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How to Make Money on Amazon – The FBA Business Model 2020

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I started my Amazon FBA business back in 2015-16, and to date, I have 3 brands selling in different niches.

Is it worth learning how to make money on Amazon? Absolutely. And that’s precisely what I’m going to cover in this post.

The fact is that Amazon is more profitable than ever. There are hordes of new customers joining and buying from the Amazon marketplace, and sellers are needed to fulfill that demand.

So how do you make money on Amazon?

  1. you sign up to Amazon’s Seller Central as a seller
  2. you create a listing for your product
  3. you promote your product. This is optional, but necessary in most cases, at least in the beginning. I’ll get into why this is in a moment.
  4. you make sales.

That’s the bird’s eye view of the process. But don’t worry, I’m going to cover everything step by step.

But before I do, let me clear the air by quickly addressing some questions that may be hovering at the back of most people contemplating Amazon FBA as a potential business to get into.

Is FBA still profitable in 2020?

Yes, and it will very likely continue to be so for a good few years yet. We haven’t seen Amazon’s marketplace peak yet. Websites like Statista report on Amazon’s revenue figures and show the company’s income is growing year on year.

So yeah, you’re not late to the party. In fact, things are just getting started. The fact is that there are not enough sellers to serve the growing demand.

The one thing we are all too late for is buying shares in Amazon!Click To Tweet

Is selling on Amazon profitable?

Yes and no. Some sellers are profitable, other are not. Like any business, it’s not the platform that determines success, it’s the seller, and the product, and many variables around the product, such as pricing point, market demand, branding, and other things.

How much can you make  selling on Amazon FBA?

This is an odd question to ask, and yet it gets asked over and over. It’s like asking, how much can you make being a lawyer? Well, not all lawyers make the same money, and not all sellers make the same amount.

And lastly:

Is selling on Amazon hard?

No! in fact, FBA one of the easiest online business models I’ve ever done! And in this FBA guide, I’m going to spill the beans and give you The Big Picture, as well as the tools you need to create a successful Amazon FBA business. 

Ok, let’s move on to our key topic:

How to make money on Amazon from home by selling Private Label products

In case you’re wondering, FBA stands for Fulfillment by Amazon, which describes the FBA model down to a T: you sell the product and Amazon takes care of the packing and shipping. And boy does it work…

Of all the marketplaces I have experienced, nothing comes close to Amazon in terms of how easy it is. When I uploaded my first product, I made a sale within the first 10 days, and then, as the product started to rank for various keywords, and as Amazon’s algorithm displayed my ad to more buyers, the sales really started to come in.

I remember thinking: I haven’t really done that much.

Something both surreal and magical happens when you pick the right product and you get things just right. The sales velocity you can achieve is breathtaking.Click To Tweet

With my first product, my intention was to dip my toe in and test 100 units. Instead, I plunged right in and lost my pants. Ok, not literally, but I ran completely out of stock before I could say billygoat, and saw my rank shoot up into the top 30 in an uber competitive category before plummeting back to the bottom like a post-Brexit Sterling share, once I ran out of stock.

I can honestly say that of all the different things I’ve dipped in and out of over the years, the FBA business model (when you know what levers to pull) is so easy that most people without any selling experience can do it.

And profitable? Whaaaa…. Forbes and other publications often remind us of how Amazon is churning out millionaires. I would hedge a bet that it’s way easier to become an Amazon millionaire than winning the lotto (and less brutal, because you don’t convince yourself that this is the one each and every week).

Running your own Amazon FBA business is one of the easiest online business models there is. There are no particular skills required - anybody can do this, with the right training and the right tools.Click To Tweet

But before we get too excited, let me dampen things down with a harsh truth: the majority of sellers on Amazon are just getting by, and many don’t make enough sales to buy a packet of peanuts with.

There’s a reason for this, which I will explain soon.

I personally know brick and mortar businesses that list in Amazon and barely make sales.

So what’s the difference?

Education. Sellers who are serious about their business and educate themselves on how to make money on Amazon increase their chances of success.

Why do a few sellers become rock stars whilst the majority huddle together like amoeba at the bottom of the barrel? In one word: education.Click To Tweet

Your Amazon FBA business plan…

I experienced my first FBA rush less than a month into my FBA venture because I invested in the right information and in the right tools to succeed.

A training program, a course, even a simple tutorial is a seed, the beginning to an insight that leads to a real plan.Click To Tweet

How many people do you know who are trying to build their brands on Facebook and Twitter? And out of all of them, how many bothered to read a book or buy a course on how to really use those tools?

