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Amazon FBA Explained: How To Get Started in 2023

In this article, we will provide you with everything you need to know about Amazon FBA.

Financial independence or a business with unlimited growth potential is what you desire? Then it's essential to understand the art of selling on Amazon FBA.

 

What if I informed you that you could purchase regular retail products and resell them on Amazon at a profit? Would the concept of earning money while shopping appeal to you?

 

If your answer is affirmative to all those questions, then I have fantastic news for you. Engaging in the buying and selling of retail items on Amazon is a legitimate business endeavor. It has personally generated hundreds of thousands of dollars, and you too can acquire the skills to make money by selling on Amazon.

Amazon FBA Explained How To Get Started

Introduction

What I aim to do is motivate you to take action while providing you with all the necessary information to kick-start your journey. However, I understand that your time is valuable, especially when you're seeking opportunities for personal and financial freedom.

 

Before diving into this lengthy blog post, let me identify who would benefit from reading the entire article.

Selling on Amazon FBA is a perfect fit if you:

  • Aim to replace your full-time 9-to-5 job

  • Aspire to build a scalable business

  • Desire to support your family while working from home

  • Seek a side hustle or full time that generates income

 

Is everything clear now? Great! Let's proceed and dive into the exciting world of Amazon FBA!

Amazon FBM vs Amazon FBA

Amazon FBM

Fulfilled By Merchant (FBM), commonly referred to as FBM, is an option for sellers to list their products on Amazon and handle the shipping and fulfillment process independently. In this method, sellers take on the responsibility of fulfilling orders directly, without relying on Amazon's assistance. While FBM can be advantageous for products with lower profit margins, it is often overshadowed by the convenience, streamlined shipping, handling, and other benefits associated with Amazon FBA.

Amazon FBA

Fulfillment by Amazon (FBA) offers a hassle-free solution for order fulfillment by allowing you to entrust this process to Amazon. With Amazon FBA, you have the opportunity to ship your products to Amazon's vast network of fulfillment centers across the globe. This grants you the advantage of providing customers with the added benefit of free, expedited two-day shipping through Amazon Prime. Once an order is placed, Amazon's dedicated team of fulfillment specialists assumes responsibility for picking, packing, and shipping the products efficiently. Moreover, Amazon takes care of handling customer service inquiries and managing returns, ensuring a seamless experience for both sellers and customers.

Note: Amazon Prime is an exclusive subscription service that guarantees fast delivery, with Amazon handling the shipping process and ensuring that customers receive their orders within 1 to 2 days.

What Amazon does for FBA Sellers

In addition to the incredible access to Prime buyers, there is another significant advantage to utilizing FBA: Amazon takes care of a substantial portion of the selling process on your behalf.

 

  1. Unpacking and securely storing your inventory in their warehouses.

  2. Making your product available for sale on Amazon.com.

  3. Designating your product as Prime Eligible on the product page.

  4. When a customer purchases your product, Amazon employees will locate, package, and ship the product to the customer.

  5. Prime buyers will receive their product either on the same day or with expedited 1- or 2-day free shipping. Non-Prime buyers also enjoy free standard shipping.

  6. The customer's satisfaction is ensured!

  7. In the event of any issues or concerns, Amazon's customer service representatives handle refunds, returns, and exchanges. The customer will not need to contact you directly.

 

Just a reminder that throughout the remainder of this article, our primary focus will be on the FBA program. This exclusive program offered by Amazon provides you with the unique opportunity to establish a business that has the potential for continuous growth and expansion. With Amazon FBA, your business can thrive and flourish, reaching new heights as time goes on.

Know the Basics of Amazon FBA

What are the pros of Amazon FBA?

Less work

If you avail of the FBA service from Amazon, they will be in charge of picking, packing, and shipping the products, which will mean less work for you as an Amazon seller.

More advantage

By utilizing Amazon FBA, your products automatically qualify for the Prime shipping badge on your listings. This program has gained immense popularity among Amazon customers worldwide, as it offers the enticing prospect of receiving orders promptly.

 

Becoming an Amazon FBA seller grants you an advantage in attracting customers, as Amazon exclusively assigns the Prime badge to products enrolled in the FBA program. When customers see the Prime badge on your listings, they are more likely to trust and choose your product, knowing that it is backed by Amazon's efficient fulfillment and delivery services.

Customer Service

When you opt for Amazon's fulfillment services, you can rely on their comprehensive customer support, ensuring a smooth experience for both you as the seller and your customers. In the event of a return, Amazon's efficient system takes charge, alleviating any burden or inconvenience associated with the return process.

What are the cons of Amazon FBA?

