon. You can list many items for dropshipping.

Step 3: Manage Sales

When you make a sale, contact your supplier and provide them with the customer details. The supplier will prepare the product and send it to your customer.

Pros and Cons of Amazon FBM Dropshipping

Pros:

• Super easy to start
• No upfront investment

Cons:

• High risk of Amazon account suspension
• Potential for bad customer reviews

Conclusion

I have tried to explain everything about Amazon’s e-commerce business models. I hope you now have a good understanding of how Amazon works, how to start, and which business model might be suitable for you.