I have been selling online through an Amazon FBA business since 2013, but I haven’t really spoken about it much on this blog. I hesitate because to a reader I think it sounds too easy.
The logic is simple and the businesses can be very profitable, but that doesn’t mean that an Amazon FBA business is a get-rich-quick scheme. They are serious businesses and are a lot of work to get going. It is worth it, but you should treat your Amazon FBA business just like any other business.
- 1 What is an Amazon FBA Business?
- 2 How to Source Your Products
- 3 How To Do Market Research On Amazon
- 4 Getting Your Stock From Alibaba to Amazon FBA
- 5 Pricing
- 6 Finding A Manufacturer
- 7 Prototyping
- 8 Negotiation and Manufacturing
- 9 Freight Forwarding & Customs
- 10 Amazon and Amazon FBA
- 11 Sending Stock to Amazon FBA
- 12 Marketing
- 13 How To Get Reviews On Amazon
- 14 Expand to eBay
- 15 Expand to Different Countries
- 16 Expand to Different Products
- 17 Where To Learn More?
- 18 Amazon FBA Courses
- 19 Recap
What is an Amazon FBA Business?
I am sure you have heard of Amazon. It is the largest online retailer in the USA, UK and much of Europe. A household name. But what you might not know is that when you purchase something from Amazon, there is a very good chance that you are buying from a third party seller using a service called Amazon FBA.
FBA stands for ‘fulfilment by Amazon’. What it means is that Amazon looks after all of the seller’s stock. When a customer places an order, it by-passes the seller altogether and goes straight to the FBA warehouse. Amazon then picks out the order and delivers it to the customer.
Amazon FBA also handles most of the customer service. They process all customer returns and only the most specific queries get forwarded on to the seller.
To the customer, there is almost no difference between purchasing from Amazon directly and from a person selling their items on Amazon through Amazon FBA. They get the same delivery options, the same returns policy and the same customer service team.
In the image below you can see that the torch below is sold by ‘TriumphInnovations’ and ‘Fulfilled by Amazon’. ‘TirumphInnovations’ is an Amazon FBA business.
An Amazon FBA business is a great intermediary between a bedroom eBay business, and a full-time brand with a large staff. As a seller, you don’t have to look after the stock and it takes the same amount of work to sell 10,000 items as it does to sell 10. But to the customer, they get a quality of service that is on par with the biggest brands in the word.
As a seller, you can run a one-person business that sells thousands of items each month, all remotely from anywhere in the world. In fact, I am currently in South America with Amazon FBA businesses in Europe, Asia and North America.
You acquire the stock and get it delivered to Amazon FBA. Then all you need to do is focus on getting sales.
In this article, we will talk about the main two types of Amazon FBA businesses. (there is one other type is completely different that I covered in this article: Retail Arbitrage).
- Invent a product from scratch. Get it professionally designed and manufactured. Then work your arse off to try and convince people that they really want it and will buy it. This is the approach I follow and is documented for the table tennis bat cases in this post. It’s a lot of work and you run the very real risk of discovering that people don’t really want whatever you have invented.
- Reinvent/improve on someone else’s product. Simply find a not very good item that is selling well and create a better version of it. There are hundreds of items on Amazon that are just rebrands of readily available white-label products. You can even find the same factory that makes the original item and get them to do your manufacturing. As of 2019, this is the easiest and still a very profitable route to take. We will cover this method in this how-to guide.
How to Source Your Products
We’ve spoken a lot about Amazon, but there is another global company that is almost as important. Alibaba.
Alibaba is a Chinese online wholesale market where factories and distributors from all around the world display their items. Most of these companies will work with you to create and manufacture your unique product.
Since Alibaba came on the scene it has got very easy to create a basic Amazon FBA business. Too easy. And has led to Amazon getting flooded with white-labelled products that are straight from Alibaba with a brand attached and a huge price markup. Most of them don’t sell well, but there are plenty that do.
Here’s an example.
The only difference between the two is the adding of a brand name… and the price increase.
You can buy them in bulk on Alibaba, branded with your own brand for between $1 and $7 each (depending on how many you purchase and how good you are at negotiating), and people are buying them on Amazon for £16.95. Even with all the fees and costs (which we will talk about later), that is still a very good profit margin.
Now I can’t be 100% sure that it is the same factory that makes both of them. But it doesn’t really matter. Provided the factory is able to make us a better version, then we’re in business.
Now that pest repeller looks pretty low quality, but you can also find very high quality, well-respected brands on Alibaba.
The next images are of a very popular supplier of boxing gloves on…