Costs more

The expenses associated with Amazon FBA can vary depending on the size and weight of your product. As an FBA seller, you are responsible for several fees, including fulfillment fees, storage fees, and referral fees. In addition, there are other charges to consider, such as the selling plan fee and potentially long-term storage fees.

 

The costs of using Amazon FBA can accumulate based on the characteristics of your product. Fulfillment fees cover the services provided by Amazon for picking, packing, and shipping your products. Storage fees are incurred for utilizing Amazon's storage facilities for your inventory. Referral fees are a percentage of the item's sale price that Amazon charges for facilitating the sale.

Inventory problems

While uncommon, there may be instances where Amazon loses some of your inventory during the fulfillment process. In such cases, Amazon takes responsibility and offers reimbursement for the value of the lost inventory.

 

It is important to note that while Amazon has robust systems in place to minimize such occurrences, unforeseen circumstances can lead to occasional losses. However, as an FBA seller, you can have peace of mind knowing that Amazon acknowledges and compensates for any lost inventory, ensuring that these rare incidents did not financially burden you.

How to Start Selling on Amazon FBA

Now that you have gained a clear understanding of Amazon FBA and the advantages it offers, let's dive into the process of getting started!

 

I will guide you through the necessary steps to embark on your Amazon FBA journey, enabling you to tap into its potential and reap the benefits it provides.

Sign Up as an Amazon seller

Regardless of whether you are fully convinced about selling on Amazon or not, creating your Amazon Seller account is the first crucial step you need to take. By signing up for an Amazon seller account, you gain access to a range of free tools that enable you to explore and evaluate the opportunities available on the platform.

 

To create your Amazon seller account, simply visit the website and follow the registration process.

Professional plan

  • Ideal for sellers with a sales volume of 40 units or more per month.

  • Requires a monthly subscription fee.

  • Offers various features, such as the ability to create listings for new products and access to advanced selling tools.

  • Enables you to qualify for Amazon's advertising services, which can enhance product visibility and sales potential.

Individual selling plan

  • Suitable for sellers with a sales volume of less than 40 units per month.

  • Involves a per-item fee for each product sold, instead of a monthly subscription fee.

  • Provides basic features to create listings and manage orders.

  • Does not grant eligibility for Amazon's advertising services.

Find products

Finding inventory to sell on Amazon can be approached through various methods, which I will discuss in greater detail later on. Certain sellers create and manufacture their own unique products, while others prefer purchasing large quantities from wholesale distributors.

 

As for me, I get my products from online websites and online retailers. I did create a list of my Top 100 Suppliers from both the US and UK marketplace if you want a quick way to scan for suppliers.

 

As mentioned, we will go through the specifics at a later point. However, it is important to understand that as an Amazon seller, it is your responsibility to source items that will 1. Generate a profit and 2. Customers will buy.

List products to an existing product listing on Amazon

Once you have acquired your inventory, the subsequent step involves listing your items on Amazon.

 

The approach I am teaching you involves purchasing items with the intention of reselling them on Amazon. The advantage of this method is that you will be listing products that are already available for sale on Amazon.

 

What you need to do is search for the product you want to sell in Amazon Seller Central using the product ASIN.

Then you have to choose the condition of the product, then a new button will appear that says “Sell this product”.

Note: If you don't see this button it means you're gated on this product.

Input the necessary information and always choose your Fulfillment Channel (Amazon FBA).

 

I have written an article that provides a step-by-step guide on how to add your products to an existing product listing on Amazon. This will walk you through the process, ensuring that you can successfully list your products and leverage the existing listing for maximum visibility and sales potential.

Ship Products to Amazon

After listing your initial group of items, the next step is to send them to Amazon. However, it is important to note that you cannot simply pack them in a box. There are specific steps you, as the Amazon seller, must follow to prepare your items for shipment.

 

One step of preparation is assigning a unique barcode to each of your products. This label is specific to your Amazon selling account and ensures that Amazon can identify which boxes belong to each seller when there are multiple boxes of the same product.

There is a process to generate and print these labels or barcodes. It is your responsibility to apply the label to each item accordingly. Additionally, some products may require additional preparation, such as bubble wrapping or bagging. Don't worry because Amazon will provide specific instructions in such cases.

 

Once completed, it is time to send your items to Amazon. Remember your Amazon FBA fulfillment? One advantage is the ability to send a batch of items to Amazon centers rather than shipping them individually to customers. Amazon will then determine which warehouse will receive your items for each shipment.

 

To ship your inventory at a discounted price, you can utilize Amazon's partnered shipping rates with UPS. This offers cost savings compared to shipping each box individually using standard UPS rates.