Well, the same goes for the majority of Amazon sellers. Every one of them wants to know how to become a successful Amazon FBA seller, but almost all of them haven’t invested a penny on education. 

And that’s the differentiator. I would bet that most successful Amazon FBA sellers didn’t guess their way to success. Instead, they invested in their education to accelerate their success. 

This is the reason why some sellers make massive profits and others don’t. They had a business plan, an intention to succeed. 

Btw, I’m not suggesting you need a real business plan. But you do need direction, a clear intention of what you want to achieve, and how you plan to achieve it. Almost nobody stumbles upon success by chance.

You being here right now is what could make the difference. You’re here researching how to go about setting up an Amazon FBA business or because you’re already a seller but you’ve realised there’s a trick or two you need to discover to make money on Amazon and grow your brand like it’s on steroids.

Think of this: millions of Amazon sellers didn’t even take this first step. They didn’t do a search online, not even those grandiose question you see people ask, like how to make a lot of money with Amazon FBA, or give me the complete guide to dominate with Amazon.

Those aspirations are high, and they take real work to accomplish. So I would start with something a little more humble, like how to be a successful FBA seller, or how to make money with FBA. Nothing wrong with those for starters.

Now, let me clear one thing up:

I said FBA is one of – if not ‘the’ – easiest business model I’ve come across. That is not the same as saying making money on Amazon is easy. Let’s not get our wires crossed here. A bicycle is easy to ride, when you know how, but that doesn’t mean the Tour de France is easy!

There are different factors that affect how well a product sells on Amazon, such as:

  • the price
  • the product
  • the demand
  • the branding
  • the images
  • the copy (the words on the listing)

Selling just about anything anywhere usually takes some work. Being mega successful also usually takes a lot of work. So let’s get things in perspective.

That said, it’s great news that the FBA model is so easy to run, because the alternative would be a difficult business to run, and hard work to do in order to succeed.

Let me remind you of some reasons why starting an Amazon FBA business is potentially one of the best decisions you could make, if you’re that way inclined:

  • it can be a home business (you can’t beat working from home)
  • you can get out of bed at 9 am (I like doing that too)
  • you can work your own hours (be your own boss, yay!)
  • you can run your entire FBA business on a laptop (I do)
  • you can live the fabled laptop lifestyle and travel the bits of the world that are not crazy (good luck with that last bit)
Running your own Amazon FBA business has the potential to provide you with the lifestyle you want.Click To Tweet

So let’s continue our deep dive into the FBA business model, or as it’s often thought of: becoming a Private Label Seller. And if you’re already kicking butt in the marketplace, then read on as I dish out some goodies that you may not have had the good fortune to come across until now!

Earning revenue selling Private Label products

Let’s start by answering the magic question…

How do you find the perfect product to sell on Amazon?

Coming up with ideas for products is one of the most amusing things I get to witness when I work with a client, or when a buddy wants to pick my brains. It’s amusing because I made the exact same mistakes they do.

They think, and they think hard. They look around themselves as if they were tourists in a souvenir shop. Some start to stare at things as if they were seeing them for the first time. It can get freaky, I tell you.

Some walk around with notepads like Mrs. Marple, taking notes every time they think of something. A mirror! A face! My face!

Don’t do that, OK? Just don’t…

I’m going to reveal where to find the perfect products to sell. Meaning the products that sells like crazy. It’s hidden, in…

The Amazon Best Sellers Section

Take a deep breath. You knew this already. I know you did.

The best sellers' section is where you can see the products that are selling like hot cakes right now.Click To Tweet

If you think I’m over simplifying this, then let me tell you that I have a video on my process for finding winning products, and this is where I find them.

Here’s the post and the video on how to find the best products.

Anyway, to find the Best Sellers page, do a search in good old Google for ‘Amazon best sellers’ and the relevant link will appear for you depending on where you are.

Amazon best sellers
Do a search for Amazon best sellers
The trick is not finding a perfect product. The trick is looking through all those perfect products and deciding which ones you think you can beat.Click To Tweet

How’s that for an insight? The pressure of finding the perfect product is no more.

Thank me later (or better yet, subscribe to my newsletter for more good stuff).

Let me add something here: many or most private label sellers who don’t know this, or don’t think this way, are the ones that don’t really make money on Amazon unless they hit it lucky. And you can see why: it’s a lack of strategy, due to lack of understanding, due to lack of… education.

