Amazon is definitely at the forefront of the Ecommerce market and is only getting better, so it makes sense to take a piece of the pie.
If you don’t already know about Amazon FBA and how it’s a great way to make money working from home in 2020 and beyond, then I will walk you through!
With everything currently happening at the moment, a lot of people are asking if it’s still a profitable business model going into 2020?
The short answer is Yes, but.
Yes, there is still huge potential for you to make money on this platform, but you will have to put in a lot more effort to make sure your product stands out from the rest.
Most of the information you get out there about Amazon FBA is outdated because years ago, you were able to list products on Amazon to sell with ease.
Although things are a little trickier in 2020, there are ways you can succeed, and I will give you the steps to do just that.
What is Amazon FBA Private Label?
Amazon FBA, also known as ‘Fulfilment by Amazon’ is a service Amazon provides for sellers on their platform.
Amazon will store your products in their warehouses across the country and ship them to the customer when they purchase from the website.
They charge a fee for this known as an Fulfilment Fees, but it’s a small price to pay considering they store, advertise, package and ship the product direct to the customer.
All of your work to create, brand, manufacture and ship the product is done upfront.
Once the goods arrive at the Amazon warehouse, Amazon take care of the rest.
Private Label allows sellers to find a product to sell on Amazon, make improvements, add your brand and ship the merchandise into their warehouse (fulfilment center).
When a customer purchases the product on Amazon, Amazon will package and ship the item to the customer for you.
With private label, once the product has been manufactured and branded (with your name and logo), the goods are sold on Amazon.
Benefits of Amazon FBA Private Label
Amazon is a brand that speaks for themselves, with a huge $75 billion generated in the first 3 months of 2020 alone!
Having a brand like this behind your products speaks volumes. Because it’ Amazon, people trust that they are receiving quality goods. On top of that, when there are issues with a product or service, Amazon’s amazing customer service will step in.
Here are some of the other benefits to starting a Legitimate money making Amazon FBA business in 2020:
Builds a brand – FBA Private Label allows you to build a brand from the very start. Once you create and put your logo on one product, it makes it easier to create a product line of products in the same niche. Once someone trusts one product, they are likely to want to invest in other products you sell.
Passive Income – The potential to make money while you sleep is huge! Although the majority of the work is required upfront, once the products are in the warehouse and are selling, you generally have a business that runs itself. Once established, you can hire people to handle product faults and complaints from customers.
Customers come to you – With Amazon, the customers are already there for you. There is usually no need to pay for ads like you would do with your own website. Because you are on Amazon, customers tend to trust your brand a lot more.
- Fast shipping – With Amazon FBA, your product is shipped out to customers via Amazon Prime. This is an extremely fast shipping service offered by Amazon which gets the item to the customer in either 2 days or next day (sometimes same day).
10 steps to Amazon FBA success
I know the struggle of selling on Amazon, so want to give you a quick crash course to success.
1. Find your product(s)
Identify which product(s) you’d like to sell. You may want to pick an overall niche, so that you can extend you product line in the future.
Gone are the days of finding a cheap product from China, sending it into Amazon and hoping to make money.
You need to do extensive research into what is selling and how you’re able to make it different. Your product needs to have the right balance of competition and sales volume.
The best scenario is to find a product with high sales and low review count. This means that there is demand for the product but the low review count shows low competition.
The way I have always checked if the product is a winner, is by using a tool called the Chrome Extension by Jungle Scout.
Jungle Scout makes it incredibly easy to find products that are selling. Depending on the tool you use, they will walk through the entire process from finding a product to launching it on Amazon.
There are a variety of ways to search for products to sell. I have listed the manual and automated methods below:
Search Amazon best sellers – Every product in their database is sorted with a best-seller rank (BSR). You are able to judge how well a product is selling by looking at this figure. The lower a product’s BSR value is, the more units they are selling.
Utilise Google Trends – Another way to ‘vet’ the product is to check on google trends. This Free tool allows you to see which products are on the up and which products have died off a bit.
Look at the competition – Once you have found a product (start with an initial list of 10 or so), type the main keyword into Amazon at the top. The first page will show the products with the best sales under that specific keyword. For example, you can see below the search of “activity centre” brings up the sellers for this product under this keyword.
Check product reviews – This is the way you determine if the product is too competitive. If the product has thousands of reviews, then this would be a highly competitive product. On the other end, if the product has high sales with only a handful (under 200 reviews, ideally 100) then this is a great product to get into.
The Jungle Scout Chrome Extension avoids hours and hours of mindless searching. They compile all of the information for you by showing you BSR, Sales and reviews in one place.
2. Improve the offer
Once you have found the product(s) you think are worthwhile, it is vital in 2020 that you improve the product is some way and offer the customer a ‘complete solution’.
The goal here is to solve a problem for the customer, not to sell a “me too” product and hope to make money.
Yes you could sell a camera like everybody else, but how amazing would it be for the customer if you could sell the camera, straps, tripod and SD card (just an example).
