I’m sure you’ve heard of Amazon. It is the largest online store in the USA, UK, and Europe. But you may not know that if you buy something from Amazon, there is a good chance that you are buying from a third-party seller using a service called Amazon FBA.
FBA stands for ‘fulfillment with Amazon.’ This means it’s about to be the most delusional time of the year, as far as Amazon is concerned. When a customer places an order, it passes the seller completely and goes straight to the FBA store. Amazon then selects an order and sends it to customers.
Amazon FBA also manages the majority of customers. They process all customer returns, and only the most specific questions are referred to the seller.
For customers, there is almost no difference between buying from Amazon directly and someone selling their items on Amazon via Amazon FBA. They get the same delivery options, the same return policy, and the same customer service team.
The Amazon FBA business is a great link between the eBay sleeping business and a full-time product with many employees. As a trader, you don’t have to take care of the stock, and it takes the same job to sell 10,000 items as it makes 10 sales. But for customers, they get a service quality equal to the larger products in the voice.
As a retailer, you can run a one-person business that sells thousands of items each month, all remotely anywhere in the world. I am currently in South America with Amazon FBA businesses in Europe, Asia, and North America.
You get the stock and bring it to Amazon FBA. After that, all you need to do is focus on getting sales.
In this article, we will discuss two main types of Amazon FBA businesses. (There is one completely different type I have covered in this article: Retail Arbitrage).
- Create a product from scratch: It is professionally designed and made. Then work hard to convince people that they want it and will buy it. This is the method I follow, and it is written with tennis bat charges on the table in this post. It’s a lot of work, and it puts you at real risk of finding that people don’t want anything you’ve invented.
- Renew/improve someone else’s product. Just find something that is not very good that sells well and create its best version. There are hundreds of items on Amazon that are just plain paper products with a white label. You can even find the same factory that makes the first thing and make them make your product. As of 2019, this is the easiest and most profitable way you can take. We will cover this approach in this direction.
How to Find Your Products
We have talked a lot about Amazon, but another significant global company is Alibaba.
Alibaba is a Chinese online retail market where firms and distributors worldwide showcase their products. Most of these companies will work with you to create and create your unique product.
Since Alibaba arrived on the scene, it has been straightforward to create an Amazon FBA-based business. It’s effortless. It also led to Amazon being flooded with products with a white label directly from Alibaba with an attached product and a higher price. Most of them do not sell well, but you do a lot.
The only difference between the two is to add the product name… and the price increase.
You can buy them in bulk at Alibaba, book your product for between $ 1 to $ 7 each (depending on how many you buy and how well you negotiate), and people buy on Amazon for £ 16.95. Even with all the costs and expenses (which we will talk about later), that is still an excellent profit margin.
Now I can’t be 100% sure it’s the same industry that does both. But it doesn’t matter. Depending on the size of the yard, only one or two toys will fit.
The insect repellent looks very low, but you can also find the highest quality, highly respected products in Alibaba.
On the Alibaba industrial website, they described themselves as: “The official supplier of ‘RDX’ is one of the world’s leading durable, and many other products.”
I am not suggesting that you should try to create fake RDX gloves. That could be bad business and bad – it wouldn’t take long before it was closed. But I suggest that if you can improve in boxing gloves, you can officially contact that factory in Alibaba, make your unique boxing gloves, add your brand and start competing with RDX.
How To Do Market Research On Amazon
Getting a good idea about a product can take some time and research, and it’s worth it not to rush. It is the full title itself. You can check out my in-depth guide here.
To get an idea of what to sell and how much I spend on a market research tool called Jungle Scout.
Amazon’s in-depth search tool compares each listing with its data to find out how much your competitors are selling per month. It costs $ 69 a month with a version of the web app (EDIT: Now reduced to $ 49 per month), and you can cancel once you have selected a product.