Note: You must ship your items to the assigned Amazon Fulfillment Center; personally driving your products to a nearby warehouse is not allowed by Amazon.

When all of this is done and your items are picked up, it is now effectively under Amazon's control, ready to be processed within their fulfillment channel.

Amazon Stores Your Products

Delivered means that the assigned Amazon warehouse got your box delivered by UPS.

 

Checked In means that Amazon has scanned the labels or barcode and acknowledged receipt.

 

Receiving means that Amazon is now unpacking your box and scanning individual items. Now, your products are available for sale.

 

Received in Full/Closed means that Amazon received all items in the shipment.

Customer Buys

Know the Basics of Amazon FBA

The product listing you listed is now for sale!

 

As seen in the image, your item is now displayed to Amazon customers. Your Store Name will be beside the “Sold by” and since you have the FBA fulfillment option, it will show that the item will be shipped from Amazon.

Amazon Ships

After shipping your products to the Amazon warehouse, you don't have to do anything!

 

Amazon will be the one to locate the item being sold, prep the item and ship it to the customer. After Amazon has fulfilled the shipment of the item to the customer, your account will be credited with the selling price, taking into account any applicable Amazon fees. As you continue to make more sales, your account will accumulate additional credits reflecting the sales made. The more items you sell, the greater the number of sales credits that will be credited to your account.

Happy Customer

Once the customer receives their order, they will appreciate the swift delivery facilitated by Amazon, resulting in their satisfaction.

 

In the rare event of an issue with an FBA order, the customer will directly contact Amazon for resolution. As Amazon strives to provide the best customer experience for all shoppers that includes a generous return policy, which may frustrate Amazon sellers but greatly pleases buyers. This commitment to customer satisfaction is one of the factors that contribute to the popularity of Amazon.

 

If are interested in learning how to get reviews on Amazon, we recommend referring to our previous article that discusses a review software you can use and provides insights on writing effective seller feedback emails to encourage more reviews on Amazon.

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What to Sell on Amazon

There are actually 5 different methods to explore when searching for products to sell on Amazon. However, it's important to note that Dropshipping is against Amazon's terms of service, and engaging in this practice can result in the suspension of your account.

Retail Arbitrage

In retail arbitrage, buyers often have the advantage of purchasing bulk quantities of low-priced items, which enables them to resell these items at a higher price without significantly increasing their own overhead costs. As sellers typically do not need to maintain extensive inventories, their overhead expenses remain relatively low.

 

This method involves the practice of buying a product at a retail store for a certain price and reselling it on Amazon at a higher price. It essentially involves the “flipping” of merchandise, taking advantage of market inefficiencies and price disparities.

Typically, this strategy is implemented by sourcing clearance items from local retail stores and then selling them on Amazon for a price closer to the regular retail price.

Online Arbitrage

Online arbitrage (OA) involves purchasing products online at a lower price and reselling them at a higher rate. It encompasses buying from various online retailers and profiting by reselling on platforms like eBay, Craigslist, or Amazon.

 

One of the key advantages of online arbitrage is the ability to conduct it from the comfort of your home, making it accessible to anyone. It is important to note that online arbitrage is legal on Amazon, but it is essential to ensure compliance with the authorized brands that you are permitted to sell on the platform.

 

If you are interested in learning how to make money through online arbitrage and wish to understand the process of engaging in online arbitrage, I recommend reading our informative articles. This article provides valuable insights and guidance on effectively implementing online arbitrage strategies to generate income.

Private Label

This involves the ownership of the brand by your company, distinguishing it from arbitrage or wholesale practices where products from other brands are resold. With the private label model, you have the freedom to market, expand, and set the pricing for your products according to your own vision and strategy. This unique approach allows you to establish a distinct brand identity and exercise greater control over the marketing and pricing aspects of your products.

 

This particular Amazon business model, along with wholesale, has gained increased attention in recent times due to the expanding list of restricted items. Amazon sellers who unknowingly listed and sold these restricted brands found themselves facing temporary suspensions.

What to sell on Amazon FBA

To prevent accidentally selling restricted items, you can utilize tools such as the Amazon Brand Intellectual Property Checker. This tool allows you to verify whether the items you intend to sell are private labels or not, helping you avoid any potential issues or reports. It is a FREE tool and can serve as a valuable resource to ensure compliance with Amazon's policies and protect your selling account.

Wholesale

Wholesale involves the procurement of products directly from the manufacturer or through a middleman, typically in larger quantities. By buying in bulk, wholesalers can secure a lower price compared to retail stores.

