How to make money on amazon fba

Do you want to maximize your earnings by selling products online on Amazon FBA?

If yes, then Amazon FBA will be your right choice. Being the biggest e-commerce marketplace on the map of the internet, Amazon is worth over $1.7 Trillion.

Why not join Amazon FBA and make thousands of dollars by selling products online!

Sounds like a green signal? Before starting your Amazon business, keep several questions in mind.

Are you still thinking about how to make money on Amazon FBA? How does Amazon FBA Works? How to source products to sell on Amazon?

To help in your business, read through the blog, which contains everything you need to know about selling products on Amazon FBA and making a living online! Let’s get straight into it!

Table of Content

Chapter 1: What to Know Before Selling on Amazon FBA?

Chapter 2: How to Make Money on Amazon FBA? 6 Simple Steps to Get Started

Chapter 3: How to Make Money on Amazon FBA? Top 5 Business Models you can use

Chapter 4: How to Make Money on Amazon FBA? Pro Seller Strategies to Grow your Business

Chapter 5: What Hurdles you can face while Selling on Amazon FBA?

Chapter 6: Frequently Asked Questions About Amazon FBA

Chapter 1: What to Know Before Selling on Amazon FBA?

Before we dig into details about “how to make money on Amazon FBA?” It is important for you to understand everything about how the Amazon FBA program works. You must also know the complexities of Amazon FBA before beginning your journey.

What to Know Before Selling on Amazon FBA

1. What is Amazon FBA?

FBA stands for “fulfillment by Amazon”. Therefore, Amazon FBA means the company will do all the hard work for you.

This means Amazon will choose, pack, and ship all your orders to your customers. You won’t have to worry about the product’s shipping process that includes handling returns & refunds as well.

Additionally, Amazon also provides 24/7 customer service to your customers.

Here is the answer of how Amazon FBA operates with a quick breakdown:

  • You list and deliver items to Amazon.
  • Amazon picks and stores your items.
  • Customers purchase your products.
  • Amazon delivers the items bought.
  • Amazon follows up to ensure the buyer is satisfied.
  • You get paid.

For more related information, you can also check our former blog – How does Amazon FBA Works? We have provided all the necessary about the understanding of Amazon FBA in the blog.

2. What is Amazon Seller Central?

As the name suggests, Amazon Seller Central is a platform that allows you to become an Amazon seller.

Well, in fact, Amazon Seller Central account allows you to become an Amazon retailer without having to worry about payment processing, designing, maintenance, establishing and managing a personal website, or processing returns.

It is available to anyone and allows you to sell directly on Amazon. Alternatively, you may hire 3rd Party Logistics Provider to handle everything for you.

3. Cost of using Amazon FBA

Cost of using Amazon FBA

While you can enjoy a bunch of advantages, you have to bear some costs as well. To be precise, the overall cost of Amazon FBA is determined by the storage fees, fulfillment charges, and extra inventory management charges.

Storage fees are associated with the cost of keeping your items in warehouses and fulfillment facilities. Amazon will charge you an inventory storage fee based on the amount of space used by your items.

Fulfillment fees are mostly associated with choosing and shipping items when they are ordered by your customers.

It includes the price of packaging, delivering the products, as well as the costs of returning them if necessary. It begins at $2.41 per unit. It may rise to $137.32 for specific items.

You may also have to bear some extra costs in the form of a standard inventory fee. These costs are incurred when your low-selling items remain in warehouses for an extended period of time.

Let’s have a look at all possible charges you need to bear by availing of Amazon FBA service:

  • The cost of a professional seller account is $39.99 per month.
  • Storage cost is $2.40 per cubic foot (365 days)
  • The long-term storage cost is $6.90/cubic foot after 365 days. 
  • The labeling fee is 20 cents per unit.
  • The fee for stock removal is 60 cents per unit.
  • The fee for product preparation is $1-$2/unit.

4. Top Benefits of Selling Products on Amazon FBA

While we were doing our research to provide you authentic details about Amazon FBA, we conducted interviews with many Amazon sellers—those who are making a living with Amazon FBA.

top Benefits of Selling Products on Amazon FBA

Having said all that, let’s now look at some of the biggest advantages you can have while working on Amazon FBA.

Amazon has built a strong reputation, and customers trust it. When you start selling on a platform like Amazon, your chances of making a sale enhance.

Amazon will entirely take care of your inventory at their warehouses, and you won’t have to take care of them.

Don’t want to deal with complex customs laws and shipping procedures? It doesn’t even have to be a whisper of thinking. Amazon will take care of it.

Do-Worry about how to tackle customers from different time zones? Amazon assists in the form of 24/7 customer service. What’s best? It will assist your customers in the languages of the marketplaces in which they sell.

5. What are the newest changes of Amazon FBA?

Amazon’s FBA service is changing constantly as per the needs of both customers & sellers using the platform.