There is more to finding a good product (size, weight, and price are also important), but we don’t need to go into that much information right now. If you’re interested, you can bookmark this post and come back later.
Getting Your Stock From Alibaba to Amazon FBA
The last piece of the puzzle to set up an Amazon FBA business is how you get your stock in bulk from factory to FBA archives. On the face, it can be not easy. Each country has different cultural processes, and Amazon has some complex requirements for how they need to deliver your products.
Happily, many companies deal with all of your sufferings and make it easy, known as freight forwarders and cultural vendors. I recommend Flexport. They are sponsored by Google, have a good online display, and thanks to a transparent, affordable price comparison service.
The steps are simple enough:
- The factory delivers the stock to a Flexport freight forwarder.
- The consignor receives stock in the country you are going to and deals with all taxes and paperwork.
- Shipping offers stock to Amazon affiliate subscribers who subscribe to FBA archives.
Well, the basics of Amazon FBA business:
- Find a factory in Alibaba.
- Open conversations with them and build your brand.
- Find a great collection of things to do.
- Use a freight forwarder like Flexport to get items from the factory to Amazon.
- Find marketing and sell your products.
- Now let’s get into the nitty-gritty.
If you have ever browsed something in Alibaba, you might be a little shocked at how cheap factories are selling a large number of their goods. Unfortunately, it is not as easy as taking the price you sell and withdrawing the money you paid for; there are more costs you can incur.
I’m talking about price and line at the beginning because it’s so important. You can’t start talking to the producers until you know how much you need.
Fortunately, Amazon has a portable calculator that you can use at a lot of costs.
Just find something similar to yours, or enter the size of your product.
In addition to these costs, there are a few other things you need to install manually.
- The price of the item.
- Shipping to the country.
- Customs and taxes.
- Delivery to Amazon FBA factories.
- You can contact Flexport and Alibaba factories to get all these costs.
A common example would be:
- You expect to be able to sell that item for $ 16
- It costs $ 4 for each item to buy.
- Shipping is $ 1 per item.
- Taxes and import duties are $ 0.75 per item.
- Delivery to the FBA warehouse is $ 0.2 per item.
- The FBA filing fee is $ 3.05 per item.
- Amazon’s closing fee is 15% of the retail price, so $ 2.4.
- Your profit is $ 4.6 per item.
That’s still a good limit and as long as we can get to sell a good Amazon FBA business.
- Due to Amazon’s fee, your best product will be:
- Selling between £ 15 and £ 50 ($ 20 and $ 70).
- Small and lightweight.
- Simple parts and not too many moving parts.
And of course, something people want to buy. As mentioned earlier, finding the best products you can sell on Amazon is the best post ever posted. In short, there are a few great tools that can help you research the right product. JungleScout is probably the most popular and popular.
Working for your real profit is difficult, and many people choose a monitoring tool.
Seller Spike tracks all of your products from the first purchase to the last sale and works for your direct benefit. It is unnecessary, but if you are worried about getting your number right, it is beneficial. And once you have a few products and spend money on advertising, it becomes hard to stay out of it.
Once you understand how limits and costs work, the next step is to start talking to other manufacturers.
Finding A Manufacturer
I suggest talking to as many industries as possible.
With Alibaba, it’s so easy, use the search bar for whatever you want and click on “contact supplier” next to the companies that loaded the word ‘OEM’ at the end of your search. Example “Flashlight OEM.” It stands for ‘practicality’ and should filter out all retailers and give you factories that make things.
You can capture the same message in many different factories and play them against each other. Factories know the new business value of Amazon FBA and will want to work with you.
It’s much harder to describe what I see in a good factory than the “good feeling.” I think it comes with performance. I suggest that once you’ve talked to them, try chatting on Skype. If their English is too bad you can’t speak, then it probably won’t be okay.
Once you’ve narrowed down your search to 3 or 4 of your favorite industries, ask them to send you a sample. Some places will send you one for free, some will charge you but then deduct the cost from any major order you end up making. A few will ask you to pay the full amount.
