So many people have big dreams of becoming an Amazon FBA seller but feel that it’s impossible for them because of operational costs that they don’t think they can afford. It doesn’t have to be a big dream after all, because we’re here to tell you that it’s possible for you to start an Amazon FBA business with little money!
The company’s platform has rapidly expanded in recent years, not even COVID-19 could stop this growth! A large percentage of retailers on Amazon are private label sellers – and not familiar brands. Because of this, they know that they need to make it relatively easy for an everyday person to get started as a seller, and they encourage this big leap!
The first thing that we would recommend you do as an Amazon FBA Seller hopeful with a small budget is to do lots of research, so you are in the right place and on the right path!
Today we’re going to talk about what it takes and how to start an Amazon FBA business with little money!
First of all, what is an FBA Seller?
An FBA seller is an Amazon seller who stores their inventory in the Amazon fulfillment centers. FBA means “Fulfillment by Amazon” wherein Amazon prepares the order for shipment and handles the delivery of the package to the buyer.
It’s typically the most preferred option sellers go for, because of the many benefits, such as:
- Eligibility for listing as Prime – This means that your products will have next day and free delivery, which attracts customers to you!
- Amazon has a team that handles customer service and coordinates customer returns on behalf of their sellers
- You have more time to spend on analyzing and growing your business
If you are not interested in having Amazon fulfill orders for you, you can be an FBM seller, which means Fulfillment by Merchant. An Amazon FBM seller prepares orders by themselves and sends their products to individual customers using traditional methods like UPS, FedEx, DHL etc., while avoiding third party fees associated with selling on Amazon.
However, take note that the rest of our article will be on the Amazon FBA guide, particularly on how to sell on the platform!
What are the different ways I can sell on Amazon?
If you’re not ready to take big risks and want to start small, you can sell on Amazon by signing up as an individual seller, which charges only $0.99 per sale.
Amazon’s website recommends Individual Seller accounts for those who:
- Sell less than 40 items monthly
- Don’t require advanced selling tools or programs for their business
- Are still under the process of deciding what they want to sell
On the other hand, if you’re willing to invest more, you can take the leap to sell through a Professional account, which costs $39.99 monthly.
Amazon’s website recommends Professional seller accounts for those who:
- Sell more than 40 items monthly
- Need the ability to access APIs and additional selling reports
- Are interested in selling through programs like Launchpad or Handmade
Amazon’s Communities and Programs
You may be wondering from the previous section, what is Launchpad and Handmade? Amazon has several programs to help their entrepreneurs get started.
Amazon Launchpad – Designed to give small and medium sized businesses (SMBs) access to millions of customers who shop at Amazon through innovative brands.
Amazon Handmade – This platform connects artisans around the globe to customers in the United States, Canada, and Mexico.
Merch by Amazon – A print-on-demand service from Amazon that allows anyone to create and sell T-shirts, sweatshirts, phone cases, pet supplies, and more to customers all over the world.
Amazon Renewed – Where repaired and refurbished electronic items can be tested for functionality then sold to work and look like a new product.
The right resources are provided by Amazon to help you get started, but first, you need to be willing to do the product research to determine what’s best to build on your existing knowledge, skills, and expertise.
Read further about all of Amazon’s Programs.
How much do I need to start an Amazon FBA business?
When it comes to actual numbers, there are entrepreneurs who started with as little as $1,000! However, we personally recommend that you strive to start with $5,000.
This is because many don’t explain the kind of expenses that come into building a successful business on Amazon, such as:
- Product launching expenses – A small budget can only work for products that you will create from scratch all by yourself. Otherwise, there are manufacturing, packaging, manpower, and legal fees to consider.
- Patenting – This is an option to consider if you will sell your own products on Amazon. It’s the grant of a set of exclusive rights to a person or company. This grant is legally enforceable and protects intellectual property rights. A patent makes it possible for a person to make more money from the invention because it creates exclusivity.
- Pay-per-click marketing (PPC) – A type of internet advertising where advertisers only pay for the click-throughs pay, or impressions, that they receive each time their advertisement is displayed on search engine results pages. This is very helpful for new businesses until they gain enough visibility on their own.
- Copywriting services – It’s recommended to hire copywriters rather than write your own product descriptions, because copywriters are skilled in knowing how their words will affect how people purchase a product or service.
Another big factor of your initial investment depends on how big of an inventory you are willing to have Amazon hold. If your business model is based on having just a handful of products, then it’s likely that you will need around $1000 or less than that in order to start up all the required tools and ship some orders every month. But if your business plan includes hundreds of different items, then it’s likely that you will need to invest more.
One thing is for sure, you have to take into account the fees for Fulfillment by Amazon, and they vary widely by the type of product as well as their size tier and shipping weight. It’s best that you read about FBA Fulfillment Fees on Seller Central for you to be able to calculate how much money you will need to start as an FBA seller on Amazon.
This is why research is crucial for you to understand what products make the most sense for you to sell considering your limited budget. Taking the time and effort to learn as much as possible about the best practices and risks will put you in a much favorable position.
