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How to Sell on Amazon FBA for Beginners - A Comprehensive Guide to Starting an FBA Business

Threecolts
Geri Mileva
Published
May 17, 2023
Modified
May 17, 2023
How to sell on Amazon FBA

Online shopping has become a ubiquitous and indispensable part of our lives. Aside from offering consumers convenience, it has also opened vast opportunities for businesses and individual sellers. With market analysis projecting retail e-commerce sales to reach $560 billion in 2025, selling online is definitely a lucrative step to take.

For those looking to start with online selling or to grow their existing e-commerce business, Amazon is one of the best platforms to join. Amazon continues to be among the top online retailers that have a high customer satisfaction index. In the past year, its American Customer Satisfaction Index or ACSI increased from 78 to 84 and it has registered annual sales of $434 billion. These are clear indicators that Amazon offers growth for sellers. If you’re already an Amazon seller, you can increase revenue further by enrolling products in FBA through Seller Central.

Is enrolling in Fulfillment by Amazon (FBA) worth the extra cost? With Amazon dominating the e-commerce market today, it just might be. We’ve compiled everything you need to know about how to sell on Amazon FBA in this comprehensive guide. Whether you’re a beginner seller or experienced entrepreneur, you’ll find plenty of useful information in this guide that could help you understand what FBA is and how to leverage it for business success.

Benefits of Selling on Amazon FBA

Selling on Amazon is straightforward, but it still requires quite a bit of elbow grease. Aside from creating or sourcing your products, you also need to manage your seller account, inventory, storage, and product shipping. If you’re new to e-commerce, all these tasks can be overwhelming.

Fulfillment by Amazon streamlines most of these tasks, making online selling easier. By signing up for the service, Amazon handles all order fulfillment processes—from picking up stocks from your store to shipping them to your buyers. However, streamlined order fulfillment is not the only benefit Amazon FBA brings to businesses.

Access to Amazon's vast customer base

In 2022, Amazon reported over 300 million active customer accounts in over 180 countries. With millions of active users worldwide, it provides sellers with access to a vast customer base that would be difficult for most to reach on their own. By selling on Amazon FBA, your products are exposed to a larger audience, leading to greater potential for sales.

Reliable fulfillment services

A survey shows that the main driver of online purchases is direct home delivery. Amazon FBA gives you an edge with this through its streamlined fulfillment process. Your products can even be eligible for free shipping and free return processing. Amazon also offers incentives for new sellers including free shipping to fulfillment centers, free storage, free promotional clicks on ads, and free two-day shipping for Prime.

Enhanced visibility and credibility

Amazon is already a well-established brand that consumers trust. This lends credibility to its sellers. Aside from this, the platform also enhances the online visibility of businesses. Market intelligence shows that 55% of consumers start their search at Amazon when online shopping. It also shows that shoppers do product research on Amazon more than on search engines. By selling on Amazon FBA, you place your business in front of a vast audience during their product discovery stage.

Constant customer service support

By signing up for FBA, you get help managing customer inquiries and concerns. Amazon handles all customer services for orders that they fulfill. Your buyers can get 24/7/365 customer support for inquiries, returns, refunds, and other issues. You also do not have to pay for dedicated third-party service provider.

Flexibility and scalability

Amazon does not set a minimum number for products for FBA. You can send one product only or outsource your entire inventory. This gives you flexibility to grow your business without the need for additional capital to meet inventory requirements. Choose a selling plan that meets your current needs and upgrade to specialized plans as you scale your business. 

Access to sales and marketing tools

Aside from reducing your workload, Amazon FBA also enhances your business efficiency. As an Amazon seller, you have access to sales and marketing tools in your Seller Central dashboard. With FBA, you also gain access to the Inventory Performance Dashboard where you can optimize product listings, manage your inventory, and track shipments.

The Basics: Getting Started with Amazon FBA

After realizing the benefits you can gain by enrolling in Amazon FBA, you’re probably eager to start selling there. Before you do so, understand the basics to set a solid foundation for your e-commerce business.