 

In the wholesale model, sellers establish direct relationships with manufacturers or work with intermediaries to obtain products in large quantities. This enables them to take advantage of discounted prices due to the economies of scale. By purchasing items at a lower cost, wholesalers can offer competitive prices to customers, making it a viable business model for those looking to source products and resell them for a profit.

How to Find Products to Sell on Amazon

After discussing the 4 different business models for selling on Amazon, we will now focus on retail arbitrage and online arbitrage in finding products to sell on Amazon.

Note: There are numerous techniques available for finding products to sell on Amazon. However, we will focus on the top 4 techniques that have proven to be effective in my Amazon FBA journey.

Manual Sourcing

This method is the most generic way of sourcing products for your Amazon business, involving the exploration of various websites to identify potential products for resale on Amazon. While the concept of Manual Sourcing may appear simple, this approach can be time-consuming.

 

You can get the full step-by-step tutorial on Manual Sourcing in this article: How to do Manual Sourcing Step-by-Step Guide for 2023

 

For example, consider the process of visiting Disney.com, carefully reviewing the available offers and discounts, and manually cross-referencing the products with those listed on Amazon. You should assess whether the product aligns with your sourcing criteria, which include factors such as profitability, Return on Investment (ROI), and sales rank.

Reverse Sourcing

Ideally, reverse sourcing is the literal opposite of manual sourcing. This refers to the practice of finding suppliers or manufacturers first, and then identifying the products available from them.

Storefront Stalking

This method involves identifying competitors within the marketplace and employing the reverse sourcing method to determine the sources from which they bought their products. Studying their product offerings and suppliers, you can potentially uncover opportunities to acquire and sell the same or similar products. This technique can provide valuable insights and aid in expanding your product range and market presence.

For a complete guide on both reverse sourcing and storefront stalking, I recommend referring to our previously published article. It provides detailed instructions and insights on how to effectively utilize these sourcing techniques. If you are more of a visual learner, you can also watch the attached video, which offers a visual explanation and demonstration of these methods.

Keepa Sourcing

Keepa is a Chrome extension that is known to track the history of a product sold on Amazon in a form of a graph. This feature allows you to easily evaluate whether the product you are reviewing offers a favorable deal or not. Referring to the historical data presented in the Keepa graph, you can gain valuable insights into the product's performance over time, aiding in predicting future trends.

 

What sets Keepa sourcing apart from other methods is the wealth of data it provides. This data enables you to apply effective filtering techniques to identify products that alight with your specific criteria. In comparison to storefront stalking, which primarily displays the sellers' selling price, Keepa sourcing offers a wide range of data points, allowing for a more thorough analysis.

Why Amazon Sellers should start with Arbitrage

Retail arbitrage and online arbitrage are considered beginner-friendly business models, making them ideal choices for those who are planning to start selling on Amazon.

Low cost of entry

Starting arbitrage requires minimal initial expenses, making it accessible for aspiring Amazon sellers. Unlike other business models, there is no requirement to invest in manufacturing, product development, or even establish a physical store.

 

Furthermore, in terms of inventory, the flexibility is notable. Unlike certain suppliers who may impose minimum order quantities, such as purchasing an entire pallet of toys, major retailers like Target will allow you to purchase as little as 1 or 2 items at a time. This allows potential Amazon sellers to start small and gradually scale their inventory according to demand and budget considerations.

Endless product possibilities

Arbitrage offers a wide range of sourcing opportunities, encompassing various channels such as local retailers, online platforms, wholesale suppliers, and international markets. This versatility allows sellers to access a diverse array of products and tap into both seasonal and niche markets. The nature of arbitrage ensures that new products are constantly entering the market, presenting endless possibilities within this business model.

Low risk

Arbitrage serves as a highly secure method for gaining insights into the dynamics of conducting business on Amazon. To begin, it is advisable to initiate small-scale test purchases. This approach ensures that any potential errors would only result in minimal financial losses, typically around $20 or so.

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This Ultimate Amazon Ungating Guide is based on my own experience selling through Amazon Arbitrage. I discuss what ungating is and why it happens, and list down how I ungate profitable categories and brands to  help you in your business.

Retail Arbitrage or Online Arbitrage?

While both retail arbitrage and online arbitrage offer similar benefits, online arbitrage does present some distinct advantages. One of the key benefits of online arbitrage is the elimination of the need to visit multiple physical stores. Instead, online arbitrage can be conducted from virtually anywhere with internet access, providing greater convenience and flexibility. Additionally, online arbitrage allows for easier bulk purchasing, enabling Amazon sellers to buy higher quantities of products at once.

