Chances are, you are here because you are considering selling products online. More, you want to know if Amazon is the right platform for you. But first, you wish to get a better understanding of how Amazon seller utilizing Fulfillment By Amazon (FBA) works.
Amazon is :
- 300 million active customers in more than 180 countries
- 195 million monthly unique visitors (in the U.S. alone)
- $1.5 billion reported sales by third-party businesses during Prime Day 2018
Statistics gathered from amazon.com
Typically, this is how to sell on Amazon FBA for beginners:
- Basically, you source a cheaper product typically from a low-cost production country such as China or in a cheap market for $1.
- Then, you get them shipped to an Amazon fulfillment center.
- Later, you sell them on Amazon for $20.
- After, Amazon fulfills then for you.
- But, Amazon takes their fee, because of fulfillment, handling, and distribution.
- Finally, you get paid to the profit.
Sound easy right? But in reality the process is more complex and requires a certain level of knowledge if you want to make things right.
A. Find a product that can sell on Amazon
This is the most difficult stage of the process. It all starts with the product. Indeed, you can apply all sorts of marketing strategies for instance the 4Ps (Price, Product, Place, and Promotion) methodology to help you. It all starts with the product. But a good place to start is the Amazon bestseller list. That is because, in the 4Ps strategy, your Place is Amazon. Surely, Amazon bestseller list will basically tell you what is selling on Amazon and what is most profitable per category.
How it works
- Scan Amazon
Check out the Amazon Bestseller list. It is a fantastic place to start. Indeed, you can narrow down to any category you have interest in. In addition, try to eliminate seasonal products so you can maintain consistency throughout the year.
This is the most critical step of the entire process. That is why you should go in-depth and spent enough time, researching without cutting corners. If you pick the right product, you can do anything else wrong but still, make a lot of money. However, if you pick the wrong product you are going to have a hard time.
- Stay away from items that are extremely popular or niche.
That is because you will be facing competition. Equally, if they are niche it could be hard finding buyers.
That is why you should focus on products with “Product Reviews” on Amazon of less than 900 and “Best Seller Rank” Between 500 to 6500 within your interest category.
- Go Private Label
You can take a great selling product, improve it with your own taste and twist, and put it back on the market.
- Quality and size
Focus on good quality products for durability. In addition, to mitigating any complaint from your client. Then the size will help you ship fast and limit shipping cost.
You want your products to be small, non-breakable, and easy to use. Ideally, weight should be less than 4 pounds
There is no exact science. Each product is different. However, you want to make sure you get a good profit margin on the product and the considerable net profit. A good rule of thumb is a profit margin of at least 30%.
B. Find a way to make your product.
International sourcing and manufacturing
A lot of people will go on Alibaba because it is a massive directory of manufacturers. Truly, many products are made in China or Asia. If you choose to have your product done in China then here are some key elements to keep in mind during your search:
- You want a manufacturer that has years of history. Don’t be deceit by the badge on Alibaba. It doesn’t really work. Instead, check the manufacturer’s website, do phone calls, check the manufacturer references, look for past transactions (Alibaba list those transactions), find a seller that has used the manufacturer. If you can do a tour at the manufacturer factory. Then narrow your list to the top 3 manufacturers within the category you are interested in.
Sourcing in Asia can be extremely challenging. More, if you are limited with the language, culture knowledge, location knowledge, and no reliable contact.
Establish a presence in your manufacturing hub. You can either hire a person that represents your interest in the country or work with a specialized firm. Either way don’t do it alone make sure to surround yourself with subject matter experts.
Another option is to find a reliable contact agent. Usually, with a little bit of research, you will find some agents in your hometown. He or she will do basically everything for you and present you with the manufacturing options. Typically, they know the manufacturer and have worked with the manufacturer for years and in case of any issue, you know where to go.
Nonetheless keep in mind, when your manufacturer is abroad, you might encounter some setbacks. For instance, difficulties fulfilling your order, intellectual property, product defect, and delivery delay.
But more and more people are going South nowadays ( Mexico, Brazil). That is because it is nearer and easy access.
Yet there is another challenge with that sourcing strategy, trade wars. Indeed, trade wars or protectionism can actually stop the influx of your products in the country or add another dimension to the challenge.
You can find the top sourcing and manufacturing agent in China by visiting this website : https://www.chinaimportal.com/blog/sourcing-companies-china/
Local sourcing and manufacturing
On the other hand, you can choose to make your product in the country., you will have more control over your products. The margin might not be very high but you will have the assurance of quality, resolve any disputes, and mitigate shipping challenges. However, you have to work a little harder to find an on-demand manufacturer. Yet thanks to the advancement of technology especially with 3D printing has improved manufacturing capabilities in some categories locally manufactured products can be quite competitive.
Eventually, you can decide to focus your effort on high quality, high margin products. Actually, a quick browse on Amazon, you will find more and more vendors that are proposing top notch products for a very good fee.