So already you’re ahead of the pack, my friend. Because you took the time to research how to start an FBA business. Now you know where to go to find perfect products: products that are proven to sell in this marketplace. And you even get to see the prices at which people are buying them. Zero guessing! Where else can you get that kind of competitive information?

Let the others walk around with notepads while you and I browse through the thousands of opportunities right in front of us. This will save us weeks of stress.

That was insanely easy, eh?

Ok, so once we choose the product we want to sell, let’s set about acquiring it.

Where do you get products to sell on Amazon?

The answer is simple:

  • locally (where you are)
  • or China

Yes, we could get fancy and source cosmetics from a Swiss lab, but I can’t cram a 6-week training into this guide so let’s stick to the proven and easiest (in most cases) ways.

Here’s where to go to source your product if you can’t find it locally (in your country):

How to get products from China to sell on Amazon

Alibaba dwarves Amazon in terms of revenue and size. Alibaba is a website with literally hundreds of thousands of Chinese manufacturers that you can research. The only thing separating you from these manufacturers is a mouse click.

Cool, eh?

Ok, let’s find our product.

Here’s how:

  • type in the type of product you want to get your hands on (for example: spinner)
  • tons of manufacturers who make spinners will fill the results page
  • go through them, look at their product images and check out their prices and minimum quantity orders

By the way, if you know what a spinner is, let me know.

Let’s keep moving.

So how do you actually source a product?

Here’s how you do that:

  • sign up for a free account in Alibaba
  • fill in your profile (tip: as your business)
  • search for the type of product you want
  • browse the results and pick a few potential manufacturers
  • contact them (as your business) all via Alibaba and send them a polite (business) email introducing yourself and enquire how much it would be to send you a sample

Why order a sample?

Because you don’t want to be the one who got bought a case-load of duff products. Be patient. It’s part of the process. Here’s the flow:

  • Order 1 or 2 (I don’t quite know why but I always order 4 or 5 of each. Search me).
  • Make sure you pay for air mail! Do you know how far China is?
  • Wait and try not to lose your mind or start staring at things in that freaky way some sellers do.
  • Receive the samples (yes, plural, from various manufacturers).
  • Touch them. Feel the quality. Smell them. Actually, don’t do that. They’ve been through customs.
  • Choose the best. Is it good enough? Yes? Then let’s roll!

How cool is this? You have hundreds of thousands of products at your fingertips, most of which your friends neighbours can only get from stores that buy them from… you guessed it, China! This gives you an incredible opportunity. You could buy a boatload of spinners (heh) and sell them just about anywhere for a markup.

But we’re talking about Amazon here, so let’s move on to the next step:

Why Amazon FBA is a great platform for online sellers

Here’s a quick little video by Amazon explaining why their platform is an ideal launch pad for eCommerce businesses, new and established:

Sign up to Amazon as a Seller, if You Haven’t Already

You may want to do this before you invest in your products, in case there are some issues. By issues I mean you screwing up the sign-up process (ahem, like I did).

Read up on this part. It’s super simple, but seriously, spend 10 minutes reading Amazon’s own guidelines and make sure you provide the right info.

Again, depending on where you are, you’ll use a different link, so search Google for ‘sell on Amazon‘ and the first result should be a link to your local Amazon’s seller sign up page.

In case you’re wondering how I screwed up: I signed up, provided my details and then changed my business address (I had been meaning to do that anyway, but decided to do it at that point).

Once you get past the first stage, Amazon asks you for your financial details (you wanna get paid, no?) and they got a little freaked out when the business address I had registered with had suddenly changed.

I’m not sure what they thought I was up to, but it caused a lot of confusion and I had to bite the bullet and call them up, and finally, it all got sorted out.

So don’t be that person. Read their page and then sign up. And don’t get freaked out by all this talk of ‘business’. Amazon make over $100 billion a year now, and they realise how important us little private sellers are in their ecosystem, so they are very private seller friendly these days.

Little old you and me rock in Amazon’s world. But don’t get cocky: act ‘businessy’ always. After all, it is your FBA business.

Create a brand

I’m slowly running out of Internet to type on, but bear with me.

Here’s a list of the things you’ll want to do next:

  • get a domain name for your brand once you’ve sussed out your FBA business name.
  • set up an email address at your domain, for example: sales@yournewdomain.com (your domain provider will help you with this)
  • if you want to sell certain things, such as cosmetics, you’ll need to be (or look like) a real brand, and that includes having a domain and a web page (not necessarily a website, but at least a holding page that represents your brand).
  • if you set up a page, get yourself a logo or just use text. You’re just doing the bare minimum at this point to get going. We’ll come back to your website later on.
  • if you want to be really smart about this, get yourself an eCommerce store, because you’ll want to have this in place later on anyway. Get a Shopify store. It’s super affordable, it’s done-for-you (you just add your products) and it has stellar 24×7 support. Use a free template (no design costs).

