Planning to venture into Amazon? Welcome to the club! Every day, more and more entrepreneurs are lured into selling products online. This is because of the huge demand from consumers all over the world. The first marketplace that comes to mind for aspiring sellers is Amazon.com. AMZ is a leading e-commerce site that has amassed a 50% stake in the e-commerce market. Starting an Amazon FBA business is a great venture for 2022.
The sales numbers on this marketplace are very attractive. As a matter of fact, there are almost 10 million sellers on the platform at present. Of this total, about 2 million are active sellers. Hence, if you want to sell on AMZ, you must be ready to face fierce competition. How to get ahead of the competition? Read this to the end.
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What is an Amazon Business?
If you’ve been looking for a passive income source, then you may have considered selling online. And if you have, setting up an Amazon business is most likely the first thing that comes to mind. But if you have no idea about what an Amazon business is, then you should learn all about it first. So, what is an Amazon business?
Online shopping is on the rise and more people are ditching walk-in shopping, and of course, more entrepreneurs are setting up online businesses to cater to the increasing demand. Amazon is the world’s largest online marketplace with over 300 million active customers and 2.5 million active sellers. An Amazon business is an easy to set up business model that gives people access to a AMZ’s customer base in order to help them expand their businesses or improve their finances.
If you decide to sell on Amazon, you will have to source products, store them, then ship orders and provide customer service. AMZ offers two fulfillment models: Amazon FBA (Fulfillment by Amazon) and Amazon FBM (Fulfillment by Merchant). With FBM, you will be solely responsible for all your business tasks . In contrast, with FBA, you won’t have to go through much stress since the fulfillment model allows you to outsource your business processes to AMZ’s excellent team.
Amazon FBA Business Explained
FBA is a program offered by Amazon to help third-party sellers. Through this service, AMZ automates order fulfillment and shipping services for its sellers. So, how does FBA work?
When you enroll, Amazon will manage these processes for you:
- Shipping
- Returns and refunds
- Product warehousing
- Picking and packing
- And more
As an FBA seller, all you have to do is to send your products to Amazon. They will store your inventory in their warehouse and process all your orders as they come.
Key Advantages of Fulfillment By Amazon
Aspiring sellers always ask, “Is FBA better than FBM (Fulfillment by Merchant)?” This depends on several factors. Still, FBA has some clear advantages over FBM. Here’s a summary of the pros and cons of selling on AMZ via FBA.
Pros
- FBA Saves You a Lot of Time
When you sign up for the program, you no longer have to go to and from courier offices to ship out your products. You won’t have to stress about customer returns neither. This means that you get to have more time to focus on growing your business. You also enjoy access to a team of customer service experts. These experts will take care of your customers’ needs and concerns for you 24/7.
- You Get the Prime Badge
As an FBA seller, your products are automatically eligible for Amazon Prime. If you sell to Prime subscribers, you will have to offer free two-day delivery at no extra cost. As of 2021, Amazon has over 200 million Prime subscribers. The fast and free shipping incentive makes buyers order products that have a Prime badge. Also, the “Fulfilled by Amazon” tag makes your brand more credible. This is because shoppers are more inclined to buy products that are under FBA. So, between you and an FBM seller, customers will choose you.
- You Have Greater Chances of “Winning” the Buy Box
The Buy Box section on Amazon is the white box that you will see on the right-hand side of the product page. This is where most shoppers buy their items. When a customer goes to this section, the seller who has the highest ranking at that time will be featured up there. As a result, if you get to win the Buy Box, you end up making more sales than any other merchant for that product.
Over 80% of Amazon’s website sales go through the Buy Box, and the percentage is even higher for their mobile sales. This is why sellers fight tooth and nail to be able to win the Buy Box. Signing up for FBA does not guarantee that you’ll win the Buy Box. But it increases your chances compared to other business models.
Related: How AMZ’s Buy Box Works
Cons
- You May See an Increase in Customer Returns
Some sellers have claimed that they have seen a spike in returns after using Fulfillment by Amazon FBA. This may as a result of Amazon’s no-questions-asked return policy. Initially, AMZ mails order returns back to the sellers. But the e-commerce platform has improved its return management system. So returns are sent back to the warehouse or fulfillment center.
