Guide to Starting a ‘Fulfillment by Amazon’ Business

Guide to Starting a 'Fulfillment by Amazon' Business thumbnail

Opinions expressed by Entrepreneur contributors are their own.

The Fulfillment by Amazon (FBA) business model continues to grow in popularity, and for good reason. Fundamentally, it’s the same as a traditional eCommerce business. But, instead of your having to fulfill orders one by one, Amazon stores your products for you and even picks, packs, and ships them out to customers.


Related: Fulfillment by Amazon Poses a Great Option for Those Looking to Break Into Ecommerce

This makes it a lot easier for you to build your business without having to worry about the logistics of warehouses, packaging materials, couriers, and so on. Private labeling gives you the chance to create your brand and website, increasing your business’s value.

Raring are you ready? Here’s our basic guide for starting an Amazon FBA business.

What Is Fulfillment by Amazon?

The Amazon fulfillment business model allows you to leverage Amazon’s robust distribution network and customer base. Amazon will store your products, fulfill orders, and provide customer service, so you don’t have to be involved in every aspect of the business. This means that entrepreneurs can act like a large corporation without having to deal with the hassle of being one. Amazon will take care of the rest. You can concentrate on product opportunities.

Related: 7 Online Business Ideas That Could Make You Rich

In a typical eCommerce business, you have to figure out the logistics of sending products to your customers in a timely manner. However, with FBA, Amazon Prime members get most orders shipped to their door within two to five days. Another problem with eCommerce stores is the increased complexity of inventorying and product listing. FBA allows you to ship your products to Amazon warehouses and the company will handle the rest. It is easy to increase your product range and inventory without increasing your workload.

Create an Amazon seller account.

First things first: In order to get your FBA business up and running, you’re going to need to create an Amazon seller account. You could start by going to Amazon Seller Central, or go to Amazon’s website, scroll down to the footer and look for the heading marked “Make Money with Us.” Click on the link “Sell on Products Amazon. “

Related: The Pros and Cons of Buying a ‘Fulfillment by Amazon’ Business

At this point, you can either sign up as an “Individual” or a “Professional.” You will not be charged a monthly subscription fee if you sign up as an “Individual”, but $0. 99 per unit sold. If you are looking to build a long-lasting business, you should sign up for the “Professional” plan. The plan costs $39. 99 per month plus selling fees. Other than that, it is very easy to sign up. Follow the instructions on screen to complete the setup. The fulfillment fee for Amazon FBA may vary depending upon the product’s weight and dimensions. Plus, Amazon FBA sellers are charged a storage fee monthly based on the total space your inventory storage occupies in an Amazon Fulfillment center. Excess inventory is not subject to a long-term storage charge.

The shipping cost depends on whether you are an Amazon FBA seller or a third-party seller who fulfills orders on your behalf. If you choose not to use Amazon’s warehouse, your prime customers could still receive the benefits of prime through Seller Fulfilled Prime. Businesses could also use Amazon FBM, or Merchant Fulfilled Network, where the seller can list products on Amazon Marketplace, but manage all other dealings independently, all while still utilizing the Amazon platform.

To help you pick the best option, potential sellers can use the Amazon Revenue Calculator, which will give you real-time cost comparisons and estimates.

Uncover product opportunities and establish your private label.

There are a number of different ways to leverage the FBA model, but the most popular way is private labeling. You will need to create a brand or label and apply it to your product. Then, you can sell it on Amazon.

First, you will need to do your Amazon product research. This is a critical step for many reasons. You could lose money if you try to sell a product in a niche that is not popular. If you take the time to find a popular product category, do competitive analysis, study product reviews and identify a product that you can improve upon or sell at a better price, you’ll have found the sweet spot. Another popular way to sell products on Amazon is through retail arbitrage. This involves buying a brand-name product, and then flipping it on Amazon for profit. This is a great way to make money on Amazon, at the least for the short-term.

Related: 10 Online Careers You Can Start Today With Basically No Money

With private labeling, you need capital. Although private label products can be expensive, this is the best way to start a career.

Your supplier is another key piece of the puzzle. If you don’t have the products you need, you won’t be able to make money. This is why you must ensure that there is no delay between placing the order and receiving it.

Tips for growing and scaling your FBA business

  • Pursue your passion. If you enjoy doing it, you will stick with it for longer. Find a product category that interests you.
  • Increase your product offerings. You will need to do proper research for every new product offering you create. You can reduce the risk that your business becomes dependent on one product.
  • Improve your Best Sellers Rank. BSR is an important metric for both your customers and your sales. This is also important when you sell your business. Buyers want to see steady growth in the BSR rank over time.
  • Build your brand website. As you continue to expand your private label product offerings, you’ll want to build a professional, dedicated site for your business. This will allow you to market your products in a different way and make your business more attractive to potential buyers.
  • Become an Amazon Associate. Increase your revenues by becoming an affiliate with Amazon. Refer customers to your products through your site and earn commissions

Earning potential

How much do FBA business owners earn? What is the earning potential for an FBA business?

Spencer Haws from Niche Pursuits reports he was able to make nearly $40,000 within 30 days of starting his FBA business. Chris Guthrie from UpFuel made almost $3,000 within 30 days. James Amazio, founder of Feedbackz, went from zero to $50,000 per month in just eight months. These results are not typical but show that it is possible for an FBA business to grow from zero to $280495 in just eight months.

Related: 5 Ways To Grow Your ‘Fulfillment by Amazon’ Business

Final thoughts

Although starting an FBA business will require up-front capital, the effort will be nowhere near as intensive as it would be with a traditional eCommerce business. The hardest part is getting your business started. Finding ways to grow your FBA business is the more difficult part. Make the most of the resources you have and organize your processes as you go.

Read More