How to Sell on Amazon FBA

Starting a FBA business is a great idea to get your 2022 off to a bang. I think it’s the best place to launch a products business, as you get so much traffic. You can start getting sales with relatively little work, compared to selling your products on your own site or through trade shows.

In this FBA guide for beginners, I go through step by step exactly what you need to do in order to find a product to sell, finding a manufacturer, organising your shipping, and getting your first sales.

Why sell on Amazon FBA

Like a lot of people I stumbled into selling on Amazon FBA (which stands for Fulfilment by Amazon) while looking for ways to make some side income.

I’ve spent a lot of time researching different business ideas over the years (I even thought about starting a funeral business at one stage – lucky escape there!) but Amazon appealed to me at the time for a couple of reasons:

Firstly, I’ve always liked the idea of selling physical products – there’s something really rewarding about creating and selling your own product from scratch. I was looking forward to the process of designing the labels, receiving samples and selling!
Secondly, from my research it looked like selling Amazon would be relatively straightforward and something I could do in my free time. This was really important to me as I wanted the security of being able to stay in my full time job while I worked out whether Amazon was right for me.

Most of the business ideas I had considered in the past either required a lot of upfront investment or required me to give up a lot of time – neither of which I had a lot of! So my girlfriend and I decided that Amazon FBA was worth a shot.

What I found

Turns out my first impressions were kind of right – selling on Amazon is pretty straightforward to do as long as you follow the right steps. Easy doesn’t equal no work though. It does take quite a lot of effort to set up an Amazon FBA business and at the end of the day, it is a real business and you need to treat it as such.

However, once you are up and running you can make a decent income from Amazon FBA. It’s just not exactly passive income.

It is totally possible to start an Amazon business as a side project whilst you are still at work – that’s exactly what I did for 2 years. You can work on your Amazon business in the evenings and keep your pay-cheque coming in which really takes the pressure off.

I run the business with my girlfriend which works really well as we both have different strengths – she’s better at the numbers, while I really love coming up with product ideas and marketing. After a couple of years, we got to the point where I was able to quit my job and work on the business full time.

I think Amazon FBA can be a great way to start to start a business. In this guide I’ll show you how to make money on Amazon FBA and the steps involved in setting up an Amazon FBA business.

How does Amazon FBA work?

So what is Amazon FBA? When you purchase products through Amazon, especially when you aren’t buying household name items, then you are probably buying from someone like me.

Thanks to Amazon FBA, small businesses and entrepreneurs like me and you can start selling products on Amazon without having to set up delivery networks or storage facilities. Amazon FBA has enabled me to sell my products in the US even though I’m UK based which is amazing when you think about it!

When you sign up to Amazon FBA, Amazon stores your products for you and ships them to your customers on your behalf. They also deal with returns too. You simply ship your products in bulk to one of their fulfilment centres and then Amazon takes care of the rest.

For an additional fee, you can also get Amazon to do your product labelling and product photography, but I don’t do any of this. I prefer to have control over this part of the process.

Most of the time Amazon customers don’t even realise that they’re buying from a FBA seller. As far as the customer is concerned they order the product and it is shipped with Amazon Prime, they get a confirmation from Amazon, they return the product to Amazon (if necessary) and leave the review on Amazon.

Here is a product on Amazon that is sold by Amazon FBA, as you can see it looks the same as any other listing:

GiggleBeaver is pretty much an Amazon only business, but the customer can’t tell that from the listing.

You don’t have to use Amazon FBA if you sell on Amazon, in fact many sellers fulfil their products themselves (it’s called Merchant Fulfilled), and this is particularly great if you are a handmade seller. But in this article we’ll be focusing on how to start Amazon FBA.

The benefits of an Amazon FBA business

As you’ve probably guessed I think there are some serious benefits with the Amazon FBA programme, particularly for small businesses or new sellers:

START SELLING FAST: You can start selling on Amazon quickly and with relatively low investment because you don’t have the hassle or cost of sorting storage and delivery to customers.
FOCUS ON PRODUCTS: Amazon handles most of the customer support and returns, leaving you time to focus on product development and marketing.
SELL INTERNATIONALLY: You can sell internationally. Through Amazon FBA, a UK based seller can sell on Amazon.com and sell products to US customers by shipping products in bulk to an Amazon distribution centre in the US. This is what I do, and it’s incredible when you think about it.
SAVE TIME & MONEY: Amazon FBA is often cheaper and easier than fulfilling products yourself – Amazon has cheaper delivery rates than most local delivery services and you don’t have to spend time in your local post office!
PEACE OF MIND: Amazon’s fulfilment network is amazing – it’s so fast and reliable that you don’t need to worry about your products getting to customers on time.
ELIGIBLE FOR PRIME: If your products are fulfilled via FBA then they will also be eligible for Prime delivery which gives you a significant advantage over sellers who don’t offer Prime delivery, particularly during busy buying periods like Christmas.