Don’t stress about this part. The objective at this point is to sell on Amazon, not on your website. The webpage is simply a representation of your brand online but in many cases you may not need a page at all to get started.

If you do, however, then here are some resources for you:

  • get a logo: try Fiverr and search for logo design
  • you can also get somebody in Fiverr to set up a single webpage for you for a super reasonable price
  • if you need hosting for the page, check out my hosting recommendations.

Ok, so at this point, we’ve done the following (not necessarily in this order):

  • signed up to Amazon Seller Central
  • picked a best-selling product
  • found a manufacturer for the product
  • secured a domain name for our brand
  • set up a page (optional) for the brand
  • got ourselves a logo

Now it’s time to…

Order your Private Label roduct

Here’s what to do:

  • send the manufacturer your logo (by email) and ask for a price in x amount of units, branded with your logo
  • start with 100 units if you just want to test the product but if you do this, be aware that you can very quickly run out of stock and that can hurt your rankings. But let’s play it safe
  • order however many products you’re comfortable ordering
  • make sure you ask for air shipping unless you’re prepared to wait for months…
  • wait for them to arrive
  • ask the manufacturer for images of the product that you can use on your listing (many manufacturers have professional images, saving you an extra cost)

Tip: note down how long the products take to arrive from the day you order. This is something you need to be very aware of so that you don’t screw up by ordering your next batch too late and run out of stock in FBA.

Why not send your stock direct to FBA?

Many manufacturers will send your stock into FBA directly, saving you the small cost of sending them from your place of business (e.g your home) into Amazon and helping you get that stock in a little quicker.

However, I don’t recommend doing this. Sometimes there are screw-ups, and you don’t want to be at the other end of an email from Amazon telling you that your products are messed up.

I always take delivery of my stock and then inspect it. Sometimes things need tidying up. That’s just part and parcel of this business: don’t expect perfection.

Don’t blame the workers – just be realistic and aware that sometimes shit happens and you may need to fix a few things.

Let me also add here that in my experience, I’ve only had one real issue. But hey, why chance it – it’s your FBA business so take it seriously and put in the extra time where needed.

Ok, next…

Set up your product in Seller Central

It’s all wizard-driven. Here’s the process:

  1. create a listing
  2. add your images if you have any from the manufacturer. If not, ignore this part for now.
  3. add your title, description, and price

You’re done. There’s a ton of help at hand in your seller central account on how to do this, but it’s pretty easy and straightforward.

Send in your stock to FBA

The next step, once you have received and inspected your products, is to send your stock into FBA. There’s a wizard on Amazon’s website (when you’re logged into your seller central account) where you can quickly set up a shipment.

Note: if you didn’t get images from the manufacturer, take some good pics with your smartphone or camera at the very least. At best, send a product to a local photographer and get some good snaps taken. You can then use whatever images you have to complete your product listing inside seller central.

Essentially, here’s what you do:

  • set up a shipment inside your seller central account
  • choose the courier (Amazon subsidises some couriers like UPS so you get a good discount)
  • print the shipping labels that Amazon gives you at the end of the setup
  • stick them on your box(es)
  • contact the courier to let them know there’s a pick up (they’ll know what to do because the barcode on the shipping labels tells them all they need to know)
  • wait for the courier to turn up, pick your boxes and take them away to FBA

Next, as soon as your products hit FBA and you get the email letting you know, you’ll want to set up an advertising campaign.

This is the crucial part

Set up your ads in Seller Central

Amazon has a very intuitive, easy to use interface when it comes to setting up ads. You don’t have to write a title or a description. You just tell the wizard what product you want to advertise, set your daily budget and you’re off to the races.

Ads are how you get visibility to your product on Amazon - you can be on page 1 of the results with a brand new product!Click To Tweet

Get sales and reviews

This is crucial to getting more exposure and making money on Amazon.

  1. sales help your product rank better, bringing in organic sales that don’t cost you anything
  2. positive reviews generally help you sell more because people don’t trust you and think you’re out to rip them off, but they’ll trust whatever a complete stranger says about you, so make sure complete strangers say nice things about you

How Amazon reviews work: earn them honestly

Don’t fall for services that ‘sell’ reviews. Back in the day, you could to an extent get away with that kind of thing, but Amazon is pretty smart, and one of the smart things they did (I believe) was to hire Google search developers to help them improve their user-system. And Google are good at fending off those gaming the system

In the old days, you would ask all your friends to buy your product and leave you a 5 star review. the problem with this approach is that Amazon has a ton of data points about you and your friends.