The trick here is to offer the customer a complete solution not just bundle random products together.
A great way to scout out improvements that can be made to the product is by checking the reviews customers have left on your competitions products.
In the below example, a customer explains how much an improved manual in English would have helped. You could improve this product by offering an online manual/video to your customer.
Such a simple thing to include, that could boost your sales and increase ratings. So start to brainstorm ideas, bundles or add ons for your chosen product.
3. Work out Profit Margins
At the end of the day, you are in this business not only to build a brand but also to make decent profit. This is the time for you to work out what your margins are.
An excellent tool for working this out is the FBA Calculator. Simply input price of the item (your selling price), the cost to ship goods to Amazon and the total cost of goods from the supplier (this will include product photos, advertising etc).
The calculator will fill in the fees and give you a percentage of profit you can expect. This tool will allow you to determine if a particular product is worthwhile.
Breaking down the FBA calculator
The great thing about this free amazon FBA calculator is that, you can enter a price points to determine if the product is viable for sale.
Firstly put in the product number you wish to sell or a similar product. Then to use the calculator, enter:
Item Price: This is the price you’d like to sell the item for (make sure you research similar products and enter a realistic figure)
Ship to Amazon: This is the cost of delivery into Amazon. Often the manufacturer, especially if they’re in China, will give you a total cost of the product including delivery into Amazon. If so, enter 0 here.
If you are inspecting the goods beforehand or not getting the manufacturer to ship directly into Amazon, enter the shipping fee per item.
Average Units Stored: Just enter 1 here. Amazon charge storage fees, so when you enter 1, it will give you the storage cost per unit. This is an important factor.
Cost of Product: This the total cost of the product from the manufacturer
Once you enter these 3 figures, the Amazon FBA calculator will generate a Net Profit & Net Margin. See below:
We are only interested in selling with Amazon FBA, so I have blocked out the first “your fulfilment” column.
The profit margin with Amazon is calculated after you minus the Cost of product from the Item price (total revenue), Amazon fulfilment Costs.
So in the above Amazon FBA example:
Profit Margin = Total Revenue ($38) – Cost of Product ($10) – Amazon storage, selling & fulfilment fees – ($0.26+$5.70+11.29)
Profit Margin = $10.75 (28.29%)
A profit margin nearing 30% is great. Don’t go for a product withe less than 20% profit margin
Make sure you get a full grasp of all fees and costs associated with the product before you continue.
4. Look for Suppliers
Now that you have found a product, proved its’ viability and worked out ways to improve it, you need to find a supplier.
The main and most popular way to do this is by using Alibaba.com. This site is a huge database of suppliers offering manufactured products in hundreds if not thousands of different categories.
Start by searching for the product in the main search bar and switch the tab to suppliers.
It’s important you filter for a supplier that provides Trade Assurance.
This is a type of insurance that protects buyers just in case the products do not get delivered, is not to specifications or has been damaged.
You can also make sure the supplier is a Verified or Gold supplierand has been manufacturing for 2years+.
In my experience this offers the best suppliers on the site and you’re less likely to get scammed.
After you have found between 3-4 suppliers, you need to contact them with details on what you are looking for.
Always make this first communication professional and detailed. When you appear as if you are from a reputable company, the supplier will treat you with respect and take you seriously.
You also want to make sure you detail all the questions you want answered. This will avoid the back and forth questions between you and the supplier.
Click here to download a FREE Supplier Template.
Analyse the suppliers responses in terms of:
Minimum order quantities.
Price per unit.
Essential tip: Always negotiate; whether on price, lead times, MOQ, Chinese manufacturers will always give you the highest price, standard lead times and high MOQ’s.
They expect you to negotiate with them, and if you don’t try you’re doing yourself a disservice.
If you need to decline business from a supplier, always do so on good terms just in case you need to use them in the future.
5. Invest in Samples
It’s tempting to save some cash by avoiding this step, but you MUST ALWAYS get samples from your suppliers.
You want to make sure everything you’ve talked about with the supplier has been translated to your final product, and the only way to do this is by ordering samples.
Depending on the product, this usually costs approx. $40-50, and seems like a lot but in the long run you will save a lot of headache.
6. Open your Amazon account
You can do this step earlier on in the process but doing it at this point will avoid you paying for something you don’t yet use. There are 2 options when opening an Amazon seller account:
• An individual account – Amazon will only charge you once you make a sale. There are limitations with this type of account, check out the details here.
• A professional account – with this type of account you will have to pay will $39.99 each month. There is no limit on the amount of products you sell and all of the business details are set up from the very start.
I recommend you open a professional plan from the very start, if you are really committed to making this a business.
7. Choose the right Supplier
Once you’ve analysed the samples, it’s time to pick the supplier that offers you the right product, great lead times and best price!
Then you need to place your order and pay 30% of the total amount. The remaining 70% is paid once the products are ready to be shipped.
Make sure you have every communication with your supplier in writing just in case you run into any issues or discrepancies later.
Essential Tip: Get the supplier to throw in a free business card to be included in every package.