Fortunately, they have an excellent communicative system in place that alerts sellers of every new update and feature that become available on Amazon.

Keeping up-to-date with the newest updates and additions may help you meeting customer demand and remaining at the top of your competitors.

With this approach, you can not only tackle the adjustments that aren’t working for you but also can create a better plan for your company.

The two new features added are as follows:

Amazon FBA now offers commingling inventory (sticker-less inventory). It simply means that Amazon will keep all units of your particular product together and sends any one of them when someone orders it.

Amazon has also launched the inventory performance index in August 2020. It is beneficial to measure several aspects to evaluate how a seller’s inventory is performing. This gives the seller a chance to improve and boost sell-through rates.

Now that you know the basics about Amazon FBA, let us answer your biggest question “how to make money on Amazon FBA?” Keep reading!

Chapter 2: How to Make Money on Amazon FBA? 6 Simple Steps to Get Started

how to make money

With Amazon FBA, you have the opportunity to reach out to more potential consumers and less of a headache dealing with storage and shipment. Amazon handles a lot of the efforts for you.

Here’s how to make money on Amazon FBA by following 6 simple steps:

1. Setting up an Account

You can’t start making money on Amazon FBA without creating an account. Once you’ve made up your mind to start with Amazon FBA, you’ll need to select a selling plan.

In this regard, Amazon offers two plans, an Individual Plan that costs $0.99 per sale and a Professional Plan that costs $39.99 each month.

You should also think about your business’s selling approach. Whether you wish to sell your original goods or resale products that are currently popular— there is a method for each.

Once you’ve selected how you wish to use the Amazon FBA service, you may set up your account with the appropriate selling plan.

2. Do thorough Product Research

Amazon FBA allows you to sell almost every kind of product you can think of — from cosmetic items to cell phones to home garden materials.

There is no shortage of options that can hinder you from making money on Amazon FBA.

Do thorough Product Research

What can make you stand out from the crowd? It is none other than your in-depth product research! Before investing time and money in any product, you should always conduct proper research on that particular product.

For this purpose, we recommend you use a tool known as Jungle Scout. It is available in the Google Chrome extension and will display real-time statistics for each product that you hover your mouse over.

  • Pro Tip: Choose items with less competition to ensure that your listing reaches more people.

3. Start Sourcing your Products

Once you have done researching and selecting a perfect product, the next step is to find the best supplier to source products.

In this regard, we again recommend you to use Jungle Scout. What’s the reason? It also has a large database of suppliers and can ease your hectic research.

Through Jungle Scout, you can simply search the database for a reputable product provider. Each product can be sorted, filtered, and even searched for by name or product number.

Start Sourcing your Products

Or you can find a professional sourcing agent like EJET Sourcing to help you in finding products.

If you have an idea about what you gonna to import, you can directly check some big online wholesale websites like Alibaba, AliExpress, DHgate and so on.

Check the product’s price and buy some good products which have more net profit margin.

  • Pro Tip: Obtain quotes from various suppliers to get the best price of products and select products based on quality+ price.

4. Gather Product details and Publish your Listings

Once you have successfully sourced all your products, now it’s time to list them effectively. Even if you have sourced high-quality products—you will still make no sales until you list them properly!

For listing products effectively, you should first gather all necessary product information. Then upload them to the listings.

To increase your product listing, you can use high-quality images, catchy feature descriptions, affordable prices, and other visuals.

You can access all of the product details in one click if you choose a seller discovered through Jungle Scout! Finally, publish your items on Amazon and start making money on Amazon FBA.

5. Send your Products to a Distribution Center

Send your Products to a Distribution Center

Can Amazon deliver your products to final customers without having them in their warehouses? Obviously not! So, now you only need to deliver your products to the Amazon distribution center.

Amazon FBA takes care of packing and shipping orders as they arrive, so you don’t have to do it yourself.

Customers are generally happy to pay a little higher prices for the products delivered through Amazon itself as they know it will be arrived on time.

6. Advertise your Products

The sales can be increased a lot if you advertise your products properly and timely. You may promote your items with sponsored advertisements to get in front of buyers when they are shopping.

Make your items competitively priced so that customers may get the greatest bargains. Customers frequently choose the product that provides them the most value for their money.

Chapter 3: How to Make Money on Amazon FBA? Top 5 Business Models you can use

Top 5 Business Models you can use

So now you know that how to get started with Amazon FBA. But before that, you must know which business model you should adopt to meet your business goals.

This is what we like the most about Amazon FBA. It offers a variety of business models and you can choose the one that appears to be the perfect fit for you.

1. Sell Wholesale items to make money on Amazon FBA

A successful method you can use is to purchase bulk items from wholesale suppliers and resell them on Amazon. Usually, you will sell pre-existing items and the most important is to find the good products at good prices.

