Amazon FBA

Everything You Need to Know About Amazon FBA in 2020

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I’ve been selling on Amazon as an FBA seller for some years now, using what’s known as the private label model (that’s fancy-speak for ‘I sell another company’s products under my own brand’).

There were many things I wanted to know back when I started, and I remember how frustrating it was trying to find information that I could easily digest.

The information is out there, but it’s all over the place, and a lot of it is bad advice.  

If there’s one thing I wish I’d had back when I was trying to get started on Amazon, is a simple-speak guide with straight-forward answers that covered what I needed to know just to get started.

So, I decided to create one. A resource for all things FBA, all in one place. This is for people like you, who want real answers that aren’t going to send you down a rabbit hole and cost you time and money.

I’m going to cover everything you need to know about Amazon FBA so you can get started. If you already got started selling on Amazon, this will help answer any questions you may still have.

Just remember me if you become the next Amazon FBA millionaire!

OK, here’s how I’ve laid things out:

I’ve gathered (and answered) the most pressing questions new Amazon FBA sellers (and those thinking about getting into FBA) have, including the questions I had when I first considered private.

I’ve grouped the questions and answers into 4 sections:

  1. Business questions
  2. Product questions
  3. Getting started questions
  4. Shipping questions

Ok, let’s do this…

Let me start by giving you all my FBA guides here. I recommend you go through them at your own pace; you’ll learn a ton of stuff that took me a very long time to learn. In many cases you’ll save money too, by avoiding the mistakes I made.

Now, let’s get to the questions…

Contents

Business questions…

These are the business-related questions.

How much money do I need for Amazon FBA?

When starting a business, the more starting capital you have, the better. That said, there is no set amount of money that you need to start an Amazon FBA business. In fact, you can start with just enough money to buy a few items.

Just keep in mind that if you’re starting with a very tight budget, it’s very likely going to take you longer to get traction. And in some cases you may just not get traction at all, although that can happen regardless of how much capital you start with. The difference is that, with some starting capital, you have access to funds to buy inventory and ads, significantly improving your chances of getting traction.

Your expectations need to be aligned with how much money you bring to the table. That’s the reality.

I myself got started selling on Amazon with around $150. You can read about that here. But I invested in education and learned the best way to set up my product listing. This gave me and edge over many competitors and enabled me to make a few very quick sales, which brought in cashflow which I then invested in buying more stock.

However, if you’re starting with a small amount of cash, keep your expectations in check and treat it as a test (like I did). If you make sales and you decide you have a good product, you’ll find a way to secure more cash for a bigger order.

If you are on a tight budget, then read my post on how to start an Amazon FBA business with little money.

How much should I invest in Amazon FBA?

My advice is to invest in at least 100 units of whatever product you decide to sell and test the market. Then, depending on the response you get, invest in 500 units and, if the sales continue, invest in 1,000 units.

At that point, when you balance things like cashflow, sales and inventory, you’ll be looking at securing bigger orders and even switching to freight shipping to get your products shipped to you by sea.

I launched my third brand by investing in 50 units only. I always treat the first round as a test. I want to see proof of concept, so to speak. That said, I had a feeling 50 units was too small an amount, and I wasn’t wrong. The product sold faster than I could invest in a second order.

On that note, you will soon get a sense of whether a product is a good seller when you get started. Trust me on this. It’s an abstract topic to try to explain, but if you had a shop in the high street and you stocked a new product, you would soon know if the product was a good seller or not.

How much money can I make on Amazon FBA?

This question has no simple answer. A lot, if you sell a lot, or a little, if you sell a little. If you’re asking how to make a lot of money with Amazon FBA, then the answer is by selling a lot of product at a profitable margin.

But to try to answer the question as directly as possible, I will say that there are various things involved in how much money you can make on Amazon.

For example:

  1. Whether your product sells or not
  2. How many units of your product you sell

And, as you can see, the above points depend on how much money you invest in stock. So, as they say, it’s complicated.

That said, if you have stock and you sell a lot of units, then you can make a lot of money. It’s not unusual for some FBA sellers to make 5 and 6 figures a month. Just keep in mind that those sellers are not likely to be newbies.

What is a good ROI for Amazon FBA?

Put simply: a positive one. If you make 1 penny profit from selling something, then sell it all day long every day and eventually you’ll be wealthy.

Naturally, the higher the ROI the better, but only you can decide what a good profit margin on Amazon FBA is for you.

Is there an Amazon FBA profit calculator?

Yep. Search Google for FBA revenue calculator and click the appropriate result.

Here’s an image of my search results, where you can see the .com result and my local (UK) Amazon result:

Google search results for Amazon FBA profit calculator

How do I start an Amazon FBA business?

By signing up to Amazon as a seller. You can do this even before you have a product. The process of signing up is a commitment from yourself to yourself to finish what you started.

To open an Amazon FBA account, visit Amazon’s seller central page. You can find it by searching Google for Amazon seller central.

See image below:

Google search results for Amazon Seller Central

When you’re signing up, decide what type of account is right for you.

Here’s a video about that:

I recommend you sign up for a professional seller account, as that gives you access to Amazon’s ad platform, which I recommend you use to promote your products.