This card will include a few things:
Option for customer to leave a review or come to you with any issues
Allow you to build up your ‘customer list’ by offering a subscription service/recommend a friend of some sort.
Say thank you, improving customer experience
Not a designer, find someone to do this for you on Fiverr.
8. Launch Product
This category comes with its own step by step process, because there is so much that goes into successfully launching your product.
Product Design and Branding
As a private label Amazon seller, you will need to create a brand and to do this you must not only have a fantastically improved product but also follow through with the overall design and branding.
This means focusing in on name brand, logo & packaging.
Product sales on Amazon are non existent without amazing product images. You need to visually show the customer every detail of the product, chances are they will not read your description in detail.
There are loads of tutorials on Youtube on how to take professional pictures but if you want to outsource this job search for somebody on Fiverr to do this for you. 6-8 images are ideal
List your product
I recommend you complete this step before you even order you item(s) from the supplier.
The reason for this being you will know in advance if the product you are selling requires approval from Amazon, if that is the case this can easily take a few weeks.
If you wait until your products are ready to be shipped you and you need approval, you could end up with a whole lot of stress if for some reason they are rejected.
Look for keywords which are relevant to your product – This can be done easily and free by searching for the main keyword in Amazon. You will then see all of the popular search terms for that particular item. This is a great free tool that allows you to optimise your listing based on most search keywords.
Product description/title – Create a title that includes all of the most relevant keywords that you found in the previous step. When thinking up a product description make sure you emphasise the benefits to customers not only the features. Remember you want this product to improve the customers experience, so this is essential. Make the description easy to read and use words that stand out.
- Create FAQ’s – Anticipate the queries you prospective customer may ask. Create an FAQ sheet and make it visible on the listings. People (including myself) love it when all of the information is there for them without having to do any extra work.
Try to market your product(s) in the earlier stages. You can do this by:
- Advertising on facebook
- Letting friends & family know
- Sending the product in to a relevant influencer to promote (will cost money).
Early sales will help increase your product’s visibility in Amazon’s database and allow your product to hit the ground running.
Inspect your goods
When ordering for the first time from a brand new supplier, it is always recommended to inspect your products before sending them to Amazon.
9. Marketing your Product
Luckily, Amazon is a platform that will list your product and bring the customers to you, half the work already done.
However, when you’re just starting out and especially if you have competition, you need to find ways to promote your product.
I briefly mentioned getting your products seen in the early stages but this is essential. Ways to promote your product are:
Find an influencer on Youtube or Instagram with a decent amount of followers and send the product to them to try for free.
You may have to pay them a small fee, depending on their reach. If an influencer recommends your product, you will have the increased likelihood of sales.
This is why it is so important you find a good product that can be recommended with ease.
The Sponsored ads you see at the top of each page are where people have paid to have their products seen on Page 1.
Amazon PPC (Pay-Per-Click) works like an auction. Sellers will enter a maximum amount of money they’d like to spend on a certain keyword.
The seller and product who bid the highest on that particular keyword will appear at the top of Amazon’s sear h results.
When an Amazon customer performs a search for a product, the sellers with the highest bids on relevant keywords win the auction.
At the top of an Amazon search, there are products displayed as “Sponsored” – these are products sellers paid to appear there.
Use your blog/website
Promoting your own Amazon FBA products on your website or blog can be a great way to increase rank on Amazon.
It isn’t totally necessary when you’re just starting out, but can be a great stepping stone once your Amazon FBA product is fully established. Learn how to create your very own blog here >>
Use your social media
Having social media accounts to backup your brand help significantly and allow the customer to trust into you.
I would start posting content while your products are being shipped. At this point you can start to build up your brand and have everything set and ready when you products arrive at Amazon.
Essential tip: What other users have to say about a product, helps other determine whether or not that product is a good fit for them.
Product reviews will 100% help to get your products sold.
People want to find out if a product is good or bad, there it experiences faults and most importantly whether or not it actually works for the intended purpose. Reviews help them do just that!
Important things to consider
Following the steps that we have just laid out is the best way to get your FBA business started.
These are the building blocks necessary to grow your Amazon FBA business. In a short while, depending on your determination, you could be on your way to establishing a full time income from Selling on Amazon.
Take the next step…
Depending on the amount of time, money and effort your invest into it, you can produce a decent side income. Or even establish and grow an extremely profitable business.
If you are ready to take the plunge into the world of FBA but would like a step by step guide, start to finish, I cannot recommend highly enough Jonny Bradley’s SellerPro Academy course. Jonny has been selling on Amazon for over 3 years and I like to think of him as the #1 Amazon FBA trainer in the UK.
I bought his course in September of 2018 and ever since then have been striving on Amazon.
He provides you with over 100+ tutorials providing a step by step through every aspect of setting up your Amazon FBA Business.
These include Finding that Winning Product & Sourcing, Launching and Scaling your business into the 6-Figures. Everything you could ever need!
Click here to check it out (no affiliate).