Once you have samples from a few industries you are excited about; it is time to move on to the next step.
Now, remember, we are not just looking to resell their products. We want to improve ourselves and make it our own.
This process can take a long time, but it is worth it. If you can make the designs well, that can help speed up the process. You can hire a freelancer at Freelancer to help you.
Or you could make amateur proposals and ask the factory to make the products. Here are some of the designs we did for Microsoft Paint for our tennis table.
One of the keys to the Amazon FBA business is to keep costs as low as possible. So make sure you think of the best way to spend your money.
Negotiation and Manufacturing
Negotiating with Alibaba is a requirement. You can often easily get 40%-70% off the asking price.
At first, it is essential. You might be able to get a great deal if you order 10,000 items, but that would be crazy with a new product you haven’t tried to sell yet. If no one buys it, you are left paying for the storage of 10,000 items! I recommend s
out you may be willing to sacrifice some margins to speed up Amazon products.
Freight Forwarding, Customs & Prep Centres
The consignor will do most of the shipping and customs work for you. They’re usually good enough not to need to go into too much detail without talking about shipping options.
Shipping from China to the UK or USA will take 6-8 weeks. With flights, it will take less than a week. But the plane will cost about five times.
Amazon and Amazon FBA
Once your shipment has reached the country you are going to, you need to add it to Amazon archives.
But first, you will need to create an Amazon account.
It’s free to register as an ‘Individual’ seller for Amazon in many countries, and anyone from many countries can do so. India is the only thing I know where you need to have a business based in India to register.
There are two types of Amazon accounts. Individual and professional.
Each person is free but pays extra for each item sold and has access to small analytics.
The person charges a monthly fee.
The best way to get decent sales of a new product in the new Amazon FBA business is to make a sharp burst and try to climb as high as possible at the highest selling levels.
That’s when the Amazon algorithm will start showing that thing to people searching on a website.
Let me explain.
When you start a new Amazon FBA business, you have zero updates and do not sell zero. You don’t even have an Amazon merchant position. There is no reason for a customer or Amazon to trust that your product is right.
Amazon has a secret formula that determines what comes up when people want something. It’s a secret, but we can guess how it would work logically. It is known as the Amazon Search algorithm.
Let’s pretend I’m an Amazon algorithm, and it’s my job to choose what we show people who use the site. Imagine that someone wants a cup of tea. How do I choose from the hundreds of teapots I have to show the user?
Yes, I think my first impression would be to rate all Amazon teapots for how much they sell. Put the best sellers at the top and the best sellers at the bottom.
But that is very simple. What if the best-selling tea is just a big brand name trash, but they spend a lot of money on advertising? People still buy it but give it bad reviews.
Okay, so measurements are also important; let’s look at that. Maybe I’m showing a better-reviewed tea that’s higher than a tap with a little more sales.
But that too is very simple. How about a teapot with only one update. Although it is a 5-star review, I can’t show that it is higher than tea with 100 4.9 reviews. Okay, so I somehow estimate the rating by the number of reviews.
But what if there is new bitmap technology and the best-selling teapot is behind the times? There are still all those good reviews. And it can still sell well. But it is wrong because it has been a long time since it could take years for a better teapot to get the same number of reviews.
Ok, now I’m going to consider the momentum. It only lasted a few weeks but got a lot of sales and good reviews that I will show you in the top spot.
This is a quick recap of this blog post. If you have missed anything, you can find it here:
- Select a product.
- Find and open links to relevant Alibaba firms that produce similar products.
- Request samples and submit prototypes to be made.
- Start producing.
- Use a freight forwarder like Flexport to get your stock in the target country and culture.
- Open an Amazon Merchant Account and create your list.
- Create an Amazon FBA and pay in advance for the post.
- Provide your courier with pre-payment shipping labels.
- Start marketing.