Amazon FBA is a really easy way for sellers to expand their business and build a global customer base without all the challenges that come with building an international fulfilment network. It can be absolutely game-changing for a small business.

How much does Amazon FBA cost?

Of course, there is a cost to using Amazon FBA but it really depends on your personal circumstances and the products you’re selling as to whether it’s worth it for you. When you use FBA, you’ll pay the following fees:

FBA FEE: This varies depending on the size and weight, but I generally work on the basis that 30-35% of my sales price will be paid to Amazon in fees. Bear in mind that if you’re selling products for less than $20 then you might not be left with much profit.
STORAGE FEE: Storage fees can get expensive if your products don’t sell quickly. If you don’t sell your items within 12 months, Amazon charges a higher per-month storage rate.

How do Amazon FBA fees work?

Amazon automatically deducts the fulfilment fee from the price the customer pays on Amazon. The FBA fee is a flat fee that you pay on each product sold based on the product type and the size and weight of the product.

Storage fees are charged on a monthly basis and are based on how much space your products take up in an Amazon warehouse (Amazon calculates this as the daily average volume in cubic feet per month). The fee varies throughout the year with prices increasing during October to December.

Amazon has a reasonably handy calculator to help you estimate what sort of fees you’re going to pay, however Helium10 has an even better one called the profitability calculator (more on that further down).

The fees for selling via FBA often work out cheaper than storing and sending products to customers yourself, plus it’s a lot less work! Imagine having to go and queue up every day at your local post office to ship your orders!

But the FBA costs all have an effect on your overall profit margin, so it’s important to factor in what sort of margin you are going to need. For example you also need to pay a ‘referral fee’ which is basically Amazon jargon for commission. This commission is 15% for most categories, but for some it is more, for example for kindle related products.

So it’s really important you understand these fees, because they will help you to understand your profit. At the end of the day, this is a business, and you want to know how much dough you’re going to get after all the fees!

EXAMPLE

Let’s say you’re selling a water bottle for £20. The breakdown of the fees might look something like this:

Sale price of product: £20

Cost of manufacture: – £4.00

Shipping and import taxes: – £5.00/air £2.00/ship

FBA fees: – £3.75

Amazon referral fee (15% for most items): – £3.00

Profit: £4.25 or £7.25

How to come up with product ideas for Amazon FBA

First things first you need to come up with some product ideas – this is the part I really enjoy! Amazon is this amazing place where you can buy pretty much anything from tampons to tablet computers, so no idea you have is going to be too silly to sell, it’s just about finding something that has good potential. This is something me and my girlfriend always work on together as we both come up with totally different ideas and challenge each other’s assumptions.

There are lots of different ways to generate product ideas – I actually covered some of my favourite tactics in this recent video. Helium10 has another tool which can also help with product ideas called Blackbox. It allows you to filter products across loads of different categories by demand, price, estimated sales, rating, seasonality, dimensions.

Top tip

Don’t try and compete with household brands. This applies to some products more than others. For example, if you search for “football” on Amazon you may find that the search results are dominated by household names like Nike and Adidas. There is no point competing with Nike, if I want a Nike football I will buy a Nike football. But if I want a football pump, I wouldn’t necessarily care what brand it is and you’ll find that the search results show a lot more smaller companies (some of which will be FBA sellers!). These are the sort of products we are looking for.

How to rank on Amazon (Amazon SEO)

When thinking about product ideas it’s also important to remember how Amazon ranks products. Amazon uses an algorithm (A9) to determine how products are ranked in the search results. The algorithm considers a range of factors but in general terms it’s looking at performance and relevance to determine which order to rank products in.

Amazon prioritises those listings that perform best ( i.e. the listings that have the highest sales conversions and which have the best reviews) and those products that are most relevant ( i.e. the listings which most closely match what the customer has searched for).

