How to Start an Amazon FBA Business?By Jamie Toyne
So you’ve decided to start an Amazon FBA store. Good for you! This is a tried and tested business model, and there are a lot of people making a lot of money off such setups these days.
You probably already know, but we’re going to tell you anyway, that FBA stands for Fulfilled by Amazon. These kinds of FBA stores allow Amazon to pick, pack, and ship your orders. So, this means you store your product at an Amazon fulfillment center (or multiple), and they pick, pack, ship, and even (for additional fees) provide customer service for the products.
If you’re not quite sure what kind of Amazon FBA business you’re after, start with some soul searching. Figure out where your passions lie and explore various niche markets that fit within them.
Of course, if you already have a successful website and audience, you’ll want to pick a niche that aligns with them. Don’t start selling men’s fashion if you have a following of young women — but that’s a no-brainer!
Once you have selected your niche, the real work begins. But don’t worry, it’s made up of somewhat enjoyable tasks. Your first step will be to select your first product.
Conduct thorough market research
Market research is the process of gathering information to help you thoroughly investigate your product’s market viability. To reach a sales spike with your FBA business, you need to first ensure that your choice of product matches the current demand. You’ll need to conduct detailed, realistic and data-driven research in advance, to see what products can succeed in today’s marketplace.
This can be quite a time-consuming process, but it’s a must-do, as it will lay the groundwork for your business, and spare you future headaches. Keep in mind that research can be a never-ending task and one that you need to be constantly on top of if you’re planning on keeping your FBA business on top of its game.
All market needs change over time, and a product that is now selling might become obsolete and be replaced with a different one down the line — you just never know what the future holds…
Suppose you don’t have time for this type of primary market research, sourcing information from focus groups, online surveys, etc., you can try your hand at secondary research. In the latter, you’ll be making use of whatever public data and records you can get your hands on, and drawing your own conclusions from those.
Before we dive into a few secondary market research tools, you might want to consider setting a target group beforehand. Analyze that target group, their consumer behavior, size, location and budget.
For example, if you are aiming mostly at younger buyers, you might want to pick a product with a generally affordable price. A more expensive product, even in high demand, could prove harder to sell, especially since anything that will slow down the purchase (read: overthinking) prevents that coveted “impulse buy” process from taking place.
Once you have set your target group, it’s time to open your laptop and do some serious research!
Since you are starting an Amazon business, it would make sense to begin with the Best Sellers Rankings, on Amazon itself. This list is updated by the hour, and will show you the products that dominate in each category — and it is also an excellent way to check the competition. It is important to pay attention to the number of reviews on each product, as this will show you how many people actually bought it.
Remember that not all best-selling items are equally popular. Consider selecting just one or a few at this point, and then turn their best and worst reviews into your bullet-pointed marketing plan!
Another source that could help you is keyword tool sites, such as MerchantWords, which holds the most accurate Amazon SEO (Search Engine Optimization) tools on the market. Here, you can easily track how often people search for a specific product keyword, and you can get ideas on what words to include when listing your item online.
When you’ve decided on a specific product or category, you can then visit Google Trends, where you can see the interest in this product over time, by region and with related topics/queries.
Before you reach your conclusion, remember to check the Amazon FBA fees that apply, depending on the product’s size, shape, shipping weight and other factors.
Things to watch out for
Keep an eye out for products that are popular just because of their brand name — people are often hesitant to switch brands. Watch out for products with over 50 good reviews that are also doing well on the Best Seller Rankings — these two signs often signal that a product is slightly too competitive to start with.
That said, there are times when you’ll come across a product that doesn’t have much competition, which isn’t being marketed as it could be. These are gold nuggets that you simply must keep to yourself — until you’re ready to launch your store, that is!
When you come across such an opportunity, you can often kick things up a notch and put your own stamp on it, literally! Some products can act as white label products, which means that you can brand them with your own private label, and really up the ante on your store’s brand. This, however, requires a bit more of an investment of both time and money, but it can be worth the trouble to create a demand for your brand and products.