- You Need to Pay for Long-Term Storage Fees
Amazon doesn’t like keeping inventory in their warehouses long-term. Because of this, they charge a long-term storage fee for products that sit for an extended period. This is something that you need to expect and budget for. Aside from the financial repercussions, prolonged storage can affect your metrics. Given this, you might want to take static inventory away from AMZ’s warehouse. Especially if they have not been selling out fast for quite some time.
Related: FBA Fees Breakdown For 2021
How Much is the Cost of Starting an FBA seller?
When you register for an account, you will be charged two fees. These are apart from referral fees (Amazon’s commission for sales on its marketplace). They are:
- Fulfillment fee: Covers costs related to picking, packing, shipping, and providing customer service
- Monthly inventory storage fee: Covers the cost of storing your products in Amazon’s fulfillment centers
Note that fulfillment costs will vary. It all depends on the specifics of your business. The type of products that you offer and the size of your operations, for instance. The cost of having AMZ take care of shipping and handling your customers’ orders is lower. Especially when compared to the costs you’ll incur if you use FBM.
You can review the FBA cost structure to learn more.
How Much Do Sellers Make?
There are so many variables involved that a single answer will not suffice. Still, it is safe to say that sellers earn between $3,000 and $40,000 in the first 30 days of opening their businesses.
What’s great about FBA is that it does not limit a seller’s income potential. There are those who have experienced a spike from $0 income to $50,000 per month within 8 months. Hence, it is possible to earn a five, six, or seven-figure income on AMZ. All you have to do is use effective strategies. Also, utilize AMZ software like Zonbase. ZB provides powerful, accurate tools so even beginners can dominate the market.
How to Start an Amazon Business
If you’re ready to begin your new venture as a startup, here are the steps:
Step 1: Set Up
Register your seller account by going to www.amazon.com/fba. Click Get started, then select Add FBA to your account if you already have a seller account. If you do not have a seller account yet, select Register.
Step 2: Create Your Product Listing
Log in to Seller Central, then click on Add a Product. You will find this under the Inventory drop-down menu. Once you’re on the Add a Product page, select from the following methods:
- Add a product that is already.
- Click on Create a new product listing right below the search box.
- Use the Bulk Upload feature to the right of the screen if you want to upload many products.
The next step is to assign your new product to a category. To find the appropriate category, you can use the search feature or browse the categories. Once you have chosen the category for your product. The next thing is to fill in the listing information for your new product. There are 7 fields:
- Vital Info
- Variations
- Offer
- Images
- Description
- Keywords
- More Details
When creating your product listing, it is best to optimize your content. Including relevant keywords is important. This increases your chances of reaching your target customers. Zonbase is a helpful tool for FBA sellers and one of its features is Keyword Research.
Step 3: Prepare Your Products
You will have to prepare and pack the products that you will be shipping to the fulfillment center. Pay attention to AMZ’s guidelines on product packaging. Failure to pack your products according to these requirements may lead to extra costs.
Check AMZ’s packaging and prep requirements.
Step 4: Assign Inventory
Once you’re ready to create your first shipment. First, assign your inventory by logging in to your Seller Central account. After signing in, navigate to ‘Manage Inventory’. Next, select the items that you want to include in your FBA listings. Then from the Actions menu, select Change to Fulfilled. On the following page, click the Convert & Send Inventory button. Follow the instructions in the shipment creation workflow. These instructions will help you send your first shipment to FBA.
Step 5: Create an FBA Shipment
Create an FBA shipment to send your items to a fulfillment center by following the above steps. The products that you have assigned to FBA will appear under the Fulfilled By Amazon column. Tick the boxes next to the products that you would like to ship. From the Actions menu, select Send/Replenish Inventory. This will lead you to the shipment creation workflow.
Step 6: Send and Track Your Shipment
Next, the shipment will be picked up, or you can drop it off. Once this is done, mark your shipment as Shipped. This is in the Shipment Summary page of the shipment creation workflow. You can track your shipment in your Shipping Queue.