Create an Amazon seller account

Before you can activate an FBA selling plan, you’d need an Amazon selling account first. If you haven’t created one, head on over to https://sellercentral.amazon.com/ to sign up as a seller. You need a government-issued ID, chargeable credit card, and phone number to set up your selling account. You also have to provide your tax information, bank account number, and bank routing number.

Set up FBA

Once you have an Amazon selling account, log into your Seller Central dashboard. Go to the Inventory tab and click on Manage FBA Inventory. Click Get Started to complete the registration process and set up your Amazon FBA.

Understand Amazon FBA fees and costs

Aside from the per item or monthly fees for individual or professional seller accounts, FBA entails other fees. These include fees for inventory storage and fulfillment services. Fees and surcharges may also be imposed on aged inventory, unplanned services, product removal, and returns.

Amazon FBA fees are based on the volume of your inventory, product size, and sales volume. To find out how much it would cost you, use the FBA calculator in Seller Central.

Choosing a niche and product category

While there are some restrictions on potentially harmful or dangerous substances, most consumer products can be sold on FBA. If you already have an existing e-commerce business, you can focus on that niche. If you are new to selling, research market trends to discover in-demand products.

For instance, the latest eMarketer report reveals that the apparel and accessories category is projected to get the most market share in retail e-commerce from 2023 to 2027. Other categories that are expected to do well in the consumer market are furniture and home furnishings, computer and consumer electronics, and health and personal care. You can use market reports such as this one to find the right niche to focus on.

Researching and analyzing the market and competition

Once you have chosen a niche or category, use tools such as Amazon Best Sellers Rank and Amazon Product Advertising API to understand your market better and analyze what competitors are doing. You can also leverage third-party tools such as Threecolts, Jungle Scout, Helium 10, Sellics, AMZ Tracker, and Viral Launch for more comprehensive market insights.

Finding a profitable product to sell
Finding a profitable product to sell

Finding a Profitable Product to Sell

Although there are hundreds of millions of customers on Amazon, there are also millions of sellers to compete with. To achieve business growth, you need to sell products that are profitable and in high demand. To find the best products to sell on FBA, you can follow these steps.

  1. Use Amazon's Best Sellers and New Releases pages to see what’s popular on Amazon. Look for in-demand products that have less competition. You can also check the Product Opportunity Explorer to see what’s trending on the platform.
  2. Use third-party tools such as Threecolts, Jungle Scout, Helium 10, and Viral Launch to gain insight on product demand, sales estimates, and competitor analysis.
  3. Use Amazon Keyword Tool to conduct keyword research. Keep an eye out for high-volume, low-competition keywords.
  4. Read customer reviews and feedback to identify niches that may be underserved. Analyze what customers are saying to know what needs are unmet and what products can fill those needs.
  5. Conduct a SWOT analysis for the particular niche you are targeting. This can help you find products that are potentially profitable and avoid those that may be too difficult to sell.

Once you have found the product that gives you high potential for lucrative growth, you can start looking for the best sources in the market.

Sourcing Your Product

Amazon has strict guidelines on product sourcing and authenticity. Amazon FBA sellers must adhere with product compliance requirements that follow trade control laws and other regulations. As a seller, you must keep these policies in mind when sourcing your products. That said, let’s explore the different ways you can source your products and some tips on how to negotiate with your suppliers.

Different ways to source your products

As an Amazon seller, you can purchase products wholesale, be a dropshipping partner, or start your own private label. Purchasing items in bulk gets you potentially huge discounts that allow you to sell popular brands at low prices while still maintaining a profitable markup. If you do not have enough capital for a sizable inventory, you can opt to partner with a supplier as a dropshipper. You do the marketing and product listing but the supplier ships the products directly to the buyers. On the other hand, as a private label, your supplier adds your custom branding and packaging to existing products that you can sell under your own brand name. 