Retail arbitrage is another approach that works for some sellers, though certainly not all. The idea is that you purchase ridiculously cheap brand name items from outlet stores, and sell them for a higher price on Amazon. This, however, has been identified as a less profitable route, particularly for anyone who plans to sell their business down the line.
Source your products
Once you’ve found your first product to sell, you’ll probably be pretty stoked. But now the real work begins! You’ll need to find a supplier before you can start trading.
Products sourced from within the US are often priced higher than those from outside countries (like China or Indonesia, for example).
If you are looking to source your product within the US, it’s a good idea to look for local trade shows within your product’s industry. You could also just pick up a trade magazine or check around for some helpful resources at your local bookstore or library.
When you do finally find your matching supplier, check out what other similar products they make, and see if you can expand your offering from there. This could be the start of a glorious relationship (which is key, because it’s really important to have a good relationship with your supplier!).
Figure out shipping
Right, so now you’ve figured out which product(s) you’ll be selling, you’ve located a supplier…what next? Well, you need to figure out how to get that product from your supplier to your buyer.
You can have your product shipped by air, sea, or land (via plane, boat, truck or train). As with shipping anything, these come with varying costs attached, as well as varying regulations.
Because of these two variables, products from overseas are often too expensive, and it can be too difficult to get them past the red tape (overseas goods can come with tiny mountains of paperwork attached).
Shipping by train is best for products that need to be transported from a port, over a long distance. Obviously, your product’s shipping route will be relegated to where the train tracks lead. Still, if they happen to lead to a convenient location for you, then you may just be on to a winner. This is also an ideal method for shipping larger, bulkier items, where the costs will skyrocket if sent by plane.
If you’re shipping from overseas, your choices are, of course, limited to boat or plane. Shipping by boat is 50 percent cheaper than shipping by plane, and this method, therefore, makes it a workable option for scaling your new Amazon FBA business. This guide on Jungle Scout’s blog, however, also warns that this shipping method tends to be heavily regulated.
Because products shipped from overseas are usually far less expensive than products sourced within the US, shipping by boat is the preferred shipping method of most Amazon FBA sellers.
If shipping from overseas, be sure to brush up on your knowledge of your country’s customs laws, fees and regulations, as your product will most likely be subject to some or all of these.
It’s also possible to have your overseas product shipped directly to an Amazon warehouse. This comes with its own set of risks — like not being able to perform quality checks before it goes to your customer (though you can pay someone to do this for you).
You could also opt to receive the shipment yourself, and prepare it to send to an Amazon Fulfillment Center. Be warned — Amazon’s regulations are notoriously tight (and, speaking of tight, have you considered where in your house you’re going to store all these products?).
Another (better) option? You could have it shipped to a Virtual Assistant (VA) or another third party who will take care of precisely packaging your product for you. This is one of the best ways to maximize your Amazon FBA business’ selling potential.
How to market your Amazon FBA product?
Now that you’ve put in all the groundwork, it’s time to spread the word about your product and get everyone drooling over it.
You’re already one step ahead of the game by listing it on Amazon, which gets an incredible ⅓ of the US’s website traffic. That said, to give yourself a shot at launching a best-selling product, there are some tried-and-true marketing tactics you can test out to attract more eyeballs…and wallets.
Write a killer product description
Let’s talk copy. You may or may not be a brilliant writer. If you’re not, you might want to hire a writer to knock out some product descriptions for you. There are people who specialize in this field and have a tonne of experience SEO-optimised writing product descriptions.
If you’re writing your own copy, you’ll want to brush up on your SEO knowledge. Check out keyword research tools (there are some passable free ones) and use these to optimize both your product title and body description.
