In the recent years Amazon FBA business model has become very popular and it really grabs a lot of attention. Seems like everybody is talking about it. It’s one of the very many popular ways to make money online. There are many things you need to know before starting an Amazon FBA business. It’s not an easy way to make money online. It’s a business where you need to dedicate your focus at least for 1 to 2 years to make it work. In this post we’ll talk about the 7 things you need to know before starting an Amazon FBA business.
How much money do you need to start an Amazon FBA business?
To start an Amazon FBA business you need money to buy inventory. But not just inventory, there are many other costs as well when launching your business. Nobody really talks about these expenses but we’ll break it down for you so you’ll know exactly where you need to spend your money when starting out. We have also written another post where we’ll talk about what are Amazon FBA business setup costs what you can read here. Now, let’s talk about how much money you need to start an Amazon FBA business!
- Getting the best product research tool for Amazon FBA – this is step 1 when starting an Amazon FBA business. Product research tools cost between $50-$100 a month. There are many product research tools to choose from but we’d recommend you to go with Helium10. It simply has the best cost/value.
- Ordering product samples – this is usually around $50. We’d recommend you to order samples from different factories. So the total cost will be around $150-$200.
- Customising your product – You usually need to pay extra if you want to create a customised product sample. The cost depends on the type of product you are selling. You could customise the product, package, add some extra parts etc.This could be $50 or even $1000. It really depends on how you are customising your first sample.
- Making your first inventory order – Your first inventory cost depends on the product you are selling. Our recommendation is to have at least 500-1000 units when launching your product. You could order less products when your manufacturing time is shorter or more when the manufacturing time is longer.. You could also order less if you can ship your product with smaller quantities by air. For example then maybe your first order could be only 300 items and send a new batch via air if it starts selling after 2 weeks. It all depends.
- Customising your product package – If you are customising your product package (what we recommend to do) then you could face a mold fee. That’s usually around $150-$300. You could also get it for free.
- Registering a trademark – To register a trademark in the USA costs $350 per class of goods and services. We’d recommend you to use the Amazon IP accelerator. Because with Amazon IP accelerator you get Brand Registry much faster.
- Registering an Amazon seller account – Professional selling plan on Amazon costs $39,99 per month. You can compare prices here.
- Taking your product photos – This could cost between $100-$2000. It all depends where you are taking your photos and what photographer you are using.
- Hiring models for images – This also depends on what models you are using. The cost could be very high or very low. You could also get it for free when modeling yourself for your product images.
- Hiring designer to create attractive Amazon listing – You could get it from Fiverr for $100 or getting professional help and spending around $500-$1000.
- Hiring copywriter – Professional copywriters are expensive but to create bullet points and descriptions you should be able to get it done with $100.
- Translating the listing if needed – This cost could also be around $100. They usually charge per word. So it really depends how long your text is.
- Launching your product – When starting out on Amazon then we’d recommend to launch your product with a lower price than you would sell it normally and bid more on PPC. The launch cost could be a few thousands dollars. For example if you spend $100 a day on PPC for four weeks. It also depends on what category you are selling and how competitive it is.
- Amazon PPC – Amazon PPC cost depends on the category where you are selling your products. We’d recommend you to launch your product with at least a $100 daily budget. You could also start with a smaller budget and scale up in time.
- Your second inventory order – This is where most people usually go wrong. They think that their first inventory order can finance their second inventory order. This rarely happens. You need to have the funds for your second inventory order. The cost depends on how many you would order and what’s your product price.
- Shipping products to Amazon – You could ship your products to Amazon via air or sea. Sea shipping is much cheaper and we’d recommend you to go with that. For that you need to contact different shipping companies and freight forwarders to know the exact cost.
- Inspection in China – Final product inspection usually costs around $350.
- 3PL warehouse if needed – It’s good to have a 3pl warehouse in the USA where you store your products and ship to Amazon. You could also ship your products directly to Amazon. That’s what we’d recommend you to do as well for your first order.
- Accounting – This could be anywhere around $100-$300 a month. It really depends where you are located and what are the requirements by the state/country. You might not have this cost at all and do your taxes once a year.
- Getting some coaching – This is probably the most underrated from this list. One or two coaching calls could save you thousands of dollars and put you on the right track.
How long it takes to make money with Amazon FBA business?
You could start making money with your business on the first day when you are starting out. The real question is “When can you start paying yourself?” When starting out you need to invest your profits back to the business to make it run smoothly. We’d recommend you to do that at least for 6-12 months. That also depends on how much capital you are starting out and what’s your exact strategy.
How to do Product Research on Amazon?
This is probably the most important part of your business when starting out. First you need to use the right product research tools when starting out. We’d recommend you to use Helium10. With Helium10 chrome extensions you can scan Amazon pages and see how much certain products are selling. We have also written a full post where we talk about how to do product research on Amazon. Make sure you read it.
Watch our Helium10 Google Chrome extension tutorial video below
As shown in the video you can find opportunities on Amazon when using the right product research tool. You can get Helium10 with discounted pricing using the link below.
How to calculate profit margins on Amazon?
To calculate your product margins Amazon has their own tool that you can access here. You need to enter your product landing cost and then it shows you automatically what the fees are when you’d sell that on Amazon. Before that you also need to enter an “ASIN number” on the search field. That would be the most similar product on Amazon that could have the same fees. Make sure your product is in the same size tier when using someone else ASIN for reference.
How to find suppliers for your Amazon business?
One of the most popular places to find suppliers for your Amazon business is Alibaba. Go there and simply write your product name in the search tab. We’d recommend you to contact multiple suppliers so you can compare quotes. Another way would be just by googling different suppliers. For example “water hose connector supplier in the USA/Mexico or somewhere else” etc. and contact them by email or phone.
How to stand out on Amazon?
This is a very important part of your product research. You need to find a way to stand out on Amazon. The main way to do that is with product image. You need to find a creative way to grab attention. But not only that. You also need to make your product better than other sellers’ products on Amazon.
How to ship products to Amazon
There are two main ways to ship products to Amazon when you are ordering them from overseas – by air and by sea. Most products usually go with sea shipping because it’s the most cost effective. But sometimes it also makes sense to ship products by air if there’s an urgent matter. For example preventing going out of stock.
To ship products to Amazon we’d recommend you to ask quotes from different freight forwarders. It’s good to have some professional help with this part of your business because you need to do the customs. You don’t want to mess this up and face some unexpected charges.
These were the 7 things we wanted you to know before you are starting your Amazon FBA business. When you want to be a successful seller on Amazon then it all comes down to planning and following the right steps. We have created this site to help people like you to be successful on Amazon. If you have any questions or would just like to get in touch with us then send us a message or leave a comment below.