Finding reliable suppliers and negotiating with them

The suppliers you work with have a significant impact on your business. Unreliable and unscrupulous suppliers can hinder growth, and even worse, cause legal implications that may cause your business to fail. This makes it crucial to find the right suppliers to partner with.

Here are some steps you can take to find reliable suppliers, negotiate good terms, and forge strong relationships with them.

  1. Evaluate their reliability and reputation by browsing customer reviews and ratings. Watch out for red flags such as delayed shipments, substandard product quality, and unresponsive communication.
  2. Conduct due diligence on vetting suppliers by verifying their legitimacy. Check their references, business license, facilities, and history.  
  3. Negotiate discounts, flexible payment structures, and other terms upfront. Establish clear pricing and payment terms that are mutually beneficial. Aim to get the best deal that would maximize your profit but still provide the supplier with substantial margins.   
  4. Ensure quality control and product safety by setting clear quality control standards that comply with the necessary regulations and laws.

Sourcing products is a complex process, but with the right research and preparation, you can find a reliable supplier that can help you achieve success as an Amazon seller.

Listing Your Product on Amazon

You’ve found your product and your supplier. Now it’s time to list your offerings on Amazon and start selling. Follow these steps to create product lists that get your merchandise noticed.

Create a compelling product page.

Make a strong impression on potential buyers with a compelling product page. Craft clear and descriptive titles that include relevant keywords and highlights unique selling points. Write engaging product descriptions that showcase the product features and benefits. Use bullet points and concise paragraphs to enhance readability.

Optimize product keywords and search terms

Conduct thorough keyword research to identify relevant and high-traffic keywords for your product. Utilize Amazon's keyword research tool or third-party tools like Threecolts to identify popular search terms. Incorporate your target keywords naturally but strategically in the product title, description, bullet points, and backend search terms.

Price products competitively

Set the right price for your products to remain competitive. Research and analyze the pricing of similar products in your niche. Consider factors like product quality, features, and brand reputation to determine a competitive price point. Calculate your costs, including sourcing, manufacturing, shipping, and Amazon fees, to ensure you maintain adequate profit margins while remaining attractive to customers.

Categorize and tag products correctly

Select the most appropriate category for your product to ensure it appears in relevant search results. Explore Amazon's category tree and choose the most specific category that aligns with your product. Add relevant keywords and tags that accurately describe your product's features, benefits, and intended use.

By paying attention to these crucial steps, you can maximize your product's visibility, attract potential customers, and increase your chances of success in the competitive Amazon marketplace.

How Fulfillment by Amazon (FBA) Streamlines Your Ecommerce Operations
How Fulfilment by Amazon (FBA) Streamlines Your Ecommerce Operations

How Fulfilment by Amazon (FBA) Streamlines Your Ecommerce Operations

By leveraging Amazon's extensive network and expertise, you can benefit from streamlined operations, enhanced customer experience, and improved seller reputation. You can focus on growing your business while Amazon takes care of the operational intricacies, ultimately contributing to business success in the highly competitive e-commerce landscape.

With FBA, you can also store your inventory at Amazon's fulfilment centers. This eliminates the need for you to manage your own warehouse or storage facilities. When you put a product under FBA, you are given instructions on how to pack your inventory and send it to the fulfilment center. Once it is received at the center, your products are marked available for sale.

When a customer places an order, Amazon handles the entire fulfilment process from packing the products to shipping them to the buyers. FBA also manages the return process on behalf of sellers. If a customer wishes to return a product, Amazon handles the return logistics, inspections, and refund processing. This provides convenience to both sellers and customers, reducing the burden of return management.

Strategies for Success: Marketing and Promoting Your Product

While there are billions of potential buyers on Amazon, competing with millions of other sellers can be quite fierce. To reach your sales goals, implement effective strategies that promote your products, increase brand visibility, and cultivate customer loyalty. You must also constantly adapt your strategies based on customer insights, and continuously refine your approach to maximize success.

