New Amazon sellers want to learn about Amazon FBA which is a different beast in drop-shipping. It’s another form of e-commerce with completely different terms of how much cost you’ve got to get started in terms of the profit margin to simply just selling on Amazon.
First off , some of you may be wondering what exactly FBA is ?
How does Amazon FBA Works?
How can it benefit you as a new Amazon seller?
How to get started?
Lets dig in
To put it simply in, with Fulfillment by Amazon (FBA), you store your products in Amazon fulfillment centers.
Amazon ships your order to handle customer service and take care of returns that allows you to spend your time growing your business. However, this is not only the reason to start with FBA.
Fundamental understanding of the frictionless process of item delivery by Amazon is necessary. First and foremost, you need to understand the value of Amazon FBA.
There are some of the substantial reasons you need to start amazon business with FBA. Some of the benefits are listed below.
- It will help you reach new number of customers
- Customers love free shipping and Amazon FBA includes the Free-Shipping
- With Amazon FBA, you can sell more during the holiday season
- Same-day delivery service is given to Amazon FBA Seller.
- It is the most cost effective and easy way to free shipping of your product.
Else, through FBA, your products may be included in innovative new programs of one day free shipping which is available to prime sellers only. New FBA sellers number grew by 50% every year. While 60% of the increase in FBA units shipped was in the holiday season.
How Does FBA Work?
Amazon FBA (Fulfillment by Amazon) is out the gate like private labelling for the most part. For people who don’t know, the most beautiful part of Amazon FBA is that Amazon does all the hard work for you.
You don’t have to go to UPS (United Postal Services) and ship out your product you want to sell online. You don’t have to do any of the work and collect any of the payments. Also, you don’t have to make your own website to sell your products.
Obviously, when Amazon.com already exists
All you need to do is to find the product, a product that you want to sell on Amazon. Well, there are a lot of ways you can figure out the potential product. Once you find a good product you’ll sell on Amazon, then you may do listing of the product and run a few basic marketing campaigns on Amazon Marketplace.
There are millions of people browsing every single second on Amazon. They already have a huge number of traffic. You don’t need to bring traffic from external sources to sell your product as they already have your interest traffic.
All you need to do is get your product ranked on page # 1 for the search terms / phrases you want to rank for. To do that, there are a lot of seditious ways.
The very first step is to identify your product and its quantities required to fulfill using FBA and send them Amazon way. Once Amazon receives your products, store them into their fulfillment network Amazon Fulfillment Centers to make them available to customers.
Once the customer sends an order to the seller, the seller’s product is picked, packed, dispatched and set ready for shipment by Amazon. Amazon does this all for you, ship your products to consumers on your behalf.
Amazon is liable to provide the customer service for the FBA sellers and also manage the customer returns. With FBA, managing your day to day operations becomes flawless, where you can easily focus on other areas of your business.
Types of FBA Fees
There are three primary types of fees of FBA.
Fulfillment fee order handling (per order, per unit and pick & pack charges, weight handling (per pound). These fees vary on the size and weight of the product.
Inventory Storage Fees: This fee is charged monthly in which Long-term, Storage Fees may apply. They use the product dimensions to calculate the volume of your product to the storage rate to determine your fees. Amazon charges only for the actual space used. Whereas, there is a prorated charge, if they hold the products for less than a full month before shipping out. Amazon also offers a variety of optional services including preparing and labeling your products. And removing the disposing of inventory. You may opt any or all of these in accordance with your convenience.
Once you’ve converted an item to FBA , you’ll see a fee preview in the Seller Central dashboard. Clicking on the drop down will give you a detailed breakdown of fees. You can also click on the bottom side of the window to generate reports of all FBA items.
FBA Revenue Calculator
The FBA revenue calculator is a great tool for understanding FBA fees where you can search for specific items or similar items being sold on Amazon. Once you enter the cost information for fulfilling the item on your own, you can compare on your own what it would cost through FBA.
Overall buying process is super easy. Once you’ll learn that. You’ll incredibly be in love with them.
