Far too many great products get lost in the void of Amazon, rarely found by customers, while profit margin dwindles and eventually the product is pulled. On the other hand, while you could set up your own website, or host your shop elsewhere, Amazon is an appealing option for the many services they offer to business owners. Before jumping into the Amazon game, here’s what you need to consider and do, in order to get started selling.
Fulfillment by Amazon (FBA): How to Get Started
Amazon is one of the largest eCommerce businesses in the world, and it only makes sense that you would want your product to be sold there. Using Fulfillment by Amazon is an easy way to store your inventory, and boost sales, as long as you do it correctly.
Are Your Products Right for Amazon?
If you’re just starting to sell and have decided to start exclusively on Amazon, you may not be sure what will sell and what will be a dud. Begin by searching the product catalog for the items that you are looking to sell, and then see what comes up. Did your search bring return what you expected? How are the price points? If you sold at that price point, what would your profits be? Then check reviews, and see what people are saying, especially checking what they found to be the pitfalls of the product. Is your similar product filling those needs?
It’s a bit of work at first, so if you’re eager to begin you’ll need to slow down and research. Most products on the site sell easily if they are priced below $50, especially with new shipping specials that give Prime customers their orders the same or the next day with orders of 35 or more. If your product qualifies for this, it would be to your advantage, and customers would be more willing to buy it if they know they can get it very quickly.
How much does your product weigh and who is your competition?
Other considerations are how much your product weighs, since it will end up costing you much more to ship to the fulfillment centers. Amazon does charge a fee for weight of your product, so heavier products can eat into your profit margin quickly without you realizing it. Finally, check the competition and see if there are name brands that you would be competing with. Often, consumers will buy from a brand they know, and trust, so you may want to try other products that don’t have such heavy competition.
How Do I Ship my Products for Fulfillment by Amazon?
If you haven’t already done so, you’ll need to sign up for an account. Signing up is the easy part, but you want to be sure you sign up for a Professional Account, not just a regular seller account, if you plan on selling more than 40 items. Then you’ll choose categories for the products you will sell, but remember you can only sell in a select number of them. So if you’re hoping to try out a number of categories to see which work best, you may need to scale back.
Amazon sells a lot of products, which should be obvious, so unless you have a unique item that is manufactured by you, or just for you, Amazon will have it in their catalog. This is great because once you begin compiling the list of items that you would like to send to Amazon, it takes much less time. You just set your prices, and let Amazon know how you will be sending them your inventory.
Allowing Amazon to package your products will undoubtedly free up your time, but it will eat into your profits.
There are a few options you’ll need to choose from, and they will give you a better idea of how your products will be sold. Plus you can decide if you want Amazon to package your items, or if you would like to. Most choose to let Amazon do this, since it’s one less thing to worry about, but evaluate whether or not this is something you need to do yourself, or if the cost of Amazon doing it is going to bring down your profits too much.
Once you have everything set on the Amazon seller website, it’s time to ship your products. These will be sent using whichever carrier you choose, so check around for rates that fit your budget. As a note, some business owners have a drop shipping business they sell from, and Amazon does allow drop shipping as long as some basic rules are followed. These basically state that you are responsible for the products, which can lead to some headaches and most drop shipping businesses find that hosting their business on their own site is much less of a hassle.
What Fees Are Associated with Fulfillment by Amazon?
This is a question you’ll need to research, because your fees may be different based on a number of factors, including the time of year that you are selling. Amazon charges a packing fee, a storage fee, a handling fee, and a fee based on the weight of your product. A single product can cost you upwards of 3 to 4 dollars, which might not seem like a lot, but if you’re selling a product for $20 that you bought for $5, that means that now you'll only earn $11.
Amazon charges a packing fee, a storage fee, a handling fee, and a fee based on the weight of your product - a single product can cost you upwards of $4.
Amazon will charge you a return fee as well, and other various fees for labeling or packaging. If your product is the type that sells quickly, such as video games or other media, you won’t pay too much in storage fees, and since video games are fairly lightweight, your other fees will be lower. Since this type of product has a higher margin, your profits might not take such a hit. Again, you’ll need to evaluate your products and research their selling potential, and other details that could end up costing you more by selling with Fulfillment by Amazon.
If you look at a product page on Amazon, you’ll see that there are multiple sellers for the same products. Obviously, there is a market for business owners who would like to turn over some of the hassles in their day to day operations to a company like Amazon. While there are fees involved, you won’t have to take care of customer service, shipping, delays, or even returns, which most find worth the price.
While there are fees involved, you won’t have to take care of customer service, shipping, delays, or even returns, which most find worth the price.