Today I wanted to tell you about a woman named Jo.
Back in 2015, Jo and her husband decided to have a crack at building an Amazon FBA business as a side hustle.
What’s an Amazon FBA business, you ask?
FBA stands for ‘Fulfilled by Amazon’. What this means is that you send inventory of your product to Amazon, and Amazon handle all the product fulfillment tasks when you make a sale (ie: packing, distribution, returns etc).
Now that we know what an Amazon FBA business is, let’s go back to Jo’s story.
Jo and her husband decided to start small, no huge investment, not a lot of risk. They started out by selling a simple kitchen product that seemed to be in high demand on Amazon.
The product cost less than $2 to buy and ship to Amazon. Jo and her husband then sold that product on Amazon for $15. Within a year, they’d sold over 84,000 units and cracked 7 figures in revenue.
Hot damn!
Not bad for a little side hustle.
Now you might be wondering if that type of success is still available in 2023. In short: Heck yes it is.
That’s why in today’s newsletter, we’ll be giving you a step-by-step guide to starting your own Amazon FBA business.
What you can expect:
- Trends. If you want to know whether an Amazon FBA business is right for you, we’ve got the data to help you evaluate this opportunity.
- Strategies. We’ve put together a simple step-by-step guide to launching your Amazon FBA Business.
- Tool of the Week. This week’s tool will help you optimize your Amazon listings to get more clicks, hits and (most importantly) more sales!
So without further ado, let’s jump in.
Trends
To help you decide whether or not launching an Amazon FBA side hustle is right for you, our team has compiled some research into the top-performing product categories, average seller income, and how much investment is required up front to get your Amazon FBA business going.
Top Product Categories
Third-party sellers focus on tangible, consumer-friendly items they can produce and sell via their own private label with relative ease. Home & Kitchen products are the most common by a wide margin.
In addition to high demand and low competition, Amazon sellers look for the right products to sell based on: categories with fewer restrictions and requirements, more durable and less risky products (to avoid damaged goods or unhappy customers), items that can be easily manufactured and affordably shipped, and products with reasonably steady sales year-round, among other things.
How Often Consumers Buy From Amazon
Of the consumers who belong to Amazon Prime, Amazon’s subscription program, nearly half (48%) buy products online once a week or more frequently and nearly three-quarters (74%) shop online at least every few weeks.
Additionally, more than one-third (37%) of the consumers who are not Prime members shop online just a few times a year, revealing that Prime members tend to shop more frequently than their non-Prime counterparts.
Average Monthly Sales
Half of Amazon sellers (50%) see more than $5,000 per month in sales, and one in four (25%) sees sales over $25,000 per month.
Amazon Profit Margins
While small businesses often struggle to achieve profitability at all in their first few years, Amazon sellers see relatively high-profit margins. More than two-thirds of sellers (68%) are earning profit margins higher than 10%, and 36% are earning profit margins above 20%.
Time To Launch Amazon FBA Business
The majority of sellers are able to get a fully functioning business set up on Amazon within 3 months, and most can manage their business with fewer than 20 hours per week.
Average Up Front Investment
The majority of sellers (58%) spent less than $5,000 to start their business on Amazon — including the cost of products, Amazon fees, storage, and advertising — and 28% spent less than $1,000.
Where Amazon Sellers Advertise Products in 2023
Ecommerce platform pay-per-click (PPC) ads remain the most common marketing strategy, however more sellers are turning to social media to advertise their products, with video-focused platforms like TikTok, Snapchat, and YouTube seeing the most growth.
Strategies
It’s time to get down to business! In this section, we’ve outlined the key steps to help you launch a profitable Amazon FBA business as a side hustle. But before we get into all that, let’s talk about how an Amazon FBA business actually works.
How Does Amazon FBA Work?
The awesome thing about having an Amazon FBA business is that Amazon takes care of so many of the logistical elements for you.
Here’s how it works;
- You source private label products and add your brand and logo
- A factory manufactures your branded products in bulk (most sellers source products from China)
- A freight forwarder ships your products to Amazon warehouses in your countries of choice
- Amazon handles the storage, packing, distribution and customer service
- You list your product on the Amazon store and promote it across the web from wherever you happen to be in the world!
How To Launch Your Amazon FBA Side Hustle
When Jo and her husband started their Amazon business, they took a punt on a product that neither had any real interest in, essentially the sole aim was to simply generate some extra money.
And while there’s no harm in taking that route, these days there’s a lot more competition and sellers need to work harder to stand out from competitors.
So if you’re aiming to make your side hustle your main hustle, we recommend you start by picking a niche you’re interested in and build your brand.
Choose your niche
Building a legitimate brand will get you further in the long run over simply picking a product based on popularity.
Just look at all the companies that sprung up in 2020 selling hand masks and sanitizer! While they probably had a decent year or two of income, odds are those sales are dwindling now that we’ve more or less shifted out of the pandemic.
