Amazon FBA for beginners – How does it work

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In this article, I am focusing on Amazon FBA for beginners.

Amazon provides great opportunities for ordinary people to make money through their Amazon FBA program. I am going to give you all the information you need to get started.

My amazon experience started in the summer of 2017 and I am still hanging there and learning and generating some additional income.

This article is based on some of the valuable lessons I have learned selling on Amazon platforms across the world.

Let me just drop some points below which summarises some of the lessons I have learnt. Just like any side hustle, there will be a lot more than can be covered in a single post.

Fulfilled by Amazon

This is what I love about Amazon and what makes it different from eBay (I also sell on eBay). With Amazon FBA, all you need to do is to send all your products to Amazon fulfilment centre, Amazon will then take over the rest

When a customer buys one of your products, you will not need to do anything

Let me use one of my products as an example

300 units were shipped from China to the Amazon Fulfilment Centre

Whenever a customer buys the product, I don’t need to do anything, it will be the responsibility of Amazon to send the product to the customer from their warehouse (Fulfilment Centre)

This is a game-changer, unlike the Merchant Fulfilled (also available for sellers on Amazon) where you will have to visit the post office or courier drop off centre multiple times to ship products to customers

Fulfilled by Amazon is a great example of leveraging. It’s not a free service, you will pay fees for this service but it worth it

Amazon will pick, pack and ship your products to the customer at some cost to you.

4 Major Business Models on Amazon

On Amazon there is 4 major business model, you can focus on just one or you can do all

Retail Arbitrage

You pick up products from normal shops or supermarket, sell the same product for higher that you bought it for after Amazon deduct their fees

You keep the remaining and this is your profit. Do over and over and you can earn good money

Online Arbitrage

This is similar to retail arbitrage above. The only difference is that for online arbitrage, you will need to buy the products online

Wholesale

You find wholesaler or distributors, buy few or bulk and sell on Amazon

Again make sure you buy at a low price and sell for higher on Amazon. Buy low and sell high, it’s as simple as that. It’s simple but not easy

Private Label

This is the one I love the most. It require a lot of work at the beginning because you have to research good products that sell well, sometimes you have to design the product

You will find a manufacturer or supplier, mostly from China but you can find a manufacturer in any country including here in the UK

These are my few points based on my experience of selling on Amazon

Lessons Learnt selling on Amazon

1. Amazon FBA is not for everyone – When you test it out you will know straight away if its what you can cope with or just pass.

2. Quality – Ensure your product is high quality if you do private level

3. It takes time to succeed – Anything that will worthwhile will take time to master. There is no magic formula. There are a lot of people online making it look as if you can just throw product on Amazon and you will become a millionaire. It will take time and work to make it work.

4. Feed the Beast – Amazon is the beast, if you don’t feed it, the money will not flow. Once you stop sending products to Amazon fulfilment centre, your sales will drop or stop because you will not have products to sell. It is not a set and forgets business.

5. Product research is key – Without the right product that customers are looking for, it will be a waste of time to sell on Amazon. Finding the right product is crucial to success.

6. Amazon fees – To sell on Amazon you will pay fees. They have an online calculator to let you know the fees.

7. Start Small – Starting small is very important. It reduces risk. Test, test and test.

8. Manage your expectation – There is nothing wrong in having a high expectation. However, I have seen people have too high expectation about how much money they can make and suddenly get overwhelmed when things are not happening as quickly as they expect.

9. Think long term – after testing phase if you prefer to test it out first, it is important to think long term and stay consistent. Like anything you do in life, you need to be consistent in order to succeed.

10. Remove emotion from decision making – If the maths is not right, don’t waste your time sourcing a product. Business is about profit, any business that can not make a profit will go under, it is as simple as that. Because you are passionate about a particular product don’t mean customers will pay for it.

11. Page 1 – This is where the magic happens because most customers don’t look beyond page 1. To get to page one for any specific keywords, the major factor is sales volume. There are other factors like how long the product has been on Amazon and how to optimise the listing is.

12. Amazon SEO – Just like you see it in blogging, there is also Search Engine Optimisation (SEO) on Amazon. Amazon like Google is also a search engine.

Challenges of selling on Amazon

1. Category restrictions – When you are new, you will not be allowed to sell in all categories straight away. When you meet the requirements, you can sell in most categories.

2. Returns – Just the way you buy things and return because you change your mind. Customers will do the same and its part of the selling universe.

3. You don’t own the customers – It is important to know that the customers you are serving are not your customers. They are amazon customers.

4. Suspension – It’s like a comparison between blogging and Youtube. A blog is more or less your property but YouTube can kick you out if they want. Also, Amazon can suspend your account if you go against their terms and conditions. Don’t get scared, you won’t be suspended as long as you do things in the right way.

5. Bad reviews – Some customers are just not kind. Even if you have a high-quality product. You can’t satisfy all customers. But, customers are always right.

Final Thought

To succeed on Amazon, you need to work very hard, consistent, and think creatively. I have another article  I wrote about how to start selling books on Amazon.

Selling books is a low-risk way to start selling on Amazon. You might want to read that article by clicking here.

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