Let me explain what that means with a fictitious example that’s actually true for many sellers:

  • you ask your friend to buy your product and leave you a 5 star review
  • your friend buys your product and leaves you a 5 star review
  • you start getting sales and natural reviews (yay)
  • your friend who reviewed your product is a friend of your Facebook page, and your LinkedIn page, and lives in the same postcode…
  • suddenly your friend’s review disappears… along with your other real reviews
  • Ouch

The real issues is that there’s a trail there: there are a few too many connections there that begin to rule out the possibility of this being a real buyer without a personal connection

Does Amazon really work this way? Search me. They’re not going to tell me (or you). But they’re not keen on you gaming their system, so they’ll do whatever they can to stop that nonsense.

As you may be aware, there are a few companies online that offer ‘real’ reviews. The way they generally work is that you list your product on their site at a hefty discount in exchange for an honest review.

Does it work? Search me. I wasn’t about to give my products away for free.

Does Amazon like this? What do you think? 🙂 Just because you ask for an honest review doesn’t mean that it’s not incentivised.

The real problem is that big corporations (ahem, household name brands…) could (and probably did) game the system by buying thousands of reviews and shooting their products right to the top.

Those big corps have deeper pockets than you and I, so if this is how the system worked, then they’d win all the time. And you don’t want that to happen, do you? So let’s be happy that the system works like it does.

The bottom line is that plenty of people are making a good living on Amazon. Here’s a video from Amazon, showcasing some seller success stories:

The Reality Slap here is that you're not likely to enter a new career and become a millionaire by watching a couple of free videos in YouTube. Not a chance.Click To Tweet

The upside is that the FBA business model is super simple and doesn’t require any real skills. And here’s a suite of products and education that will not only teach you all you need to know to sell and make money on Amazon but also software that manages and improves your ads continuously so that you become more profitable.

It’s crazy stupid not to do it the right way, and it’s sheer lunacy to try to wing it. There aren’t many (if any) business models that you can jump into with no skill and have a real chance of making a fortune in, so people who wing this are doing themselves a total disservice and you and I a massive favour (less real competitors).

The secret to long-term success: diversify and get your own online store

At this point in your FBA business, if you’ve followed my guide, you are a master of advertising on Amazon and you know everything you need to know about setting up a brand for success.

Now you have software running your ads for you and you’re ready for the next phase.

This is the part where you get your brand set up properly outside of Amazon. One good reason to do this is that Amazon is not owned by you… and anything you do to upset them could hurt your brand and even get you kicked out (remember: don’t game the system).

The best way to do this is to set up your own eCommerce store. As your brand grows on Amazon, people will naturally search for you online. If you want to win fans and instil trust and confidence in your brand you need to have an online presence.

Here’s what you do:

  • get a Shopify store. It’s super affordable, it’s done-for-you (you just add your products) and it has stellar 24×7 support. Use a free template (no design costs).
  • that’s it. Seriously.

Set up your products (there are lots of video tutorials within Shopify and it’s all point and click) and you’re done.

The extras that come from setting up an FBA Business

Now that you have the full plan, things get better. You can get to this stage quickly, in 6 months, if you really want to. When you do…

…here’s what’s open to you:

  • you can sell your brand (that’s why you really want an eCommerce store: it adds tremendous value to your brand as it’s not 100% dependent on a channel it doesn’t own. And getting your store costs just a few dollars a month. It’s a no-brainer.
  • you can consult with companies that want to sell on Amazon
  • you can sell services to companies that want to sell on Amazon
  • you can really sell services to companies that are already listing but are not making money on Amazon (and there are tons of those around!)

Conclusion

Making money on Amazon is something almost anybody can do. But it’s a process, so respect the process and invest (time, or money, or both) in your education if you want to succeed as an Amazon FBA seller.

And here are some more resources for you – all free. Enjoy:

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

BONUS: here’s my Amazon FBA recipe for success: how to start an Amazon FBA business in 5 steps infographic

How to use this infographic on your own site or blog:

  • visit Slideshare by clicking here
  • in Slideshare, click on the Share button at the bottom of the infographic to get the embed code, like this:
how to get the amazon fba infographic

And there you have it: the entire blueprint for selling on Amazon successfully.

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