When deciding on your niche, it can be helpful to write down answers to the following questions;
- What am I interested in and passionate about?
- What market would I like to serve?
- Does this market have money to spend?
- Does this market shop on Amazon?
Find a popular product within your niche to sell
Use the Amazon bestsellers list to start your product research. Key metrics to look for include; product price between $15 – $50 (for decent profits), weighs under 2lbs (to keep shipping costs down), has a best seller rank of 1500 or below (a measure of good demand).
Source your private label products
Next up, it’s time to source your products!
Popular manufacturing marketplaces include GlobalSources, Alibaba, and DH Gate. You can also use the JungleScouts supplier database to cut down on research time.
Don’t forget to do your due diligence before you part with any money!
On all the sites you can see more details about the suppliers and ensure they are who they say they are and they’re not about to run away with your money and leave you high and dry.
Create your own brand name and design
Try not to get too hung up on this step, but get your creative juices flowing here and come up with a name and logo to help you stand out from the crowd.
Here are Amazon’s guidelines for creating your seller name:
“Your seller display name is displayed with your listings and on your Seller Profile. Sellers are generally allowed to be as descriptive or fanciful as they like when creating their display names. There are a few constraints, however.”
- Each seller must provide a unique display name
- Display names cannot include the word “amazon,” other Amazon trademarks or domain names.
- You must have all necessary rights to your display name.
- In addition to letters and numbers, you may use “-” and “_” but no other special characters.
- Display names cannot be offensive or include profanity.
- For readability, we suggest that you use a short display name with less than 20 characters.”
It’s also important to note that each product you list on Amazon can have a separate brand. So if you sell something in the beauty category, you can have a beauty style brand name, if you sell a kitchen product you can have a brand name for that, and so on.
Create your seller account on Amazon
Before you can ship products to Amazon, you’ll need a seller account. There is a monthly fee to have a seller account, which is why we don’t recommend you set up until you’re at this stage of your launch.
Wait until you’ve ordered your first batch of products, and have professional images, listing details, and keywords prepped before you open that Amazon seller account.
Ship your product to Amazon FBA warehouses
For some strange reason, this is the stage that many new sellers find confusing and intimidating. But it doesn’t need to be!
You can choose to ship via sea or air. When you start out you’ll likely only be ordering small quantities so it probably makes sense to ship by air. Once you start ordering over 5000 pieces at a time, it’s time to explore shipping by sea.
The simplest route is to ask your suppliers to organize shipping for you. You can expect to pay around $6 / kilo with shipping times around 8 – 10 working days.
If you’re still feeling stuck at this stage there are heaps of Amazon groups you can join to ask for advice through the shipping process.
Launch your product on Amazon
You did it! You’re live on Amazon!
Make sure your listing looks awesome, with professional images, a compelling keyword-rich headline, great bullet points and a detailed product description (outsource your ad copy to a copywriter if writing isn’t your strong suit).
The most important factors for ranking on Amazon and growing your Amazon FBA business are high conversion rates and consistent sales velocity. From Day 1 you need to be generating daily sales. Even if it’s only 5 – 10 sales a day.
Tell everyone and anyone you know your product is available for sale on Amazon. Try running Amazon PPC ads. Send your products to social media influencers to review and send traffic to your product page. Whatever you can do to generate daily sales.
Pro tip: Reviews are incredibly important as they contribute to higher conversion rates, aka more sales and money in the bank for you! Collect as many as you can!
Build your ‘off Amazon’ audience
The fastest way to build an audience ‘off Amazon’ is to approach influencers in your niche, with large audiences. Send them a product to review and talk about, and give them a link for people to purchase. This strategy really does work!
This is especially true in 2022 with more and more influencers looking for brand collaborations.
Investing in Amazon Ads
According to Nanigans Amazon Advertising Ascent report, 41% of retail marketing giants are willing to increase their ad spending on Amazon.
Why?
Simple. The money they spend on Amazon advertising actually converts — up to SIX TIMES faster than the two biggest platforms today (Facebook and Google).
The reason for the conversion?
People browsing on Amazon are actively looking to buy products rather than browse or research, which is what commonly happens within the domains of Google and Facebook. Makes sense to us!
Tool of the Week
To launch a profitable Amazon FBA business, investing in an Amazon Keyword Reseller Tool is a must. This is an easy-to-use tool that can help you supercharge your business.
By doing keyword research, you get a better understanding of the best keywords to use in your product title, description, and listings to place your products where shoppers can easily see and click them.
Simply enter any keyword, and its algorithm will scrape through millions of product data on Amazon to help you position your products in a way that brings results.
Pro Tip: Choosing the best keyword depends on the CPC rate and the search volume. They’re inversely related. This means lower CPC and higher search volume should be your goal.
This tool from Seller App comes with a 7-day free trial so you can try it out, risk-free.