Get my step-by-step blueprint for how I’ve built a successful Amazon FBA business
Today, I'm going to share with you how to get started selling on Amazon FBA and how you can too. In fact, I'm going to do more than just teach you. I'm going to share I personally got started from scratch with no experience and built my business to over $4,399 in sales in the first 30 days.
There is tons of opportunity to become an Amazon FBA seller, and I'll share some of the tips that really helped me get off the ground quickly.
First you should know, I don't read a lot of blogs usually. As a result, in some respects I'm somewhat “naive” to various online business ventures that others are pursuing.
However, I do have a handful of blogs that I subscribe to and will peruse from time to time. One that I read is my buddy Chris Guthrie's blog. We've known each other for about 4 years now, so I like to keep tabs with his business.
Back in 2014 I read a post from Chris where he shared that making over $12k in his first 68 days on Amazon FBA.
Honestly, for some reason, that post was the first time it ever dawned on me how hands off the FBA (fullfilled by Amazon) business is. I always thought manufacturing and selling a product on Amazon meant producing designs to get manufactured, shipping product to your house, shipping it to customers when they ordered, and answering customer service emails.
In a nutshell, I was clueless about how to sell through Amazon FBA. Because it turns out that none of those things are true.
So, for the first time ever I did a little bit of Googling about people selling their own products on Amazon, private labeling, and FBA. I was a total newb just a few months before I got started.
I immediately reached out to Chris and asked him to come on the Niche Pursuits podcast, and we recorded this episode on Dec. 2nd, 2014. I also got some tips shared privately from Chris as I had questions.
Fast forward 5 months, and I had a product on Amazon! Not only was it up and listed, but I sold over $4,300 worth of my product in just 30 days.
I'm about to share my journey from totally clueless to unlocking a potentially huge new revenue stream for my business with Amazon FBA.
What is Amazon FBA?
Amazon FBA stands for Fulfilled by Amazon. In a nutshell, Amazon allows 3rd party sellers (you!) to sell your products on Amazon.com and Amazon will pack and ship the products to the customer instead of you.
After signing up for an Amazon Seller account, you would tell Amazon what products you want to sell. Then Amazon automatically assigns you which warehouse to send your shipment of. You then just print out the UPS packing slip that Amazon provides on the seller central platform, and you drop off your goods at UPS or FedEx.
Once your shipment of goods arrive at the Amazon fulfillment center, you can begin selling!
As soon as you make a sale, Amazon will pick out your product from their warehouse, pack it in one of their boxes, and ship it to the customer. It's totally hands free for you. They also handle some of the customer service in regards to returned products, etc.
You can sell new products that you manufacture, used products, or re-sell products that perhaps you purchased that are still in original packaging (often called retail arbitrage).
A couple of the big benefits of using the Amazon FBA program as opposed to shipping products yourself (fulfilled by merchant) is this:
- Your product will be available for Amazon Prime shipping. This is HUGE for many buyers to get free 2-day shipping. Being able to ship via Prime and two-day shipping means you are likely to get more sales.
- Amazon handles everything, so it's REALLY easy for you. They handle shipping and returns. You just worry about your listing.
What Are the Amazon FBA Fees?
Now of course you have to pay Amazon fees to do all of that. So, the Amazon fees are the downside that you need to weigh when deciding whether to use Amazon FBA or not.
If you are curious to see how much the fees are, Amazon has provided an FBA calculator that I use all the time.
For example, if you wanted to sell this backpack or one similar to it, you can see exactly what your Amazon selling fees will be using their calculator. Just take the ASIN number (found in the URL or the listing as shown) and input it into the FBA calculator.
Here's what the Amazon FBA calculator looks like.
So, if I were to sell this item (backpack from above) my total Amazon seller fees would be $8.63 ($3.90 + $4.73). Here's an exact breakdown of all the FBA fees for this particular item:
- Selling on Amazon fees = $3.90. This $3.90 is the Amazon referral fee which is always 15% of the sale price of your items. This is a 15% commission that Amazon gets for allowing you the privilege of using the Amazon platform. You only pay this 15% when one of your items sells.
- Fulfillment by Amazon Fees = $4.73. This actually includes 2 fees: the fulfillment fee (for picking and packing items) of $4.57; and a monthly storage fee of $0.16 for using one of their fulfillment centers as a warehouse. These fees vary based on the size and weight of your products.
Overall, this quick overview gives you a good idea of what Amazon FBA is and the fees associated with selling your items.