Here’s a video on how to sign for a pro account:

Once you sign up, complete the sign up process by submitting the information Amazon asks for, including your bank details (to get paid).

Here’s a video walkthrough of the seller central account setup:

Next, you’ll need a product or more to sell. Set up your listing and you’re off to the races.

That’s the bare minimum you need to get started:

  1. An amazon seller account
  2. A product

How to create a successful Amazon FBA business?

The simple answer is that you become a successful FBA seller by doing things right. And when it comes to doing things right, you have 2 choices:

  1. Learn by doing (i.e. from your mistakes)
  2. Learn from somebody else (i.e. shortcut your learning curve)

Out of the 2, learning by doing is always going to be the most expensive route, because you’re paying with time.

My recommendation is to learn from the best. Nail what you want to learn and fast track your journey.

Here is the best Amazon FBA training program. I personally recommend this training as it’s the same training I invested in back when I got started.

How to make a business plan for Amazon FBA?

It depends on what the business plan is for. Banks, for example, usually require formal business plans. I remember asking my business bank for a loan years ago and being asked to produce a business plan with 5 year projections.

There are business plan templates you can buy online, but I’m not sure how exactly you’d make any projections about selling in the Amazon marketplace. You can’t really guess how many sales you’re going to make.

If the business plan is for yourself, then the format doesn’t matter. I would however question the reason you feel you need a business plan. If you’re the type of person who needs to make lists and plans then I get it; however, some people use planning to procrastinate and never get started on something.

The way I plan things is quickly. I often use a mind mapping tool to brainstorm and plan. I use this tool.

If you find that tool useful, you’ll find my free training on how to use it on my course platform here.

Do I need insurance for Amazon FBA?

Amazon FBA insurance is optional to start with. Last time I looked, a seller needed to be making several thousands of dollars before requiring insurance.

That said, I would consider if you need insurance depending on the product. For example, if customers could harm themselves by using the product incorrectly, I’d really consider getting insurance to cover you for any eventuality.

I personally believe that just about every seller gets started without insurance, but that’s not to say it’s the right way to do it. The reality is that insurance is an extra cost, but it’s something you need to keep in mind.

When to get it is down to you – it’s a business decision – until it become a requirement in Amazon.

Do you have to have a business to sell on Amazon FBA?

You don’t need a company for Amazon FBA, because you can sell as a sole trader. I personally used my ltd company to sign up to Amazon as a seller, but that was simply my preference.

Do you need a business license to sell on Amazon FBA?

I’m in the UK where there is no requirement to obtain a business license.

According to Wikipedia, business licenses are permits issued by the local government. In some countries like the US, you may need a business license to operate within a jurisdiction.

You’ll have to check your local government to see whether you need a business license to operate as an Amazon seller where you live. Ask a local accountant, as they usually know this sort of thing.

Product questions…

These are the product related questions.

What products can I sell on Amazon FBA?

You can sell almost any physical product in the Amazon marketplace, except for livestock and drugs.

Most things can be sold on Amazon FBA without approval, but there are some product categories that are known as ‘gated categories’ which require approval.

Some products that require approval include cosmetic products. As a rough guide, think of it this way: if you apply it to your skin or swallow it, then you’ll probably need approval.

What are the best products to sell on Amazon?

This is the million dollar question. Knowing how to pick a product to sell on Amazon FBA is the game changer that can catapult your business into the big money.

I’ve seen countless formulas for identifying Amazon FBA product ideas. I’ve even tried some. I found them tedious and unnecessarily complicated. And nothing you pick is guaranteed to work, so the formulas almost defy logic.

Here’s my simple and super effective way to find products to sell on Amazon.

How do you go about finding a product to sell on Amazon and how do you do product research?

First, I use my process for finding great products. Then I head on over to Alibaba and find suppliers, and I look at their pricing.

Using my FBA product research method, you can see how much other sellers are selling their products for.

Once you find some suppliers, you’ll have the cost of the product. Finally, use the Amazon profit calculator to figure out your profit after Amazon’s marketplace fees.

That tells you how the numbers stack up.

To complete the rest of your product research, go through your competitor’s listings and study their feedback. Sort reviews by lowest to highest and read the lowest ones to look for clues about product issues.

Similarly, you can spend time studying suppliers and their feedback, and asking them questions.

You can then use some of the information you gathered when pouring over reviews to construct your listing. For example, if people complain about a certain product feature and you know your product doesn’t have the issue, mention that.

How to list a product on Amazon FBA?

  1. Select Add a Product from the Inventory drop-down, and search for the product that you wish to sell on Amazon. Results are more accurate if you search for a product identifier such as a UPC, EAN, JAN or an ISBN.
  2. If you locate the product that you want to sell, perform these steps:
    1. Click on Sell this product.
    2. Enter your offer details in the provided data fields. Required fields are marked with an asterisk.
    3. Click on Save.

Ref: Seller Central, Create a new product listing

Shipping questions

These are the shipping related questions.

How do I ship my products to Amazon FBA?

To send a product to Amazon FBA, you create a shipment inside your seller central account, then you send the items in.

