This is something that I looked into for quite a while when I decided to give up Network Marketing. I loved the idea of setting something up and then being able to just spend an hour here and there on it! So what is Amazon FBA about?
What does the FBA stand for?
The FBA stands for Fulfilled By Amazon. Can you imagine having your own product line but instead of having a garage full of stock and having to post it out yourself, handle returns and customer service, the best online retailer in living memory handles it all for you? I have to say I was really excited about this prospect.
Furthermore, given that people want their product yesterday, your can be sent via Amazon Prime which has to be the next best thing.
Where do I get the products
The products can actually come from any source you choose – you can even manufacture them yourself. However, most people source them from China and the majority via Alibaba, a company who has partnered with thousands of manufacturers.
There are other companies of this nature but Alibaba is considered to be one of the best as they have safeguards to help the buyer (you!).
For example, if your goods are not delivered within the time frame that was agreed, Alibaba will refund your payment. They also offer an Independent Quality Inspection Service (for a fee, naturally). This would be worth doing with high value products and can be done at any stage during or after the production process.
For lower price items, I would just have a sample sent from the supplier – they will normally send it for the price of the postage as long as they believe you are a serious buyer.
Don’t think that because the products are made in China that they are inferior – after all, iPhone is made in China. Do be careful about your product selection though and make sure you are happy with what you are buying.
How do I know they will sell?
That is a very good question. You will have to carefully analyze products that are currently popular on Amazon. How do you do this? The only way I have found is by using one of the many Amazon ‘Chrome extensions’.
By using a Chrome extension on your browser, you can look at the estimated sales volume, pricing history, keyword insights and revenue predictions. It is by no means accurate, but will give you a general overview into what’s hot.
Just Google ‘Amazon Chrome Extension’ and you will find something to suit.
What could go wrong?
You could pick the wrong product. One of the things that could go wrong is that your product could become obsolete or just plain unpopular. Look at fidget spinners – they were all the rage sometime ago so you don’t want to pick something that could turn out to be a fad.
You could get the pricing wrong. With pricing you have to be very careful. Make sure you create a proper plan for your business detailing every single cost you are likely to encounter and how much you want to make on each item.
Your products get stuck or damaged en-route. Alibaba have a safeguard against this. If you are ordering from another supplier, check what safeguards there are or check if there is an insurance policy you can take out.
You can’t get your product anywhere near the top of the rankings in Amazon. You are right to be concerned about this – it’s like having a blog post out there are never, ever being found by those searching on Google for what you have.
How do I protect myself?
Choose an ‘evergreen’ product. You really want to pick something that is what you would call ‘evergreen’, i.e. there will always be a need for it. For example, gardening gloves are very unlikely to go out of fashion.
Products that are essential to do a job are great but you don’t have to be restricted to that as Amazon have just about every product in every niche to choose from. Some great success stories have been from selling products like tea!
Find a product that is selling well and make it better. Having done your research and found a product at the right price that is a good seller, scrutinize the reviews and find something that could be made better.
It is perfectly acceptable to ask a manufacturer (sourced through Alibaba or elsewhere) to give you a quote for exactly what you want. If you can address the issues with an existing product and make it your own, you could be onto a winner. If you receive a sample and want a better quality version, ask what the cost would be.
Manufacturers are so fed up with people trying to get the absolute cheapest price, most will want to do their best for you.
Get the pricing right! So your costs would be product production, transportation from China
(or where ever) to your preferred country that you are targeting (I
would suggest the U.S.A. because they buy the most stuff!), then
transport from the port the Amazon, taxes (depending on your country of residence and how much you sell), Amazon storage fees if they have
your product over a certain length of time, Amazon fees for them
managing and shipping your product etc. Do not forget to factor in your profit!
The rule of thumb when I was studying this was that anything under $14 was likely to leave you with no profit so it’s best to look for products you could retail around $20 and over. Some people focus on higher ticket items to make
more profit but naturally that means you will have a bigger investment to get started.
Research how to get on the first page of Amazon for your product. I found this really interesting. There are all sorts of ways to get to the top (or close to the top). One way I found was, as soon as you have ordered your product and weeks before it’s arrival at Amazon, start a Facebook page or Group for fans of whatever you are going to be producing.
For example, if you have a kitchen product, you could start a really valuable kitchen tips page, or you could niche down further to kitchen knives (for example) and the best ways to use them for cutting all sorts of meats and produce (before launching your fabulous kitchen knives and creating an offer for your followers). If you get some early sales, it will help your rankings.
Similarly, you could start a blog, again sharing all sorts of helpful information about your niche and make an offer to your subscribers.
Run a sponsored ad when you first launch. Go for as much exposure as you can in the first few days, again to get some early sales and push you up the rankings.
What are the pros of Amazon FBA
There is a lot to like about this program:
- There is lots of proof out there at Amazon FBA can make you a ton of money if you get it right
- You don’t have to deal with handling the product at all
- You don’t have to deal with any customer complaints or returns
- Once it’s set up, you won’t need to work on it all day every day – you can literally be making sales while you sleep
- Amazon is probably one of the most trusted brands online and people will be searching there for your product
What are the cons of Amazon FBA
- You can very easily get it wrong if you are new or make a bad product choice
- You need to invest in the product up front then wait for weeks for it to be shipped before you make any money
- The product might not be as good as you were led to believe and you could have lots of returns (make sure to get samples or a check done)
- Despite your best efforts, it might not rank highly enough on Amazon to be seen and get sales
- Amazon can change the rules. They could change the structure of their charges and dramatically change your profits (they did this recently with their Amazon Affiliates program)
Amazon FBA is a brilliant business model both for Amazon and the participants in the program. You will find countless success stories and the potential is huge, but there are also many who didn’t get it right and lost a lot of money.
If you are pursuing Amazon FBA, my recommendation is to find a course by someone who has been successful with a number of different products and can share with you, step by step, what you need to do.
I decided against it myself because I would only have been able to invest around $1,000 which didn’t leave me any contingency if things went wrong (and it was probably not enough anyway). I was a bit hacked off about it t the time but with hindsight, it wasn’t the best option for me.
What I DID find, however, was something with a lot lower start-up cost (free to begin with) and it has been the most incredible journey. Check out my review of the program I joined in the end here.
Have you been successful with Amazon FBA or do you know someone who has? I’d love to hear about it in the comments below.