I’ll discuss this in more detail later on in the guide but it’s important to have an understanding of how Amazon ranks products in order to analyse competitor products and potential product ideas.

What to look for when coming up with ideas

There are a few things to keep in mind when coming up with product ideas:

PRICE: Ideally you need to sell your product for at least £15 or $20. Any less than that and your profit margin will be so low that you’ll need to sell thousands to make any money. Remember Amazon’s fees!
SIZE: When you are learning how to sell on Amazon, it’s best to focus on small products (ideally your dimensions should be 45 x 34 x 26 cm or 18″ x 14″ x 8″ and the weight should be less than 5kg or 10lb). Amazon has product size regulations and larger products incur higher fees. That doesn’t mean you can’t do larger products, it’s just better to keep your fees low while you’re learning the ropes.
COMPETITION: You don’t want too much competition for a product. The more competition you have, the more money you will have to spend on advertising in order to get onto page 1 so steer clear of high competition areas (like yoga mats!) when you’re first starting out.
SALES: Have a look at similar products on Amazon, are they selling well? What keywords are they using? You need to check that there’s enough demand for your product using the tools I discuss below.
COMPLEXITY: When you’re first starting out, it’s best to avoid complicated products. The more complex the product, the more things that can go wrong and the more returns you’re at risk of getting. A lot of returns will hurt your profit margin and your Amazon ranking.

Seems simple enough doesn’t it! Product analysis gets easier the more you do it. After a while you’ll get a sense for what kind of products are likely to be high competition and what’s likely to be too complex. But in order to help you make these decisions, you’re going to want to use some tools.

How to validate your product ideas

Your competitors are one of your best sources of information. You can analyse their sales and listings to determine how much demand there is for your product idea and how easy it will be to compete.

My favourite tool for analysing competitors is Helium10. When starting an Amazon FBA business, this will become your best friend. Helium10 has a whole range of different tools but my favourites are Xray and Cerebro.

Xray is Helium10’s Google chrome extension which allows you to analyse product sales just by going on a competitor’s listing and clicking a button. You can even go onto a search page and use Xray. It tells you invaluable information such as how much money each product is making per month, what the product fees are, and whether a product is FBA or merchant fulfilled.

Here is what it looks like:

How cool is that! Some of these guys are making loads of money each month!

With the Cerebro tool, you just enter the ASIN for the competitor product you’re interested in and you get a long list of all the related keywords and the search volume for those keywords.

Helium 10 can be expensive, it’s $99 per month, but I think when you are starting out you can just get it for a month or two and then put it on pause until you find your product.

There is also a free version, which gives you a limited number of uses until you need to upgrade. If you use this link to get Helium 10 or use these codes, you can get 50% off your first month or 10% off your first year.

How to make your product unique

Product selection is THE most important factor when trying to start an Amazon business, but once you’ve got an idea you need to think about how you’re going to make it stand out.

It’s important that you don’t simply copy another product. Firstly, it’s unethical to copy someone else’s product design and secondly it’s going to be very difficult to compete as a new seller.

But you can take inspiration from what is selling well on Amazon and try to improve upon it. Reviews are a great source of information for this. If you see some 3 or 4* reviews, this could be a good sign that there is room for improvement. Check out this yoga mat’s reviews:

You can see here that the mat lacks grip and 30 people have found that helpful. Another reviewer has said the mat is nice, but not very durable. This is some great info that you can use to make an improved yoga mat. Although I wouldn’t suggest yoga mats as it’s super competitive!

Other simple ways to make an improvement to a product include:

Changing the colour
Changing the material
Changing size
Bundling the item into a multipack
Changing the packaging to make the item giftable

How to find a manufacturer

Now you have your product idea and you’ve validated it you can start talking to manufacturers and ordering samples.

There are a number of ways to find suppliers – trade shows are a great place to look in my experience but I’ve also found suppliers in the past from old fashioned googling.

Alibaba is another place you can try. Alibaba is an online marketplace full of manufacturers selling pretty much any product you can think of. Here is a search for football pumps:

Personally, I like to try and find suppliers from outside Alibaba, as nearly every seller uses Alibaba. I really love to find suppliers at trade shows, as you get to feel the products and talk to the manufacturer.

I also like sourcing from countries outside of China, as I like to find really different products for my homeware brand. There are loads of different places to look for suppliers and too many to go into in one guide, but I go into trade shows in more depth here.