The shipment is nothing more than some information about what it is you’re sending in, so Amazon know when to expect it and where to allocate it (i.e. your storage and your inventory).

When you create a shipment, you’ll get a unique shipping labels to print and attach to however many boxes you’re sending in.

You can use almost any courier (like DHL, UPS, etc) to ship your items to Amazon.

Amazon also integrates with certain couriers in some countries. If this is an option you’ll see it when you create the shipment. It may be a little more expensive to use Amazon’s own preferred courier, but it’s much easier to do because the courier will receive the information when you create the listing, so all you need to do is have the boxes ready for them when they turn up.

Alternatively, you can have your supplier ship the items directly to Amazon. Many suppliers do this. In this case, you’ll still need to create the shipment, but this time you’ll email the shipping labels to the supplier for them to print and attach to the boxes.

Can I ship directly from Alibaba to Amazon FBA?

You can you ship from Alibaba to Amazon FBA if your supplier agrees to do so. Many suppliers offer this option.

Can you deliver to Amazon FBA yourself?

No. Nor do I see why you’d want to hand deliver to Amazon, especially when courier services are not that expensive. As seller, your time is best spent doing something else. Let the courier drop off your stock.

How to create and send a shipment to Amazon FBA?

  1. On the Manage Inventory page, select each product that you want to ship. …
  2. On the Send/Replenish Inventory page, select one of the following: …
  3. Confirm your ship-from address. …
  4. Confirm the packing type of the products you are shipping to Amazon. …
  5. Click Continue to shipping plan.

Ref: Seller Central, creating a shipment

How to prepare my items to send to Amazon?

Here’s a handy video explaining how to do that:

Getting started questions

These are the questions that relate to getting started.

What do I need to get started with Amazon FBA?

  1. A seller central account
  2. A product

Do you need a website for Amazon FBA?

No. If you’re applying to sell in a gated category (one that needs approval), having a website can help legitimise your business. You can use Wix to create a one page site.

Do I need a credit card for Amazon FBA?

You need a credit or debit card to sign up to Seller Central. This is so Amazon can charge their marketplace fees to your card.

Is there a minimum quantity for Amazon FBA?

No. I like to start with 100 units to test the market, but I have started one brand with only 50 items.

Is there a monthly fee for Amazon FBA?

If you sign up to a professional account, which I recommend, then yes, there is a monthly fee. A professional account gives you access to Amazon’s ad platform, which I recommend you use to promote your products.

Here’s a video on how to sign up for a professional seller account:

How much is the amazon FBA monthly fee?

Right now it’s $39.99.

When does Amazon FBA pay you?

When I got started, I got paid every 2 weeks. However, as I began to sell more, I was able to request payments on demand.

How does Amazon FBA pay you?

Payments are made straight to your bank account.

What are the amazon FBA long term storage fees?

Storage fees are – as the name implies – fees for storing your product. Amazon charge fees after your products have been in storage for a period of time. The trick is not to send more inventory to Amazon than you can sell.

I made this mistake and stored hundreds of units of a product which I then didn’t sell, and I got hit by a hefty storage fee. You can read about what happened and how I avoid FBA storage fees.

What are Amazon FBA removal fees?

Fees for removing a product. In some cases, you may want to have some of your stock destroyed or sent back to you.

I once sent a faulty batch of units into Amazon straight from the manufacturer. I didn’t know the units were faulty because I hadn’t touched them, but I soon found out when buyers started complaining.

I had 2 choices:

  1. Have Amazon send the faulty items back to me
  2. Have amazon destroy the faulty items

Whichever option you choose will incur a fee. That fee is what’s known as the removal fee.

On a side note, this is why I don’t recommend you have your supplier send your products direct to Amazon. I always advise you have the products shipped to you so you can personally inspect them.

What size labels do I need for Amazon FBA?

Any good quality self-adhesive A4 sheet labels are suitable. I buy mine from Amazon, but I can also get them from my local supermarket, or any stationary shop.

What kind of printer do I need for Amazon FBA?

Any standard A4 printer is suitable. I use a laser printer because I already had it before becoming a seller, but any cheap printer will do.

Do I need a barcode for Amazon FBA?

Yes. Here’s what Amazon says:

Each item you send to an Amazon Fulfilment Centre requires a barcode. There are three kinds of labels for identifying products: Manufacturer barcodes (eligible barcodes include GCID, UPC, EAN, JAN or ISBN)

Ref: Seller Central

How to get a UPC code for Amazon FBA?

You can buy suitable UPC codes online from a number of online retailers. Just look for something along the lines of ‘suitable for Amazon FBA’ or ‘FBA UPC codes’ in the description.

I suggest you search Google for ‘UPC codes for amazon FBA’ and check out the results that match your search.

Here’s a screenshot of my search:

upa codes for Amazon fba

I hope you found this resource informative. Do check the rest of my FBA resources for step by step guides and videos.

Last but not least, remember to subscribe!

RECOMMENDED RESOURCES FOR YOU:
-> Check out my Amazon FBA Tools and Guides.
-> Check out my recommended FBA training courses.

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