Simple Steps to Get into the Amazon FBA Game
1- Both granular levels and higher levels exist in Amazon. High level amazon basically is you find the products from china or cheaper markets. You get them paid, shipped to amazon for fulfillment. Amazon fulfils them all for you and you get paid. It’s like you buy on $1 from China and you sell on for $20, Amazon takes their fee for filling, handling all of the hard work for you. You get paid on the basis of profit what you paid to supply chain and the price on which you sell on amazon.
2- Granularly, there are few steps where step 1 is product research.
- Product Research
Product research is most important of the entire selling process on Amazon. You can do pretty much everything else wrong, but if you pick the right product, you can still make tons of money. However, if you pick the wrong product, you ‘ll have a hard time in building success on Amazon or it might be a loss rather than profit.
You have to identify the diamond in the raw. Like there are a lot of products with zero reviews. So, your job is to identify those differences. You find the sweets box that a lot of people are searching but not many sellers are offering that item. Or the other sellers are offering the products in low quality, you can provide the higher quality product or offer the items in the form of bundling which really works great. If you’ll add quality, you’ll add value to your product and passive way to make money.
- Find a Manufacturer for Your Product on AliBaba
Alibaba basically is a directory of manufacturers. Let’s say, if you want to have Bluetooth headphones, you can go to AliBaba.com and search for the product you want to get made. As a result, 100s of manufacturers are going to come in search results out of which most of them are from China.
Set Criteria to Find Manufacturers
- Manufacturers with a year of history should be preferred.
- Manufacturers with a Gold Suppliers badge from AliBaba are preferred.
- Transaction history of the manufacturers
- Lots of reviews
- Real company, real website
Once, you select the manufacturer ask them how much would you charge to make me a product x in 500 numbers – 5000 numbers. Make sure to never ask for 1 product from the manufacturer. They would not listen to you and this way you won’t get a good deal.
Set cheaper prices for larger amounts and apply it to smaller amounts.
Manufacturers have MOQ (Minimum Order Quantity) set so that you can stay in stock for a minimum 3 months which is generally the longest amount of time that takes to restart. Its’ like never going out of stock. Credibility and leverage via manufactures template to get discounts.
- Create Your Listing on Amazon
Every seller and buyer, type in some search terms to find the product of their interest. They see the listing of the product,value, benefits, images, title, specifications etc. You have to optimize the listing of your product from a seo perspective. Because Amazon at the end of the day is a Product Search Engine where you want to make sure that your product is on top of the search results for targeted keywords you want to rank for. That’s how you get cheap and organic sales.
Title, image, price and reviews are very important in decision making identifiers of the buyers.
- You Need Reviews
Amazon is 100% capable of tracking Facebook friends. If two people are friends on Facebook and review their product, Amazon gets them shut down. Two ways to do this, 4 price launches is probably the first and second way to get reviews on Amazon.
Amazon early reviewer program, where you pay 60$ to Amazon and they incentivize random customers with 1 -3 $ gift cards to leave an honest review on your products. You are eligible only if you are a new amazon seller and want to get 0-5 reviews. Anything against terms of service is not recommended.
- Launch Your Product
Launches and reviews go hand in hand. Launch with zero reviews will hit back in terms of selling the product. Get your product on page 1 where any from the USA types your product name , finds you on page 1.
- You have to be on Page 1
Giveaways, Amazon now don’t give you the price ranking boost. A key to getting on page 1 is finding the correct keywords phrases that user types to find their desired product. PPC for a lot of people, is the most complicated part of the entire process including product research and Amazon PPC. If you can master PPC that basically means if anyone searches for anything like even close to your product, your product shows up. It’s going to show pop up. Moreover, you get ancillary kind of complimentary benefits.
Remember: You can never expect Amazon business success overnight. It takes a lot of time, effort and dedication to reach the top of the Amazon search results. You must know little tricks, tips and hacks to know what’s currently working on Amazon and what’s not working.
Get all your products live… where Amazon literally handles the rest.
Tehmina Zamir is a Content Manager at Blackbird Suite. With 5+ years experience in the multiple-niche industry, she writes action driven marketing sales copy to help millions of Amazon sellers grow their business at a rapid rate. She is also an author of Global Patient Transfer, Gooline Space, Healthwiz360 etc.