How to Get Started Selling Your First Product on Amazon
Before I dive in and show how I made $4,399 in my first 30 days of selling on Amazon, I want to share the different possible ways that you can sell.
In a nutshell here are your options for selling on Amazon FBA:
- Private Label Products
- Retail arbitrage
- Sell used or returned items
- Sell wholesale products
How to Sell Private Label Products
My personal favorite for selling with Amazon FBA is private label products. This is how I generated $4,399 in my first 30 days and have much more ever since.
Private labeling products means that you find a manufacturer that already produces a product and then slap your label or brand on the box. This is obviously a very simplified description, but that's essentially it.
Let's say you wanted to sell this Silicone wedding ring:
Well, it would be illegal to manufacture and sell an “HonorGear” branded silicone wedding ring. However, “HonorGear” didn't invent the silicone wedding ring and there is no patent on it. In fact, dozens of other sellers are already selling other silicone wedding bands.
So, you can find a manufacturer that makes these types of wedding bands, and then just have your brand name stamped into the ring or be on the box.
That's private labeling in a nutshell. Find a manufacturer already producing something that sells, then ask them to produce it for you with your label. As long as there is no patents, this is 100% legal and has been done for a really long time.
Most products bought and sold on Amazon don't have any IP or patent protection. Think about common everyday products: forks, bedding, curtains, brushes, backpacks, etc. You name it and likely there is no patent on the general product.
I've written extensively about how to find the right product to sell on Amazon right here.
For all of my products, I've simply used Alibaba.com to find manufacturers producing the products I want to make. Then I start communicating with them to get samples or modifications done.
Think About Being Unique
Just because you are private labeling a product doesn't mean you can't be unique! For example, instead of a plain silicone wedding band, maybe you come up with a unique pattern that can be stamped into the ring to give it more style. Or perhaps instead of black, you make it pink (this has of course been done with the rings, but this should get some ideas flowing for you).
For all of my products that have done really well on Amazon, I've always had some unique feature to help it stand out from the crowd.
How to Sell with Retail Arbitrage
Retail arbitrage is simply finding something at a retail store (like Walmart or Target) for cheap and then selling it on Amazon.com for more money. You can read more in-depth about how to get started selling with retail arbitrage right here.
Retail arbitrage is less risky than private labeling products…and less complicated. All you have to do is find items that are at a steep discount or on the clearance rack, verify that it sells for more money on Amazon before you buy it, then ship it in to Amazon and wait for it to sell for more money!
The risk is low because you can verify that the product will sell before you ever buy it.
With retail arbitrage, you CAN sell other branded products. So, if you happen to find a brand new pair of Nike Jordan's on sale for $20, you can likely sell it for $100 or more on Amazon.
You have likely noticed that some products on Amazon have “Available from Other Sellers”. For example, here a screenshot of some Energizer batteries showing other sellers below the buy box:
If I click the link to see all the sellers, there are a total of 13. And some of them are indeed FBA sellers:
In general, this is business is all about hustle and lower risk. If you are able to find name brand products that are selling well at a cheaper price than they are selling for on Amazon, then you should have no problem flipping that item.
You can read a more complete guide to getting starting with Retail arbitrage right here.
How to Sell Used or Returned Items on Amazon
Did you know that a huge volume of used or returned items are sold all the time on Amazon? And these are not just being sold by Amazon themselves, but by 3rd party sellers just like you.
One of the best categories where you can sell used items is books. In fact, you may even have books sitting in your own home that could be listed and sold right now on Amazon!
However, in general “used” categories are harder to find on Amazon. If you are just trying to sell stuff around your own house, then eBay.com may be a better option.
On the other hand, if you want to dip your toes into the returned items world, then Amazon can be a great fit. So, how do you find returned items that are still new in their packaging?
The best source for buying pallets of returned items is Liquidation.com. In fact, you can find returned items (often brand new in original packaging) from Home Depot, other major retailers, and even Amazon itself.
The idea here is very similar to retail arbitrage. You find a pallet of items you want on Liquidation.com and have it shipped to you. Then you go through the pallet and only ship the items to Amazon (via their FBA program) that you know will sell. Obviously exclude any broken items.
Another option for buying liquidations is through Walmart directly! You can go here to see truckloads and pallets of returned items that Walmart is selling. As you can see, you can buy these returned items for extremely cheap. It just comes down to your own hustle as it's more labor intensive.
How to Sell Wholesale on Amazon?
I'll admit that I've never bought wholesale from a manufacturer and sold retail on Amazon. The main idea for becoming a wholesaler is to find a brand that is not yet selling on Amazon and convincing them to allow you to sell their products for them.