How to Run an FBA Business Successfully
Making money on AMZ does not begin and end with learning how to start an Amazon business. You must also learn how to run your business successfully. AMZ offers vast opportunities for new and existing sellers. As of the first quarter of 2021, 55% of AMZ sales amounted to $80 billion. This share of AMZ’s revenue came from third-party sellers. Sellers who earn millions of dollars from their stores, are proof that you can make huge profits too. Here are some tips to help you succeed:
TIP #1: Automate and Delegate
To succeed in your venture, you need to stop managing tasks manually. Automate major business processes. This will help you focus on increasing your productivity and improving your performance. Aside from automation, you also need to start delegating some responsibilities. You can hire a virtual assistant to help with business emails or social media management. Even blogs and appointment schedules can be managed by an assistant. By automating and delegating, you now have more time to address big-picture issues. Brand promotion, quality control, and overall strategies will be your main tasks.
TIP #2: Track Your Advertising Fees and Other Expenses
A vital part of business success is being able to track your expenses. Familiarizing yourself with the campaign system will help you track your advertising expenses.
It is a bit easy to create an ad campaign. Learning how to do this will enable you to do the following:
- Set a daily limit
- Reduce or increase your ad spending’s
- Set a date range for your ad campaign
- Focus on more competitive targets
- Target keywords to appear on the first couple of pages
- Establish a total budget
FBA fees should also be factored into your budget. This is to ensure that you are able to manage your business expenses well. Perform audits and claim reimbursements. This way, you are able to recover funds and use them to scale your business.
TIP #3: Stay Up-to-Date with the Latest Trends
New products are constantly being released from stores. This is why it is imperative that you actively track trends if you want to stay ahead of the competition.
There are four locations for tracking trends:
- The Trend Report
- The Best Sellers Section
- Current Movers & Shakers
- Product Research Tools
The Trend Report is a great resource for relevant statistics as well as an overview of the “big picture.” The Best Sellers section is updated every hour. Track the top sellers in different categories. Make it a habit to go to your product category and check out the most popular products on a regular basis. The Movers & Shakers section features a short-term view of what’s trending. It also shows the sales ranking of products per category over the past 24 hours.
TIP #4: Expand Your Market and Sell Worldwide
Even at the beginning, you should be considering selling on a global scale. This is the ideal mindset, especially if you would like to be at par with the top sellers on AMZ. Fortunately, AMZ offers tools and programs to help expand your business on a global scale.
For one, AMZ’s translation options will be very helpful if you wish to expand your reach to other countries. Being an FBA seller means that they will handle the logistics for you. AMZ also offers a detailed guide on local tax codes and regulations of other countries. Also, being affiliated with a global brand like AMZ opens up new opportunities.
TIP #5: Establish Yourself as a Brand
The Brand Registry program allows you to set yourself as a brand. With this, you will be able to create content and access enhanced analytics. You can also have a social page where frequent shoppers can follow and connect with you. You can even create sponsored brand campaigns to lead buyers to your storefront.
Related: Benefits of the Brand Registry Program
Is an FBA Business Worth It?
Considering starting an AMZ business? These are questions you may have:
- “Is it profitable?”
- “Is FBA worth it in 2021?”
- “Once you sign up, how much can you make?”
These are valid questions. A good entrepreneur should ensure that they are making a good investment. Not only of their money but also of their time and efforts.
FBA may significantly boost sales. But small-scale sellers should give it a thorough assessment before opting for it. Many factors should be considered to ensure that you get the best out of it.
Final Thoughts
An FBA business is a great way to leverage AMZ’s excellent fulfillment services. It is also a great sales strategy for new sellers. There are many ways to gain momentum on this platform and get ahead of the competition. Moreover, provides several tools to help their sellers succeed.
If you have decided to give it a go, make sure you have everything you need to succeed in this business venture. One helpful tool that would prove invaluable to your FBA is Zonbase. This software can help you with product research, keyword research, and listing optimization.