To make your business a success, it is a good idea to purchase products at reasonable prices and resell them on Amazon for profits. This method is easy to start with, yet highly competitive.

You might also face some challenges if you wish to sell wholesale products.

Many product categories such as beauty and skincare require approval from Amazon before start selling products in that category. So, wisely choose products to avoid such headaches.

2. Use Private Label products to make money on Amazon FBA

If you want to escape some of the competition on Amazon, and want to enjoy full control over your products, then we recommend you to go with private label products.

use Private Label products to make money on Amazon FBA

Selling private label goods means you have registered your products under your own brand name on Amazon. This might be a complex process than just purchasing a product from Alibaba and selling it.

The biggest advantage of selling your own branded goods through Amazon FBA is that you enjoy complete control over your listing.

This simply means you can easily make changes to your items anytime whenever you need. Additionally, if one of your buyers complains about a certain element of your item, you can then easily make changes to them.

Suppose you sell pencils and observed that many of the negative reviews said that they like a long-lasting eraser, and a thin pencil for better grip.

You may then use the feedback from those reviews and create your own pencil, which you can trademark.

3. Use Reselling/Arbitrage method to make money on Amazon FBA

This business model is the inverse of private labeling. Simply said, retail arbitrage is the practice of purchasing the cheapest priced items and selling them at higher prices.

Use Reselling

Like many other sellers, you can also rely only on retail arbitrage to make a living. By using this business model, you can even avoid shipping costs.

Thinking of how? Simply visit your local Walmart and look for the best & cheapest deals and stock up products you believe will sell.

  • Pro Tip: Try to compare the prices of your Walmart products with the same products listed on Amazon, so that you can calculate profit margin.

What are the challenging factors of this business model? You will have to face huge competition.

Secondly, it takes a lot of effort and research to discover shops that are offering amazing liquidation and clearance deals.

4. Dropship products to make money on Amazon FBA

Dropship products to make money on Amazon FBA

Seeking a method to start selling on Amazon FBA but don’t want to put a lot of money or time? Use dropshipping business model.

To put it simply, dropshipping is a process in which the seller accepts orders in place of a manufacturer, supplier, or distributor.

When a buyer purchases the product, the seller then utilizes their supplier to execute those sales.

Before you begin dropshipping on Amazon, please ensure that you completely follow dropshipping guidelines given by Amazon to avoid having your account suspended.

5. Sell handmade products to make money on Amazon FBA

The final business model is Amazon Handmade that is an alternative to Etsy. If you have creative skills and want to access Amazon’s big audience, then go with it.

To sell your handcrafted items, you must apply and be approved. Amazon has an approval procedure in place to make sure that only authentic handcrafted items are offered on it.

If you choose to sell through this business model, you will need to pay a 15% referral fee to Amazon for any sales that you generate.

Chapter 4: How to Make Money on Amazon FBA? Pro Seller Strategies to Grow your Business

Pro Seller Strategies to Grow your Business

Selling on Amazon FBA is not an ordinary type of business. If you want to get succeeded with Amazon FBA, you must remain up-to-date with the latest technologies, tools, and right data to support your business.

What can help you grow like a pro on Amazon FBA? We have researched some effective seller strategies you can implement to remain ahead in the competition.

So let’s dive right in!

1. Effectively manage your Listings

Previously, we have told you how important is it to optimize your listing. A properly optimized listing can help you generate more bucks than ever! What you need is to regularly check how well your listing is working for you.

Effectively manage your Listings

Keep reviewing your images, and effectively put targeted keywords in your product descriptions. Additionally, try to answer your customer queries timely and keep an eye on all reviews. So that you can improve your products in the future.

2. Invest more in Advertisements

The more you advertise, the more you make sales— it is simple as that! How you can get the best out of your PPC campaigns? Let’s follow the following point:

  • Continue to update your Advertising campaigns every few weeks to guarantee you’re running the best performing ads.
  • Run search term reports to have a better idea about how the particular keyword is performing, then eliminate bad performers and boost bids on winners.

3. Expand your Product Line

Whether you started with a single product or a few, you may want to keep utilizing your Amazon selling expertise to grow your range of products. In this regard, keep expanding your product line will give you great results.

Using Jungle Scout’s Opportunity Finder and assessing high-demand & low-competition keywords— you may find new product ideas in a similar category as your present items. In this way, you can explore new growth opportunities instantly.

4. Stay Focused on Building your Brand

Do you know why many sellers fail while working on Amazon FBA? One of the biggest reasons is they don’t think of a long-term gain. What is that mean? It means you should build a strong brand image in the eye of your customers.

By concentrating on your brand, you can develop a loyal client base that will assist you to drive more traffic towards your Amazon items. You should produce well-designed and unique packaged items to attract more customers.