An example of this might be a small local manufacturer that makes a unique product. Perhaps they are really good at making the product and perhaps even running a local retail store. However, they might have no idea or desire to get involved with online selling.
If you can make a deal with them, then you can access a great brand at a wholesale price and sell for a profit on Amazon.
Here's some additional words of wisdom that was recently shared on the Amazon Seller central forums by a wholesaler:
We buy wholesale and direct from manufacturers to sell and make profit on sales. There is no easy, get-quick option. A viable business model requires being a business, having a wholesale license, and marking your buying and selling power to wholesalers/manufacturers.
I will not give my sources as I have enough competition to sell with. However, a good place to begin is to find a local manufacturer that may benefit from selling to you so you can sell on Amazon. You may be lucky to work with them to give you exclusive selling rights so you will minimize competition. This is how we started years ago. After that arrangement we were able to market to other suppliers the value we offer and get more contracts and business. It was a rough and hard few years; trying to make the right decisions and learning from those that weren't.
How Much Money Can You Make on Amazon FBA?
As you can see, there are plenty of ways that you can make money on Amazon. However, my favorite option is private labeling products (manufacturing my own products). This has larger profit margins and room for growth typically than the other options mentioned.
I know you guys want to see the screenshots of income, so here you go!
This is a screenshot from my first 30 days selling on Amazon. This is also my very first 30 days of having a private label product listed:
I was NOT expecting to make $4,400 in my first month of listing the product! This went from a little side project that I tried not to spend very much time on to a business with the potential to grow significantly.
I saw so much potential within 30 days of selling on Amazon, that I decided to ramp up quickly and start selling more and more products. If we fast forward a couple of years after I took that first screenshot, I've now sold well over a million dollars of product on Amazon.
In fact, I also just recently sold the Amazon FBA business that this screenshot was taken from for $425,000.
But What About Profits?
I want to be clear that the above numbers are REVENUE numbers, not PROFIT. I don't expect to make much money on the first 100 units sold, but I expect my profit margins to be 30% or more for all units sold in the future.
Here's a quick breakdown of costs for my first batch of 105 units ordered:
- Manufacturing costs: About $1,000
- Logo/branding/photo editing: $150
- Shipping/Freight costs: $2500
- Amazon fees: About $15/unit
- Giveaways/Discounts: 20 units (about $1,000 in soft costs)
So, as you can see from the screenshot above, I've sold 83 units. The screenshot shows the full revenue, even on units I actually sold for $1. So, after coupons (12) and giveaways to family/friends (8), the actual revenue is about $1,000 less.
My total Amazon FBA fees on that is approximately $1,245.
With some quick math, you can see my total costs are about $4,880. So, I'm still slightly in the hole, but I should end up breaking even after the final 22 units sell from this batch.
However, my net profit will be MUCH greater for each new batch. I was very happy to just break even with this first batch as it truly was just a test order of 105 units.
Also, my shipping costs were extremely high, and that was a conscious decision that I made. I chose to ship them via air to get them to Amazon faster.
Not only is shipment via air faster than ocean freight, there were also some port strikes going on that would have delayed things another couple of weeks most likely. So, I bought myself about a month by paying extra.
Maybe not the smartest decision from a dollar and cents perspective, but it DID allow me to test things quicker and I'm now about a month ahead of where I would have been in placing my next order.
I will be shipping via ocean freight from now on most likely. I highly recommend that you almost always take the shipping method with the lowest fees when possible.
Ocean freight for my first 105 units would have cost about $350. So, the extra shipping cost is really what eliminated my chance at a decent profit.
If I had gone ocean freight, my net profit would have been about $2,000…which is very close to a 40% profit margin.
So, even though I didn't really make any money on my first batch of units. I was able to start making about 30 to 40% profit margin and all future orders from China. I've been able to get my product cheaper (because I'll be placing larger orders), I won't have logo and branding costs, and my shipment/freight costs will be significantly lower per unit.
So, I haven't “really” made any money today…but all signs are VERY good that this business can be quite profitable for me.
A Quick Timeline of My FBA Products
As explained, I honestly first heard about this business only a few months before I got started. After doing some quick research and my podcast interview with Chris Guthrie, I figured this business didn't seem too complicated after all.
I thought it might be interesting to recreate the timeline from when I discovered this business through my first 30 days of selling. The idea behind this is to show you what kind of timeline you can expect if you decide to get into this business.