Use Amazon Advertising

Amazon Advertising offers sellers powerful tools to increase product visibility and drive sales. You can use Sponsored Product Ads to promote individual products within Amazon's search results and product detail pages. To drive awareness, run Sponsored Brands that showcase your brand logo, custom headline, and featured products in ads that appear at the top of search results.

Create an Amazon Brand Registry

Enrolling in the Amazon Brand Registry provides several benefits, including enhanced brand protection and access to valuable marketing tools. You can utilize Enhanced Brand Content (EBC) to create visually appealing product detail pages that provide shoppers with a richer brand experience. You can also create a dedicated brand storefront to showcase your entire product catalog, tell your brand story, and engage customers with a curated shopping experience.

Use social media platforms

About 1 in 2 social media users click on ads to check out new products, making it important to establish your presence on social media platforms where your target audience are active. Aside from sharing product updates and promotions, keep engagement high by responding to comments and messages promptly. This fosters a better sense of connection and builds customer trust.

Leverage influencer marketing and affiliate programs

Influencer marketing and affiliate programs can help amplify your brand's reach and drive conversions. Collaborate with influencers whose audience aligns with your target market. Set up an affiliate program that offers a commission to individuals or websites that drive traffic and sales to your products.

Run sales promotions

Running periodic sales promotions creates a sense of urgency and entices customers to make a purchase. Offer time-limited promotions on select products which are available for a few hours or until inventory is sold out. Create digital coupons that customers can apply at checkout to receive discounts on your products.

Create a strong brand image and reputation

A strong brand image and reputation is crucial for long-term success. Ensure consistent branding across all touchpoints, including packaging, product listings, and communications, to build recognition and trust.

Best Practices for Managing Your Amazon FBA Business

There’s more to Amazon FBA than choosing the right products and optimizing product listings and promotions. For long-term success on the platform, you must be able to manage all aspects of business and keep your strategies aligned with market trends. Here are some of the best practices for managing Amazon FBA.

  1. Regularly monitor your sales performance and keep a close eye on your inventory levels. Utilize Amazon's inventory management tools to track product quantities and set up alerts for low stock.
  2. Replenish your inventory at the right time by forecasting demand. Analyze market trends and historical data to gain insights on consumer preferences.
  3. Continuously monitor market dynamics and competitor pricing. Adjust your prices to remain competitive while keeping your profit margins reasonable. You can also leverage Amazon's automated repricing tools or third-party software to streamline this process.
  4. Respond promptly and professionally to customer inquiries, concerns, and complaints. Aim to provide helpful and satisfactory solutions to ensure a positive customer experience.
  5. Take proactive steps to address any product or service issues reported by customers. Offer replacements, refunds, or other suitable resolutions to demonstrate your commitment to customer satisfaction.
  6. Request feedback from satisfied customers by sending follow-up emails or using Amazon's Request a Review feature. Encourage customers to leave positive reviews.
  7. Monitor your seller feedback ratings and address any negative feedback promptly. Reach out to customers who left negative feedback to resolve their concerns.
  8. Streamline your operations. Continuously optimize business processes, such as order management, labeling, and packaging, to improve efficiency and reduce errors.
  9. Regularly analyze your sales, conversion rates, and other key performance indicators. Identify areas for improvement and implement strategies to enhance your business's overall performance.
  10. Keep up with Amazon's policy updates, algorithm changes, and industry trends. Participate in relevant forums, webinars, and training to stay ahead and make informed decisions.

Sustaining Growth: Scaling Your Amazon FBA Business

With the right strategies in place, your Amazon FBA business is bound to gain traction. When this happens, it’s time to expand and scale your business. Here are some growth strategies that can take your business to the next level.

Expand your product line and diversifying offerings

Conduct market research to identify complementary products or variations of your existing products that align with customer demand. By offering a broader range of products, you can attract a larger customer base and increase your revenue streams.