For the title, you’ll want to include your actual product name, as well as some popular keyword that customers are using to search for your (or similar) product(s). Think about the qualities your product has — is it soft? Large? Pocket-sized? Waterproof? Childproof? These descriptive words could make the difference between your customers finding you, and them finding your competition.
The description will work best with a general overview, and then concise bullet points that get into the important details of the product: size, weight, functionality, what all it comes with (and what it doesn’t), available colors…you get the idea. Be sure to be specific, and of course, honest.
Once you’ve written your description, read it aloud to yourself. This process may feel silly, but it’s one of the best ways to self-edit and catches 99 percent of all errors (so long as you know basic spelling and grammar, that is).
Any time you stumble over your words means that you can improve the flow of that particular sentence with some TLC. Remember: your audience will have more faith in your brand and product if you show them a professional, easy-to-read description that tells them everything they need to know.
Up the ante with your product visuals
Of course, you already know that you need decent photos of your product. And yes, you can snap some with your smartphone — most mobiles these days produce pretty impressive images for us amateur photographers.
That said, it’s probably worth your while to get some professional photos done. Aim to get a variety of pictures from a range of angles, showing every nook and cranny of the product. The more details you can show, the better.
People these days are less and less apprehensive about buying online, but the more details you can give them, the more confident they will be in your product, and the more likely to buy.
Advertise your Amazon FBA product
You can give your product and brand a leg up by investing some money into advertising. Pay-per-click (PPC) advertising is one of the best ways to advertise an Amazon FBA product.
This method allows you to bid on keywords and key phrases your potential customers are searching with. PPC means your product will appear in the “Sponsored Content” section of any search engine, and you pay Google (or another search engine) every time someone then clicks on your product.
You can also do this on Amazon’s own search engine, and boost your product so that it appears on page 1 of Amazon’s search pages for specific keywords. This will make it show up to potential customers as a “Sponsored Product.”
Gather your product reviews
Product reviews can truly make or break an Amazon FBA business. You’ll want to gather as many good ones as you can (remembering that they should also be honest and authentic).
It can be a bit of a catch-22 at the start, because no one will buy your product without reviews, but you can’t get authentic reviews without people buying your product.
Don’t worry, there are alternative methods. Check out product review groups on Facebook, where people are willing to write reviews on your product either just in exchange for the product itself or for a small fee. This can be a good way to get started.
Even better would be if you could identify a blogger or social influencer with a large following whose niche fits with your target market. If you can get them to give your product a positive review, say, on their Youtube channel, you could be headed for the big bucks.
Content marketing for your product
We’ll keep this section short because it’s actually quite simple: if you already have a blog or website, go ahead and continue with your content marketing. You can incorporate the product keyword research you already did into your content marketing plan, building an editorial calendar around your hottest keywords and phrases.
However, if you don’t already have a website or blog, now may not be the best time to launch one. You can run a successful Amazon FBA store without one (though it does help), and it’s a lot of work that won’t show immediate results. It can take months or even years to build up your ranking for certain keywords.
Content marketing would certainly be worth it down the line, but it’s not something you need to do right away, upon the launch of your Amazon FBA store and your first set of products.
All done! Now what?
Well done for laying the groundwork for a successful Amazon FBA store filled with desirable products with captivating photos, engaging and detailed titles and descriptions, crafted around SEO keywords that your target market is searching for now.
Once your store is running well, you may wish to consider hiring a VA who can maintain your store, continue to do keyword research on your products (as results will change monthly, so you must keep your keywords up to date), and even source new products for your store.
When you become really successful, you may even consider selling your business. There are plenty of investors out there vying to get their hands on successful Amazon FBA stores that can essentially allow them to skip the line, and fatten their pockets while they sleep.
Here at Dealflow Brokerage, we sell such lucrative businesses. Simply download our prospectus and browse through it to see the kinds of Amazon FBA businesses we currently have for sale. Alternatively, if you have an Amazon FBA business for sale, get in touch with us today for a valuation!