- October 2014 – I learn about the Amazon FBA business
- December 2, 2014 – I interview Chris Guthrie on my podcast about his Amazon business
- December 27, 2014 – I eat 12 donuts during the day. Don't ask.
- Jan 1, 2015 (at midnight) – Light off massive fireworks…possibly from China. A sign of things to come?
- January 8th, 2015 – I have my “aha” moment and decide on a unique angle for a product I can sell on Amazon (I know the date because I found scribbled notes in my notebook)
- January 10th – I go to Alibaba.com and contact about 4 manufacturers in regards to my product. Just a quick email to each with some basic questions. We exchange emails the next several days.
- January 20th – I order a sample product from the manufacturer that was able to best produce my product. (I only found one that was able to easily add the features I requested).
- February 3rd – I receive the sample product. It's exactly what I wanted!
- February 4th – I take pictures of the product
- February 5th – I hire someone on Upwork to create logo and product packaging/branding.
- February 6th – Contact logistics company to work out shipping details. We exchange several emails over the next month.
- February 12th – I have my logo/branding ready and place my first order of 105 units from my manufacturer!
- February 13th – Manufacturer informs me that the Spring Festival Holiday is starting in China and that the factory is shutting down until March 5th (almost 3 week shutdown!). They expect my order to be completed 2 weeks AFTER March 5th. I'm sad about that 🙁
- March (sometime) – I create my Amazon seller listing and write product description, upload images, and get everything ready for sale on Amazon.
- March 12th – Manufacturer completes the batch of 105 units (a week ahead of schedule!)
- March 16th – The product is loaded on a plane and flown to the US.
- March 24th – The product has gone through customs and the logistics warehouse. The product is shipped to the Amazon FBA warehouse.
- March 28th – Amazon has processed the product in their fulfillment center and my listing goes live!
- March 29th – A stranger buys my product. I'm super excited to make my first sale using Amazon FBA!
- March 30th – I go on a week long vacation with my family (Spring break) and totally ignore the FBA business other than checking stats.
- April 29th – In 30 days, I have sold $4,400 worth of the product!
I hope this breakdown of the timeline gives you an idea of what it takes to get a product up on Amazon. This is not an overnight business.
So, from product idea (my aha moment) to having a listing up on Amazon was about 2 and a half months.
A Quick Update
I've continued to sell private label products on Amazon since my first 30 days. Business has been good! I have been manufacturing and selling private label products now for over 2 and a half years.
After seeing the success of my first product, I quickly ramped up to 8 products. Here's a screenshot showing my sales from 2016:
This business was going so well after 2 and a half years, that I decided to sell the brand. You can read all about selling my Amazon FBA business here.
Please note that I continue to sell on Amazon with other private label products that I've created. I just sold off my first brand, and I now have others.
Read on to discover how to launch and grow quickly on Amazon.
Why Did this First Product Sell So Well?
Now comes the more meaty question. “Why is your product selling so well on Amazon?”
Create a Slightly Unique Product
First, I DO think a big part of the reason is because it's a slightly unique product. I discussed the importance of being the one in my last blog post and last podcast here. I don't want to give away my product, so it's difficult to explain what that unique feature is…but it's nothing revolutionary.
Remember, I am selling private label products on Amazon. Which means I'm taking a product (backpack for example), then finding a manufacturer to create my own brand of backpacks (just an example, not what I actually sell).
I just took an existing product (private label), and made it slightly different (think about something in a different color, or something that has more padding like my dog carrier example in previous post).
Now, because I'm pretty much the only listing that offers this exact product with the variation I added and I KNOW people want this feature, it's selling.
Rank on Amazon with Long Tail Keywords
The second reason this item is selling well is that my product is ranking well on Amazon for several long tail keyword phrases. Yes, this was intentional. I treated my product description like a niche site and used my targeted keywords in the product title and the product description.
Because of these 2 factors: unique product and showing up for long tail phrases, I was making about 2 to 3 sales a day after about 2 weeks of being listed. I did have a few “sales” from friends and family over the first 3 weeks…but that was 8 units total.
I was making 1 to 2 sales per day before I had a single review on Amazon. I honestly didn't do any marketing outside of getting a few friends and family members to buy the product (which I reimbursed them for doing).
I WOULD have done more marketing if I hadn't been so busy (vacation with family, New Media Expo, and running a full-time business outside of Amazon). However, the natural sales raised my eyebrows and I thought, “Okay, let's see what happens if I do some basic marketing!”
