How to Start an Amazon FBA Business

Intro

The popular Amazon FBA (Fulfillment by Amazon) program gives would-be entrepreneurs like you the opportunity to leverage the eCommerce giant's vast infrastructure to sell your products.

Once you send your stock to Amazon's warehouses, the company handles all logistics involved in picking, packing, and shipping orders, making FBA an easy and effective way to establish a profitable online business.

In this guide, we'll cover everything you need to know to start an Amazon FBA business of your own, from choosing the right product to launching a listing and generating revenue as a new Amazon seller.

How to Start an FBA Business on Amazon in Six Easy Steps

Ultimately, there are three key elements you need in order to succeed with Amazon FBA: products to sell, an account through which to sell them, and a strategy for selling them in a potentially competitive market.

The following six-step process will enable you to acquire all three and start paving the way to a profitable business.

Step 1: Pick a Business Model

In 2022, more than 60% of Amazon sales came from independent sellers, which is perhaps not too surprising when one considers that the company offers multiple business models for third-party sellers.

This means that would-be business owners of all backgrounds can find a suitable route to start selling on Amazon with FBA.

The most popular of these methods include:

A. Retail and Online Arbitrage

Retail arbitrage refers to the process of buying discount products from retail outlets and flipping them for a profit on Amazon. Amazon online arbitrage is essentially the same thing, except you buy your discounted inventory from other websites instead of brick-and-mortar stores.

This approach serves as a great low-cost entry point since you can source your products relatively cheaply. On the downside, however, scouring stores is hardly the most time-efficient way to do this, and there’s no guarantee which types of products will be discounted when you visit.

B. Wholesale FBA

The wholesale model may have more long-term appeal for serious entrepreneurs, as it offers the potential for higher profits.

With this model, you buy branded products in bulk from a distributor or brand owner. The more units you buy, the greater the discount you receive. This means you can then sell these products on Amazon at competitive prices, while still generating a sizable return on each unit sold.

With wholesale, you also have the option to negotiate with your supplier so that they send your inventory directly to the Amazon fulfillment warehouse. Still, while that can be a useful way of eliminating the time and effort needed to get your products to Amazon, don’t forget to quality-check your order before putting it up for sale.

On the downside, wholesale FBA does require a higher initial investment to make your first bulk purchase, meaning it may not be the most accessible option if you’re launching your business on a small budget.

C. Private Label

With the private label model, you're responsible for creating your own products and selling them under your own brand. For this type of business, you’re using Amazon as both your sales platform and fulfillment service.

This route is ideal for anyone looking to establish their own brand and retain full control over their pricing, though it does require a lot more time, money, and product knowledge compared to other Amazon FBA models.

Step 2: Research and Select Your Products

To maximize your chances of building a profitable FBA business, you’ll need to conduct adequate product research and analyze Amazon sales data to find the products that are most likely to bring you profits.

Amazon's “Best Sellers” page is a great place to start your product research, as it can give you a good idea of the kind of products that are in high demand in any given niche.

However, if nothing immediately jumps out as the ideal product to sell and you’re still unsure where to start, consider using a product research tool.

For example, with the AMZScout Product Database, you can enter a keyword related to any product niche you’re interested in, or simply select a product category, set filters (like price or sales) to show you the most suitable products that match your criteria. If you want to find ideas from scratch, you can use a range of pre-set filters.

The database then provides you with a wealth of useful information about each product for your search.

In the example illustrated above, we can see that a tableware set generates an estimated 17,280 monthly sales for a total of $290,782 in estimated monthly revenue.

Meanwhile, at the opposite end of the table, we can see that there's just one single Amazon FBA seller who offers this product. The most likely scenario here is that this means this is a private-label product fulfilled by Amazon FBA, meaning it’s not available for retail.

In that scenario, you can analyze the whole niche to check out other strong sellers who sell similar products. If the niche is not too saturated, you can create your own brand and sell that product under your label.

To explore product profitability, can click on the small calculator icon to open the Profit Calculator tool.

This last part of the research project is particularly important, as you'll need to ensure that your expenses (inventory purchase, shipping, and Amazon fees) won't eat into too much of your profit.

Take some time to take note of a few products that meet that criteria, then dive deeper as you analyze each product on your shortlist to determine which one has the most potential for profits.

Step 3: Source Your Products

Once you've found the perfect product, your next step is to source it. The way in which you do this will depend on the model you chose.

• If you’ve chosen the private label route, the best way to source your products is by looking at online marketplaces such as Alibaba and AliExpress, which allow you to search for thousands of products and suppliers that can be packaged and sold under your brand.

• If you’re adopting the wholesale model, you can find wholesale suppliers via directories, like Wholesale Central or Bargain Wholesale.

Once you sign up for an Alibaba account, you can also contact suppliers directly through these platforms to negotiate a sale.

As you carry out this step, be sure to choose a supplier who is reliable and has a good reputation, especially any who is willing to provide you with a product sample, before you make a bulk order.

After all, the last thing you want is to be stuck with a supplier who fails to deliver on time or ships poor-quality products.

Step 4: Create an FBA Account

Having secured a deal with a reputable supplier, your next step is to head to Amazon Seller Central and create an FBA account.

Here, you’ll want to pick the $39.99 per month Professional Pan. This option is best suited to growing your FBA business, as it gives you the freedom to create unlimited product listings and run sponsored ads, all without any per-sale transaction fees.

First, log in to your Amazon account (or create one if you don't already have one), and complete the registration process.

Along with all of the standard information (like your contact information), you'll also need to provide the following documentation to set up and verify your account:

• A passport, driver's license, or other government-issued ID.

• Tax information.

• Bank details (including account and routing numbers).

Once your identity has been verified, you must activate your Amazon FBA account. To do this, you’ll need to pay a one-time activation fee of $39.99.

Once that’s done, it's time to start listing your products.

Step 5: Get Your Products on Amazon

Now you can begin to list your products on Amazon, but remember that this is about much more than simply uploading a few high-quality photos and pasting the supplier's product description into your product pages.

Instead, it pays to develop a solid Amazon SEO strategy to ensure that your products are seen by more potential customers.

To do this, you can use Ranktraker's keyword Finder to analyze keywords that are relevant to your products, and determine the best ones to use.

Once your keywords are selected, be sure to weave them naturally into captivating product titles and engaging descriptions that link the features of your product to its key benefits.

Step 6: Promote Your Product

SEO is only the beginning when it comes to getting eyeballs on your product and convincing customers to hit that “Add to Cart” button.

You'll also benefit from considering how you can integrate SEO with Pay Per Click (PPC) strategies to drive more visitors to your listing.

Once those initial visitors start turning into customers, nothing will make a bigger difference to the success of your business than encouraging them to leave a review.

Finally, don't forget to track your results and adjust your strategy as needed - this will help you do more of what works and less of what doesn’t.

Conclusion

Starting an Amazon FBA business means allowing the world's biggest eCommerce retailer to handle the logistical side of your business, leaving you with more time to focus on attracting customers, generating sales, and, perhaps most importantly, growing your business.

Still, just because Amazon FBA provides a simple route to starting an online business, this doesn't mean that every FBA seller is guaranteed success.

To optimize your chances of turning a sizable profit from your new venture, remember to thoroughly research your products to find those that hit that high demand/low competition sweet spot, optimize your product listings using eCommerce SEO best practices, and utilize PPC advertising to attract customers.