What to think about when talking to suppliers

Make sure you have a clear idea of what you’re looking for before contacting suppliers. Suppliers get a huge number of requests for information and they’re unlikely to give you the time of day unless they think you’re serious. It’s worth putting all your questions into an email like this:

Hello,

My name is Teddy from Teddy Industries.

We are looking to purchase football pumps for the UK and EU market. Here is a link to a similar product on Amazon. https://www.amazon.com/Fitness-Factor-Small-Dual-Action/dp/B0150TYVGY/ref=sr_1_1_sspa?ie=UTF8&qid=1548937643&sr=8-1-spons&keywords=football+pumps&psc=1

Our primary sales channel will be online although we will be selling in stores too. We estimate 5000 pcs annual purchase volume after a trial order of 200 pcs and samples evaluation.

The product specifications:

Specifications: Size — 30 cm
Material — Strong plastic
Colour — We would like to add our branding to it
Style — traditional pump
Additional features — I would like a travel bag for the pump

Do you manufacture these products? If so please provide the following.

Photo, specifications and FOB quotation
Are you a manufacturer or a trading company?
What is your lead time for a sample?
What is the lead time for a trial order?
Can we add our logo to the label
What is the sample cost including shipping to the UK?

Thanks, Teddy

Once I have the answers to the above questions from a few suppliers I would compare them all and choose my favourite to work with. Make sure they speak good english as it’s really important that you are able to communicate clearly.

Designing the final product

Designing the product can take a long time, but you need to get this part right so avoid the temptation to race ahead. I always order samples so that I know exactly what I’m buying and I can feel the quality for myself.

If you’re struggling to communicate exactly what you have in mind to suppliers, then it might be worth getting some drawings done. If you need help with this you can find some great designers on Upwork or Fiverr.

How to set up a shipment on Amazon

Shipping can seem like a daunting topic, there’s a lot to consider including tax, shipping costs, lead times, paperwork etc. The good news is there are a couple of ways you can simplify the process as a new seller.

Freight forwarders

A freight forwarder is basically an agent who sorts out the shipping, taxes and customs and everything else and charges a fee to do this. It simplifies the process from dealing with 5+ people to dealing with just one.

There are a number of different freight forwarders – two I’d recommend are Flexport and Unicargo – they’re both easy to use and have English speaking staff who are used to dealing with Amazon FBA businesses. This is how it works:

The factory organises the stock to be delivered to your freight forwarder
The freight forwarder sends the stock to your target country
The freight forwarder pays the customs and paperwork
The freight forwarder organises the stock to be delivered to Amazon’s warehouse
You pay one bill which includes shipping, taxes and the freight forwarder’s fee.

Easy as that (usually)!

DDP

Another option is to get your manufacturer to sort out the shipping for you using a shipping process called DDP (Delivered Duty Paid). With DDP, the manufacturer will work with their recommended shipping partner and handle all the delivery from door to door and then charge you a fee at the end.

This can be a really good option when you’re first starting out as there’s even less for you to worry about.

You need to decide whether you want to ship by air or sea. As a general rule, a shipment from China to the UK or the USA will take 4–8 weeks. By plane, it can take less than a week but it will cost you a lot more.

For your first few orders, I would recommend shipping by air as you can get selling quicker and work out whether a product is going to work without having to wait 2 months for it to get to Amazon.

Air shipments are generally a bit more straightforward too – shipping by sea tends to involve more fees and paperwork. Air shipment is very expensive at the moment due to the Covid, but hopefully that will change soon.

How to set up an Amazon seller account

Creating your Amazon account is not as straightforward as signing up for a buyer’s Amazon account.

There are 2 types of Amazon Seller account: Individual and Professional. With an Individual account, you pay a fee for each product you sell and with a Professional account you pay a monthly fee.

It’s really up to you which you pick but if you really want to start an Amazon FBA business I would go with a Professional account and get working faster!

I talk about how to set up your account successfully in this video, but there are a couple of general things to bear in mind:

You can only have one seller account, so make sure that if you have ever had a sellers account, you use that account to register. Even if you only sold a few university books, you must either close the old account or register using that email.
Amazon has strict rules about documentation so make sure you have everything in the right format before you apply. It’s very important that all the names and addresses match exactly on all documents in order to pass verification.