Special Promotions and Giveaways on Amazon
This brings me to the 3rd reason I think the product sold so well: Promotion. As you can see from the image below, I had a huge spike in sales on April 23rd. I sold 14 units that day…but 11 of those sales were from $1 coupons.
I issued $1 coupons to a group of Amazon product reviewers (not sure I'm ready to reveal the source), and they got redeemed. I didn't make any money from those coupons, but this sudden spike in sales also boosted my Amazon best seller rank.
As a result, my product was listed higher on Amazon in various categories AND for the keywords I was targeting. As you can see after April 23rd, the sales continued to be much higher than before…but these were natural sales now!
I started selling so much product, that I'm now worried I would run out of inventory. As a result, I've raised the price and people continued buying after a 50%+ price increase!
Here's a screenshot from my highest revenue day so far. And yes, all of these sales are from people I don't know…all sold at full price (no coupons):
I have started to get a few reviews over the past week or so that I'm sure has helped with the sales as well. At the time of this screenshot was taken, I still had less than 6 reviews though…so these sales really are coming in with minimal reviews and marketing.
Because my products were selling well after 30 days, I decided that this business was the real deal and that I needed to order some more inventory. At the rate I was selling, I figured I still had a couple of months before inventory would run out.
However, after doing my coupon promotion, getting a few more reviews, and selling lots more product per day…I realized I would run out of inventory in less than a week! I only had about 22 units left and I sold 11 units on my best day…so you do the math.
I share some of these inventory issues, because this is an ongoing battle for any Amazon FBA seller. It's important to stay on top of how fast your products are selling and figuring out the lead times to produce new batches.
As a result, I raised my price to slow down the sales each day to prevent my inventory running dry too quickly. Unfortunately with the sudden spike in sales, I wasn't able to get inventory fast enough and wasn't able to sell any items for close to 3 weeks during May.
Understanding Manufacturing Lead Times
My manufacturer takes about 3 to 4 weeks to produce the product, and shipping via ocean freight will take at least 2 more weeks. So, I won't have any product ready for sale on Amazon for at least a month.
So, when you start manufacturing and selling your own items on Amazon, you need to know that your lead time could be 1 to 2 months before you can “stock the shelves”.
I wish I could wave a magic wand to make it all work out sometimes, but honestly, I'm not too worried about it. The point of my first batch of product from China was to test the market to see if people were willing to buy. The market has spoken loud and clear to me that people like my product!
So, even though I couldn't bring in too many sales while I was out of stock…I was able to gear up for bigger things down the road.
After selling for 30 days, I thought it was very feasible that I could sell 10 units a day at close to $70 each. This would be a monthly revenue of $21,000. (The net profit on this would be about $11,000). I'm obviously gone way beyond that at this point.
In fact, I was able to add 7 more SKUs and have had a number of months where I sold over $60,000 worth of product.
Next Steps for Your Amazon FBA Business
Because I've now tested the waters and can clearly see the revenue coming in, I'm going to scale this business. You should have a similar plan to what I did below in order to scale your e-commerce business.
- I've already contacted my current and other manufacturers to get samples of similar products to what I'm already selling. I believe that I can easily get 5 or 6 products up in my chosen niche. I have no idea how each product will sell, but it's clear that there is a very healthy market here.
- I will also be doing a bit more marketing (once I have inventory) to get more reviews, increase the Amazon best sellers rank, and make more sales naturally as a result.
- Finally, I plan on going outside of Amazon as well in the future. I want to build a niche site related to my product. I'll write informational articles to get natural traffic from Google and then people can buy the product directly from my site as well.
That's right, I'll be building an eCommerce site. The best part is that when you get a Shopify site up selling your own products off of Amazon, you can still have Amazon store, pack, and ship products when you make sales on your e-commerce site! This is called multi-channel fulfillment.
So, FBA fulfillment does indeed extend to sales off of Amazon if you want it to. That's an entirely different discussion, but just know that if you make product sales on your own site, on eBay, Walmart.com, or other selling platforms, you can indeed use the multi-channel fulfillment option to have Amazon fulfill those orders.
Yes, this is a new business venture still and this blog post is clearly dripping with optimism, but I plan to capitalize as much as possible on this opportunity. Will everything work out as planned? Probably not exactly. But I see no reason why I shouldn't pursue this and try to grow this into a healthy business.
Overall, I haven't been this excited about a business in a very long time. We'll see where the ride takes me.
As always, I would love to hear your thoughts on the subject. Are you currently selling a product on Amazon? Do you have any comments or questions that you would like to add to the discussion? Let's hear it below.
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