 

On the other hand, retail arbitrage may not be suitable for individuals who dislike the idea of physically visiting stores and waiting in lines to source products. It may also pose challenges for those with time constraints due to existing day jobs or family commitments. In such cases, online arbitrage becomes an ideal choice, offering convenience and the ability to source products remotely.

 

However, for those who have the capacity, engaging in both online arbitrage and retail arbitrage can provide a diversified approach and expand sourcing opportunities across various channels.

Tools to help with online arbitrage

In online arbitrage, there are several tools that can greatly assist Amazon sellers in their operations. While I will mention 3 notable tools here, you can check our list of tools and their specific purposes, I recommend clicking the link provided to access the Top 11 Tools for Amazon sellers.

Keepa

As mentioned earlier, this is a Google Chrome extension that offers data from all Amazon marketplaces and presents it in a user-friendly format. Adding this extension to your web browser, you gain access to a wealth of insights through a graph. This graph provides a detailed overview of the selected products' historical data, including essential information such as the buy boy price over time, FBA price over time, new price over time, sales rank (indicating monthly sales volume), and the number of Amazon sellers.

Amazonopen - Right Click Search

Sourcing Tools for Amazon FBA

Another convenient and practical Chrome extension, enabling you to easily search any highlighted text directly on the Amazon page. This tool proves valuable during the sourcing process, as it facilitates supplier discovery and the identification of products available on Amazon. Using this tool can help you to swiftly conduct quick searches, saving valuable time and ensuring a focused approach to your sourcing efforts.

BuyBotPro

Tools to help with online arbitrage

When it comes to evaluating Amazon online arbitrage deals, BuyBotPro emerges as a highly recommended tool. This tool offers a range of essential checks, including hazmat, along with swiftly calculating profit and ROI within seconds. By using this tool, you can benefit from accurate and efficient insights that will help you in the deal analysis process.

Arbitrage Tips Based on My Amazon Journey

Work with your team

Drawing from my experience as an Amazon seller with 5 years of selling, I cannot emphasize enough the advantage of building a team to support your business. If you have the money to invest in building a team, do so. Hiring a team can provide immense value, ranging from time savings to increased profitability. Take advantage of the skills and efforts of a dedicated team, you can drive efficiency and productivity within your business. Personally, I have witnessed the positive impact of delegating tasks to my Purchasing Manager and Purchasing Assistant, allowing them to work smarter and achieve optimal results.

Measure

Maintaining accurate records is a hallmark of successful businesses. By documenting financial information and potential challenges, you gain a clear understanding of the business's financial standing and potential obstacles that may lie ahead. This knowledge provides valuable insights and allows you the time and opportunity to develop effective strategies to overcome these challenges.

Copy what other Amazon sellers did

Gaining insights from the experiences of established and successful Amazon sellers is a valuable approach to learning in the industry. Following and engaging with these sellers, joining their communities, and seeking guidance for any unanswered questions can be immensely beneficial. Knowing the knowledge and expertise of experienced sellers, you can avoid reinventing the wheel and benefit from proven strategies and best practices. Embracing this collaborative mindset allows you to tap into a wealth of collective wisdom, accelerating your learning curve and increasing your chances of success.

 

I have created a video that highlights my earning and the strategies I implemented to achieve success in my Amazon business within a week. I encourage you to watch the video and learn from my experiences as a successful Amazon seller. By observing and emulating their practices, you can apply similar strategies to your own Amazon business, setting yourself up for potential success. Remember, learning from the achievements and insights of established sellers can provide valuable guidance and inspiration as you navigate your own journey on Amazon.

How can I help you to sell on Amazon FBA?

We offer two options to help you succeed in selling on Amazon FBA. Firstly, you can sign up for our FREE 7-day course, which provides valuable insights on purchasing products from online retailers that you can resell on Amazon for a profit.

 

For a more comprehensive and immersive learning experience, our Top Amazon Seller Program is available. This program is structured to equip you with all the necessary tools and systems to set up your Amazon business and start generating sales within a 5-week timeframe. With just 2 hours of learning per day, you can build your business on the side while managing other commitments such as work and personal time.

 

When you join the program, you will receive:

  • How to Build An Amazon Business

  • All the Tools and Systems You Need

  • How to Find Profitable Products to Resell

  • How to Measure Your Profits

  • How to Maintain It in Less Time

  • Where to Take Your Amazon Business Next

 

With over 80 training sessions, the program provides step-by-step guidance to ensure you set up your Amazon business in the right order. Our trained team is readily available to offer support, allowing you to implement your learnings with confidence. Additionally, you can engage with our vibrant Facebook community, which offers a wealth of information, thousands of answers to frequently asked questions, and the opportunity to seek personalized feedback.

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