What’s more? You should consider setting up social media profiles for highlighting and marketing your products in a more customizable way.

You may also become Amazon registered brand, this can grant you full access to advanced marketing capabilities. It will help your business stand out on Amazon and boost conversion.

5. Efficiently Manage your Inventories

Stay Focused on Building your Brand

Do you want to find the correct balance of inventory to meet customer’s demands while avoiding overstocking Amazon’s warehouses?

For keeping your products safe and in a good condition, Amazon FBA warehouse will manage that for you as well as the safety issues.

Well, you still need to manage your inventory requirements and keeping storage costs in control. We recommend storing roughly 3 to 6 months’ worth of goods in Amazon’s warehouse at any time.

6. Keep Track of your Amazon Account Health

It is also important to keep records of your Amazon account’s health. It will assure that your company is in line with Amazon’s Terms of Service and to avoid account suspension.

What you should do in this regard? Maintain product policies, prevent product authenticity or safety concerns, and concentrate on giving excellent overall customer service.

We believe now you know how to make money on Amazon FBA by implementing effective strategies. Let’s move ahead and understand some of the hurdles you will face while working on Amazon FBA.

Chapter 5: What Hurdles you can face while Selling on Amazon FBA?

challenges

Every coin has two sides! What does this phrase mean? It simply means that while you enjoy numerous benefits of Amazon FBA, you will have to face some hurdles as well.

After doing proper research on the platform and its services, we have compiled the following drawbacks for your consideration.

1. You need to pay a service fee to Amazon

Money is essential for people who are just starting. FBA is a really useful service, but it is not free. It costs money that some individuals may not be able to spend right now.

Furthermore, because of the way costs are determined, this service is not suitable for low-profit products, so you should be cautious about the products you enroll in.

Fortunately, Amazon provides a useful FBA calculator that may assist you in determining in advance whether it is a worthwhile move or not.

2. You have to bear Long-term Storage fees.

Amazon does not like storing inventories for an extended period of time. As a result, you’ll pay more for items that sit for a longer time. Long-term storage costs are not really the end of the story.

You have to bear Long-term Storage fees

To make sure that FBA is still financially viable for your company goals, you’ll need to include it into your continuing budget.

They also don’t like storing items that are not active for sale, therefore they’ll charge you for it and negatively impact your metrics.

All of this, however, can be accessed in your seller interface, and you may plan for items to be returned to your own station.

3. Your products must meet Amazon standards

Amazon has its own set of standards for items entering the warehouse to be delivered through FBA. Therefore, you need to confirm that all of your items are properly prepared before shipping them to Amazon.

This includes how they are packaged, labeled, and dispatched under the FBA inventory warehousing requirements. Some of the details might be challenging for you.

4. You need to pay sales tax

The administration of sales tax is handled at the state level. If your company works in one state but has its inventory warehoused in another, you may be unsure which tax rate to apply.

Fortunately, some tools can help you automate various tax circumstances and laws. It can also assist you in determining what to charge, and Amazon can, fortunately, manage the majority of it for you.

Chapter 6: Frequently Asked Questions About Amazon FBA

FAQs

1. Which products can I sell on Amazon FBA?

Except for animals and medicines, nearly any physical object can be sold on the Amazon marketplace. You can sell many items without permission on Amazon FBA.

However, there are some product categories known as “restricted categories” that require approval.

Cosmetics are among the goods that require clearance. Consider this as a general guideline: if you apply it to your skin or consume it, you will almost certainly require clearance.

2. How can I list a product on Amazon FBA?

Choose to ‘Add a Product’ from the Inventory drop-down menu, and then look for the product you want to sell on Amazon. When you search for product identification, such as a UPC, JAN, EAN, or ISBN, the results are better.

If you find a product you wish to sell, follow these steps:

  • Hit on “Sell this product”.
  • Fill up the blanks with the specifics of your offer. 
  • Save your work by clicking the Save button.

3. Can I ship directly from Alibaba to Amazon FBA?

If your supplier approves, you can ship from Alibaba to the Amazon FBA warehouse. This is an option provided by a large number of suppliers.

4. How much is the Amazon FBA monthly fee?

Right now it’s $39.99.

5. How much money do I need to start selling on Amazon FBA?

The more beginning capital you have when establishing a firm, the better. However, there is no specific amount of money required to start an Amazon FBA business.

In fact, you may begin with only enough money to purchase a few products. Just bear in mind that if you’re starting on a limited budget, it will almost certainly take you longer to gather momentum.

Conclusion

Amazon is not only a fantastic place to make purchases, it also offers several opportunities to make money on Amazon FBA.

In this blog, we have told you everything about how to make money on Amazon FBA by following several effective strategies & useful methods.

We believe that now you know how to get started with Amazon FBA and make a living online. And for more information about how to sell on Amazon, do contact us and we will definitely help your business.