How to set up a product listing on Amazon

Once you’ve set up your account, it’s time to create your product listing. I recommend writing your product listing in a word document before you upload it to Amazon.

Here are my top tips for what to include in each section of your product listing. Remember to check the character limit for each section:

Title

Use your most important 2 or 3 keywords
Include the material, size, colour
Keep it factual – don’t make claims like “best” or “top”

Bullet points

User your other important keywords
Use short, easy to read sentences – your first 3 bullets are the most important
Talk about the benefits of your product not features
Overcome any concerns / objections
Don’t include any outlandish claims (be very careful with health products)

Description

Tell the brand story
Build an emotional connection with the buyer by talking about the product benefits and how the product would improve their lives
Include instructions for using and looking after the product
Include trust signals such as accreditation or industry awards if relevant

Images

Use all available images
At least 2000 pixels on longest side so customers can zoom
Main images must be alone on a white background – no badges or text
Use infographics to demonstrate size, dimension, ingredients etc.
Use lifestyle images with people interacting with your product
Make sure all the lifestyle images are true to scale
Show the quality and benefits of the product

Search terms

Only use relevant search terms
No need to repeat keywords
No punctuation, just spaces between keywords
Include synonyms and local colloquialisms e.g. diaper / nappy
Include Spanish words if selling on amazon.com

Subject matter keywords

Use your top long tail keywords here

Once you’ve drafted your listing, head to Amazon and click “create a new product listing”.

You need to select the category you will be selling in. You can either use the search engine to find the category or you can browse through the categories. Have a look at a competitor product if you’re unsure. You will then be taken to the product details section where you can enter your listing information.

How to launch a product on Amazon

When starting an Amazon FBA business, it’s really important that you get your product on the first page and in the first 10 results as that’s where all the sales are made.

The key to getting onto that first page as a new seller is to get as many sales as possible in the first few weeks and get some positive reviews from those customers.

There are a number of different ways to launch your products. One option is to run a coupon using a site like Jumpsend. Jumpsend gives deal hunters a big discount coupon (like 75%) so they can buy your product super cheap.

Personally I avoid these kinds of services as they can really affect your margin, plus it’s against Amazon’s terms of service to try and manipulate review ratings – it can even get you banned.

You can also run paid for advertising through Facebook, Instagram and Google. These are long topics in themselves and I’ll cover them in more detail in future articles.

One of the best ways to get your product selling is to use some Pay Per Click advertising (PPC). Within Amazon you can pay to appear at the top of the page. It usually costs between 50p and £1.50 for each click, and you can set your budget so you don’t overspend.

When you use PPC your listing has a little ‘sponsored’ label attached to it, as you can see in this picture:

Customer service on Amazon

One of the best ways to get reviews, and one that many sellers use, is to send emails to people who buy your products and ask for a review.

You can’t ask for a good review or incentivise the review e.g. “Leave a good review for 20% off your next order” but you can ask for an honest review. You also cannot put links to your own website on the email.

In my email I simply say thanks for buying the product and give them some tips on how to look after the product, or some additional information about that product. For example, if I was selling some leather horse equipment I might give some advice on how to keep the leather soft and how to wax it.

I could also ask the buyer to get in touch with me if they are having any issues. This way I can try and avoid bad reviews.

In Helium 10 there is a tool called Follow Up which can send these emails for you. You can also use the ‘request a review’ feature inside the Amazon orders on your order page. I have tried this and I am not sure how well it works to be honest, but it’s worth a shot!

Unfortunately you can’t email customers directly through Seller Central, you need to use additional software (or do it manually).

Summary

So that’s a whistle stop tour of what’s involved in setting up an Amazon FBA business! If you would like more information, you might find my weekly newsletter useful – it’s jam packed full of tips for building and growing an Amazon FBA business.

If you’re looking for a bit more hands-on guidance as you set up your FBA business, why not check out my Amazon Fundamentals programme – It breaks down all the essential steps to selling on Amazon FBA, from finding a product through to getting your first sale in an easy to follow roadmap.

You might also like my Amazon FBA Tutorial:

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Gauthami

August 9, 2022 at 10:24 am

Thanks for sharing this content. The content help the sellers to understand the how to sell on Amazon FBA. It will help them to boost Amazon marketing.

Teddy Smith
August 10, 2022 at 4:22 pm

Thanks Gauthami, really glad you found it helpful!

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Sonny

November 14, 2022 at 2:10 pm

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