You want a manufacturer that has years of history. So, check the manufacturer’s website, do phone calls, check the manufacturer references, look for past transactions, find a seller that has used the manufacturer, visit the manufacturer factory. Then narrow your list to the top 3 manufacturers within the category you are interested in.
Below a directory of manufacturer in the USA.
In a world where locally made products are gaining traction, this could be a more reliable and beneficial option.
Then once you have find your supplier,you can move to the next step.
This probably one of the most neglected activities. That is because many people don’t realize how critical this is. Even Though you are sourcing your product for really cheap, you still need to make sure your math is right. Including forecasting possible returns. This painful activity will help you get a rough idea of how much money you can make. Basically, you will estimate how much money you need to start and how much money you will make. Beyond money, the volume you need to start making money.
When it comes to moving products, you can either capitalize on the drop-shipping model or house your inventory. Each method has its advantages and drawbacks. Still, no matter the shipping plan you choose, make sure you have a good understanding of inventory management. Don’t hesitate to learn more about inventory management if you have limited knowledge on the topic.
C. Utilize Dropshipping Model
Once you have to find the right product to sell on Amazon and finalize everything with your manufacturer. Your work is pretty much done. All you have to do now is to have your product package well and shipping directly from the manufacturer to the Amazon fulfillment center.
Or you can choose to receive your products, store them, do product control and packaging before shipping everything to an Amazon fulfillment center. That is because the less inventory you have the better you will be. Nevertheless, you will need to optimize the process with a good inventory management system.
D. Inventory Management
You want to make sure you don’t ever run out of stock and you don’t overstock. Obviously because of financial considerations related to inventory management. Consequently, monitor your inventory and find the perfect balance. Inventory forecast so you can choose the perfect number to order, the perfect quantity to have in stock, and when to order. This will take sometimes but ultimately you will find it. This aspect is critical because it will help you optimize your relationship with your manufacturer and your customers.
E. Put your product in front of the buyer
Create a listing on Amazon. In other to be effective with this step, you will need to capitalize on Search Engine Optimization, keywords. Amazon is a product search engine. To get sales on Amazon, you have to rank the highest on the result for the keywords you want your product shown for. Still, your pictures need to be on point, your product description seamless and easy to digest. Focus on the following: Product Title, Product images, Price, and Reviews.
Your image needs to be perfect, don’t hesitate to invest in a professional photographer for a better outcome. Think about it with so many vendors on the platform any little thing can make a big difference.
To get reviews, you can get into the Amazon Early Reviewer Program. You pay $60 to Amazon and Amazon incentives random customers to leave an honest review of your product. You are online eligible if your product has zero reviews and Amazon will get you from $0 to $60.
Don’t launch until or do PPC you have at least 5 reviews.
For a successful launch, you do full price giveaways or rebate give away.
But also, you can do marketing on PPC on Amazon Marketing Platform. The big part of marketing on Amazon is to do marketing on Amazon Marketing Platform.
Getting your product listed on Amazon is one thing, getting sales is another piece of cake. You need to build a consistent digital marketing strategy that drives yourself across multiple channels.
Offline, by attending events, flea markets, and any promotional events that can help put your brand out there. Get into physical stores if possible, with a link to your Amazon store.
Nevertheless, capitalizing on social media is extremely effective. Shoot viral videos and push content readers and consumers towards your product. You can also utilize blog posting. Basically, any strategy that will drive traffic towards your product is welcomed.
One of the most popular external strategies is the Amazon affiliates program. But there is a specific way to use your affiliate link on social media. Also, keep in mind you cannot use your link to buy your own product on Amazon, nor your family or friends. Failure to comply with your amazon account would simply be terminated. However, you can definitely use guest posting, offer high-level content, focus on 1 social media platform. Basically the idea is to bring your affiliate to others.
Otherwise, you might end up with inventory issue. That is because Amazon is extremely competitive and everything is done by the platform to drive price down and encourage their huge customer base to buy. Furthermore if you don’t make certain number of sales per month your inventory management cost goes up. As result, you might get less profit. So ,take time off and learn more about online and offline sales.
PPC is Amazon Marketing Platform.
Learn how to do promotion and marketing on Amazon.
F. Drawback of selling on Amazon
Selling on amazon is wonderful. Certainly, the marketplace has helped thousand become really wealthy. However, there is one thing you need to understand.
- Amazon can kick you out of the marketplace if you don’t comply
- The company has pushed its own branded products against your
- The data is owned by Amazon making it sometimes hard for you to mine.
- Amazon takes a good chunk of your sales that is because you pay for the listing, cloud, amazon warehouse inventory cost, and other related costs.
- Always keep extra inventory for defective products. You will have to either refund the customer or send them a replacement.
- No sale is final in the marketplace until a certain period of time. The time represent the period given to customers for product return. Thus have a strategy that works accordingly
How to sell on Amazon FBA: additional resources
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