In this article, let’s talk about how much money do you need to start Amazon FBA
If you’re thinking about doing online arbitrage in the Amazon marketplace, this article is for you. We will go through how much money do you need to start Amazon FBA to help grow your Amazon online arbitrage business.
If you prefer the video format of this article, you can watch it here.
Topic Rundown:
Start with an Amazon professional account
The first essential thing you’ll need for selling on Amazon is your Amazon seller account. There are actually two options to choose from: the basic option and the professional option. The tip here is to go directly to the professional option. This might save you a bit of money and you might pay per item, but you’re here on Amazon to build your business and that’s what you want to be doing.
Another reason why you should choose the professional option is because of the buy box. Remember that 80% to 90% of all sales go to the owner of the buy box. And you would not be eligible to win the buy box if you’re on the basic option. Take advantage of the power of the buy box.
Tools needed for online arbitrage
You are going to hear stories upon stories of what tools you need to get started on Amazon. Let’s keep it simple because what we want is to keep your costs low.
Amazon revenue calculator is an online free tool you can use to calculate. It will help you calculate by subtracting the cost of the product, Amazon fees, and miscellaneous costs from the overall price of the product. This is a great tool you can use when you start Amazon FBA.
Take note that in the UK, it doesn’t account for VAT correctly, so it won’t give you the right figures. If you’re going to use this, just be careful if you’re really making money since it doesn’t account for costs involving VAT.
Now, I’ll be sharing a couple of calculator tools you can use, but in Fast Track FBA, we use all these for our Amazon business. You don’t need all of them and you can just pick one; FBAmultitool, BuyBotPro, and SellerAmp or SAS.
If you’re a beginner, they all have free trials you can use and will be very helpful. Personally, I would prefer the FBAmultitool and BuyBotPro, for they are very simple to use and they have a Keepa-like graph of the products built into their software.
Now, Keepa is another tool to help you analyze the historical performance of a product. As said earlier, FBA multitool and BuyBoyPro have the same information built into their tool, which means you don’t need to pay extra for Keepa itself. These tools will help you get the right profit figures and to do the analysis. You’ll need to know if you’re buying an excellent product.
As you grow your Amazon business, you would want to buy Keepa since it’s an amazing tool with so much functionality.
I won’t recommend a lot of software since it will cost a lot. We want to keep it simple because it’s not about spending a lot of money, it’s about making money and profits.
Now that you’ve got the calculator tool, the next thing to do is start looking for products. This can be a boring process. It’s literally copy-and-paste work. In Fast Track FBA, we offer new sellers the option of providing them online arbitrage leads or deals that are going to help them not worry about copying and pasting. This way, they can focus more on growing their business.
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How to label your purchase
After purchasing the products after sourcing. The products will now go to your house and there are a couple of things you need to do before getting them shipped to Amazon’s warehouse. Obviously, putting your products into boxes.
An option is co-mingling where you are going to use the barcode on the product itself, and that is going to be where your products are going. Co-mingling means that your products or stocks are going to be joined with other people’s stock because it’s all the same product.
Another option is putting your own labels on the product, meaning your stock will always be separated from everyone else’s. A top tip here is not to co-mingle since it’s going to be a hassle. Not everyone’s product will be of the same quality as yours. Someone may have a bad item or damaged item in stock if Amazon picks up the bad stock and ships it out to the customer on your order. In the end, you’ll have bad feedback and you don’t want that.
Again, the top tip is don’t co-mingle. Label everything that you are sending to Amazon’s warehouse with your own unique barcode. That way, only your stocks get shipped out to the customer because you sell great stocks. And as a result, you will get great feedback.
If you’re thinking about the costs involved in labeling, you could simply use a household printer at home. Hopefully, you should have one. If not, you’ll need to buy one. You’ll need some labels, but at the very minimum, you want the labels to cover the barcodes. Stick the labels over the product barcode. So when Amazon scans them, they’ll be getting your barcode and not the manufacturer's barcode.
What I do in Fast Track FBA is use 4A paper and tape it around the barcode. It doesn’t need to be a special label, keep it cheap. Don’t spend too much money on special labels. Make sure it’s firmly affixed to the box so that it can withstand getting shipped off to Amazon.
Use UPS shipping services
Basically, after ordering the product, you’ll be paying the delivery fee to your house and another fee to get the boxes to Amazon’s warehouse. My tip is to use UPS, a designated provider or shipper to get your boxes into Amazon. Don’t pay that upfront. Amazon adds that onto your selling account and deducts that from your revenue; the sale you’re going to make. If you haven’t made any sales, they’ll then take that from a credit card payment to your account.
Use free-trial profit tracking software
One software everyone talks about is profit-and-loss software, which tracks your profits. This is the most important part since we really want to make sure you’re making money. There is a lot of software out there, but I’ll recommend keeping the cost down. Try taking advantage of free trials for it will make a big difference. Don’t try to use the profit software until you’ve made your first sale. Get the sale first and check this software after.
Sellerboard usually gives a one-month free trial. With my affiliate link, you’ll get a two-month free trial. It’s great because it gives you all the information you need.
I don’t actually use Sellerboard anymore and the reason is I use another software called SellerToolkit simply for the fact that I’ve read the VAT threshold with the volumes I’m selling. They are going to give you a 14-day free trial. SellerToolkit is very good at understanding how that works as a new seller.
How much money do you need to start Amazon FBA?
Again, the key thing you are looking to do and remember is to always keep your costs down and make that profit. Keep in mind that free trials are your best friend when starting Amazon FBA, since they don’t cost you anything.
Let’s quickly run through the costs. A professional selling account is roughly £30. The calculators you’ll be using are free since you’re going to be enjoying the free trials. For the shipping, that’s £15 but interesting enough, you don’t pay that in advance. It gets taken into your account afterward. The printer you’ll be needing for labels can just be your printer at home; the labels will cost £6.99.
Roughly, the total amount without inventory to get started is just under £100. Again, keep your costs low. Use the free trials. We are here to make money, not spend it.
How much do you need for inventory?
It’s very subjective. Everyone is going to tell you otherwise. Since there is no right or wrong answer. I can show you a number of people who started with very little, £100 to £500, and then do 5 to 7 figures. It can happen, don’t worry.
We asked this question to Fast Track FBA’s Facebook group. A group of Amazon sellers that are doing online arbitrage.
The majority said £3,000. Starting with that amount of money will put you in an influential position to sell. But the thing is just get started. We want you to have the best springboard. We want you to have the most money to invest in stock. Again, just get started, so whether you’ve got £500 to £1,000, just get started. Honestly, it’s about learning the process.
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Top Tips
- Take advantage of free trials
- Keep your costs low
- Learn the process
- Understand your budget
- Learn from the experience
- Accumulate all stocks first before shipping them to Amazon’s warehouse
Time to start your Amazon FBA journey
Don’t think that you’ll be an expert in this business when you’re just starting out. It’s hard and you’re going to make a lot of mistakes. Think of this as an education that you’re paying for that education.
Now that you know how much money do you need to start Amazon FBA, you can know excel on your business. Remember to tick the right things and spend less. These tips and tricks will help you excel. Save your money in the short term and will help you grow in the long term.
If you want to learn more about Amazon online arbitrage, you can watch the playlist we’ve created just for you named Arbitrage for Beginners. You can also check out our Top 100 UK and Top 100 US supplier list that can help you get started on what stores you should check out first when sourcing for products.