Increase inventory and storage capacity

To meet the demands of a growing business, increase your inventory and storage capacity. Evaluate your sales data, forecasts, and market trends to determine optimal inventory levels. Consider leveraging Amazon's FBA inventory storage programs or exploring additional warehouse options to accommodate larger quantities of products.

Sell on multiple marketplaces and channels

Expand your reach by selling on multiple marketplaces and channels outside of Amazon. Explore opportunities on other e-commerce platforms, such as eBay or Walmart Marketplace, to tap into new customer segments.

Outsource tasks and hire employees

As your business grows, it may become necessary to outsource certain tasks or hire employees. Identify repetitive or time-consuming tasks that can be delegated, such as inventory management, customer support, or marketing. Partner with freelancers or hire staff to ensure efficient operations and free up your time for strategic decision-making.

Invest in marketing and advertising

Allocate resources towards marketing and advertising initiatives to increase your business visibility and drive customer acquisition. Invest in targeted campaigns on Amazon Ads and other channels. You can also get the help of SEO and digital marketing experts to sustain business growth. 

Build strategic partnerships and collaborations

Explore potential partnerships with influencers, complementary brands, or industry influencers who can help promote your products to their audience. Consider participating in cross-promotional campaigns, joint ventures, or collaborations to leverage each other's customer base and expand your reach.

Tools and Resources for Amazon FBA Sellers

As an Amazon FBA seller, utilizing the right tools and resources can significantly streamline your operations and enhance your success. Here are some powerful tools and resources that can help you optimize various aspects of your FBA business:

Amazon Seller Central

Amazon Seller Central is the central hub for managing your Amazon FBA business. It provides essential features and functionalities such as inventory management, order fulfillment, performance metrics, advertising options, and customer communication.

Amazon FBA Revenue Calculator

Estimate the potential profitability of your products using this free tool. It automatically calculates the fees related to the sale of each product and the estimated profit for each sale.

Threecolts

Threecolts helps you monitor and track your inventory levels, provides automated reorder alerts, and generates insightful reports to optimize your inventory management. Threecolts also streamlines your FBA operations and ensures you have the right products in stock to meet customer demands.

Jungle Scout

Jungle Scout has a free product research tool that assists sellers in finding profitable product opportunities on Amazon. It can significantly expedite your product research process and increase your chances of finding successful products.

Helium 10

Helium 10 is an all-in-one software suite that offers a range of tools to optimize various aspects of your Amazon FBA business. It includes features such as product research, keyword research, listing optimization, inventory management, and competitor analysis.

Viral Launch

Viral Launch provides tools for product research, market analysis, listing optimization, and product launch strategies. Its suite of tools empowers you to make data-driven decisions and maximize your product's visibility and sales potential.

FeedbackWhiz

FeedbackWhiz is a feedback and review management tool designed to help you effectively manage customer feedback and reviews. It enables you to enhance your seller reputation, engage with customers, and foster positive feedback and reviews.

InventoryLab

InventoryLab is an end-to-end inventory management and accounting solution tailored for Amazon sellers. It offers features such as inventory tracking, cost of goods sold (COGS) calculations, profit and loss reporting, and integration with Amazon Seller Central.

TaxJar

TaxJar is a comprehensive sales tax management platform that automates sales tax calculations, reporting, and filing for your Amazon FBA business. It simplifies the complex sales tax compliance process, ensuring you meet your tax obligations accurately.

By leveraging these tools and resources, you can optimize your operations, make data-driven decisions, and automate essential tasks—ultimately empowering your Amazon FBA business for success.

Start Your Amazon FBA Journey Geared Towards Success

Throughout this guide, we have explored the fundamental aspects of the Amazon FBA business model, empowering you with the knowledge and strategies to embark on your entrepreneurial journey. Now it’s time for you to take the first step towards becoming a successful seller on Amazon FBA. To kickstart your growth, get help from experts and leverage third-party service providers like Threecolts.