How to Make Money on Amazon – FBA Business Model (2018)

26 min read(Last Updated On: December 31, 2017)

I started my Amazon FBA business a couple of years ago and to date, I have 3 brands selling in different niches.

Is it worth learning how to make money on Amazon? Absolutely.

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

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 succeed at this game.

How to Make Money on Amazon From Home 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 take care of the packing and shipping. And boy does it work…

Of all the marketplaces I have experienced, nothing comes close to AMZ.

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

I experienced this with my very 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 it’s laughable.

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).

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.

I personally know brick and mortar businesses that list in Amazon and barely make sales (I couldn’t help snooping on their products… heh).

So what’s the difference?

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 that are trying to build their brands on Facebook and Twitter? And out of all of them, who ever bothered to read a book on how to really use those tools?

Well, the same goes for the majority of Amazon sellers. This is the reason why some sellers make massive profits and others don’t.

You’ being here right now is what makes the difference. You’re here researching how to go about setting up an Amazon FBA business or because you’re already there 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.

So let’s do this, my friend, but first, let me address the burning question:

Is it Too Late to Start an Amazon FBA Business to Make Money on Amazon?

Nope. Every year this question gets asked by all those who feel they missed the boat by not jumping in earlier.

To find the real answer, all you need to do is the following:

  1. check out Forbes and other top publications each time Amazon release their earnings: they are growing year on year.
  2. check out Amazon’s own stats on the number of new Prime sign-ups: many of those are new buyers entering the Amazon ecosystem. It’s a proven fact that a Prime customer spends more money than a non-Prime customer (you can ask my wife and she’ll verify this…).
  3. check out Amazon’s own stats on the number of new sellers joining the marketplace. They even have breakdowns of private label sellers versus brick and mortar businesses.

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

So now that you know that you’re not too late, 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)

I could go on listing benefits, but you get the idea.

Running your own Amazon FBA business has the potential to provide you with the lifestyle you want.Click To Tweet

So let’s dive into the FBA business model, or as we call it: 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!

So let’s dig in deeper and discover how we can be…

Earning Revenue Selling Private Label Products

Let’s start by answering the magic question…

Finding The Perfect Product

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 mistake.

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 product. Meaning the product 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 because all my clients and friends did. But they then started to do the thing where they stare at stuff and write things down…

… because they don’t get what’s in front of them.

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

Come on! They’re there! Right in front of you! Thousands!

By the way, to find this section, 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.

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 grow your 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 whilst you and I peruse 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 Find 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):

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 neighbours can only get from stores that buy them from… you guessed it, China! This gives you an incredible opportunity my friend. You could buy a boatload of spinners (heh) and sell them just about anywhere for a markup.

But we’re talking about AMZ here, so let’s get that in place:

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

Now, 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 your 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. Use Uniregistry because they’re cool, affordable and offer lots of domain extensions.
  • 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:

  • You can set up a free blog if you just want to create a one-page presence
  • 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, go to Guru

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 Product

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 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 1 real issue. But hey, why chance it – it’s your FBA business so take it seriously and put in the extra time where needed.

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.

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.

Do People Make Money With Amazon FBA?

Here’s another video from Amazon, showcasing some seller success stories:

The Magic Tools

Now, as I mentioned at the beginning, not only did I invest in some pricey education at the start of my FBA business, but I also invested in the right tools. And those 2 things my friend are make or break. They’re not optional.

If you want to make money on Amazon then you need to step up and play the game with the right tools.Click To Tweet

I’ve tried a lot of tools, and here’s the best I recommend:

  • The best Amazon training: [please watch this space because the program is not available right now but it soon will be!]
  • The best training to master Amazon advertising (PPC): Sponsored Products Academy – ran by a cool guy called Brian who has ran advertising campaigns in Amazon for corps with million dollar budgets. He has had an opportunity like almost nobody else to figure out what works and why, with a colossal budget to test. His training is absolutely awesome.
  • By the same guy (Brian): clever software to run your Amazon PPC: PPC Scope
  • More software to manage your Amazon PPC campaigns and track your rankings as well as monitor your ads continuously and finding the profitable keywords to amplify in your campaign and pinpoints the ones that lose you money: PPC Entourage (grab a 14 day trial and you’ll see why this tool is essential and why you need it, period.)
  • All in one solution for boosting your Amazon sales: Sellics

The above are the tools of the trade. They’re not luxuries, and they’re not optional.

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

Well, now you have the full plan. But things get better here. Let’s talk about the real reason for having done all that relatively easy work (it beats stacking shelves all day long).

Once you get to this stage (and you can get to this stage quickly, in 6 months if you really want to) then 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!)

Amazon FBA Success in 5 Steps

Step 1Find a product to sell
Step 2Find a supplier
Step 3Set up a brand
Step 4Sign up to Seller Central and set up your product
Step 5Promote your product using Amazon's PPC platform

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. I’ve given you the entire blueprint for selling on Amazon successfully. Let me give you all the resources so you everything together in one place:

Resources

  • where you go to find hot selling products: do a search in Google for ‘Amazon best sellers’ and click the Amazon link. You may want to try adding your country to the search (e.g. Amazon UK best sellers)
  • where you go to find manufacturers that make products: Alibaba
  • where you get your domain name from: Uniregistry
  • where you can get a cheap logo from: Fiverr
  • where you sign up to become a seller: do a search for ‘sell on Amazon’ or ‘Seller Central signup’
  • where you can get yourself an online store: Shopify
  • master Amazon PPC advertising: PPC Scope
  • manage your Amazon PPC advertising campaigns with clever software that shows you where to spend your ad money and what to stop: PPC Entourage

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