What can I sell on Amazon?
Firstly, you’ll need to figure out if you will sell as a Reseller or as a Brand Owner.
Reseller – As a Reseller, you will list and sell other people’s products on Amazon. You can buy products from other sellers or manufacturers and sell them again. As a Reseller, you will not create original products to sell.
Brand Owner – Creates their own products from scratch and sells them on Amazon. There is a process for Brand Registry on Amazon that is separate from registering as a basic seller account.
Brand Registry on Amazon allows you to protect your product’s intellectual property including items like how it looks, how it’s advertised, how it is priced, how it functions etc.
If you are registering for Brand Registry then there are four different types that are available.
Trademarks – The trademark is the logo or word that identifies the brand. It can be a word, logo design or slogan
Designs – This protects how the product looks and includes any drawings, sketches or diagrams
Patents – The patent is the invention associated with the product whether it be mechanical or chemical in nature
Copyrights – Copyright protects how a product is advertised, how it’s described and how the design looks
These four areas protect your brand from being copied or imitated by other companies to sell their own products that look similar to yours. There are requirements for registering any of these rights, but if you have an original idea then there should be no problem protecting it as long as you follow the right steps.
Here are the categories for products that can be sold on their platform.
- Amazon Device accessories
- Amazon Kindle
- Beauty products
- Business Products (B2B)
- Beauty Tools & Accessories
- Camera & Photo
- Cell phones
- Clothing & Accessories
- Electronics Accessories
- Fashion Jewelry
- Grocery & Gourmet Food
- Home & Garden
- Luggage & Travel Accessories
- Musical Instruments
- Office Products
- Shoes, Handbags, & Sunglasses
- Software & Computer Games
- Tools & Home Improvement
- Toys & Games
- Video Games & Video Game Consoles
Amazon also has a category of restricted products that require approval from Amazon before listing them on the site. To understand the conditions that Amazon allows these items to be sold as, read their article here.
Again, spend a lot of time research what products make the most sense for you to sell with your budget and the saturation of the market. Take into consideration what kind of products you already know a lot about.
It’s important for you to observe the profitability, size and weight, ease of use, seasonality, fragility, and categories of the items that you are considering to put in your inventory. These things matter regardless of if they are your original product or resold. You can read all about my story to understand how product research makes all the difference in your success.
If you don’t have any original products to sell, you can always be a reseller and source your products elsewhere.
Where can I source items to resell on Amazon?
Through Alibaba, it’s easy to start a small reseller business because you’ll able to find items and suppliers through low Minimum Order Quantities (MOQ).
MOQ refers to the quantity you are able to order from one supplier in one order. If you can find a supplier who doesn’t expect you to order from them at wholesale or bulk quantities, you can start small and build your way up to larger quantity orders.
On Alibaba, you can source the real price of items. Sourcing for the real price of a particular item ensures that you won’t have to markup prices too high, which would drive buyers away if they can see that they can buy it cheaper from another seller. From there, you can calculate profitability and what your target pricing should be listed at.
There are pros and cons to any platform, which is why it’s so important to research alternatives to Alibaba as part of your commitment to discovering what is the best platform for you to order your products from.
How do I sign up to sell on Amazon?
Amazon provides a page on their website to help you start to learn what it takes to sell with them, but before you create a seller account, make sure you have the following:
- Business name (Seller accounts) or Legal name (Individual accounts)
- Business email address or Amazon customer account
- Business address
- Chargeable credit card information
- Government ID (identity verification protects sellers and customers)
- Tax information
- A valid phone number
- A valid bank account where you want Amazon to send your earnings
Amazon will also ask you to provide them Seller Information, which is what will be displayed to customers as they browse on your storefront and also in order confirmation emails sent to buyers.
You will need to have your phone nearby you to complete the phone verification process via an automated call from Amazon to verify your identity.
How do I sell products after signing up as an FBA seller?
Explore and understand the Seller Central platform
Navigate Seller Central and understand all of its main features, which are:
- Catalog – Add your products to your catalog on the platform and manage drafts for products that have not been listed yet
- Inventory – Create listings, manage your personal inventory, as well as inventory that Amazon’s fulfillment centers will be managing for you
- Pricing – Here you can see how Amazon’s systems analyze how you price your items and identify how you can price your items in accordance to Amazon Marketplace Fair Pricing Policies
- Orders – This is where you will be able to see information for orders to your store and manage them, as well as manage customer returns. You can download order reports to analyze them and understand how to improve your business.
- Advertising – A special feature that gives sellers the opportunity to further promote their products, as well as create deals, coupons, and promotions to entice buyers.
- Stores – Create or edit your online store in this section
- Growth – Where Amazon recommends opportunities to create content that will improve your product listings to gain visibility and sales
- Reports – Download Payments, Business, and Tax Reports
- Performance – A section on the health of your store. You can view feedback, claims, and even learn more about how to be a better seller through Seller University.
- Brands – This is where you can view your Brand Health which measures your store’s performance relative to Amazon’s standards for target scoring. It is a feature on Seller Central only available to Brand Owners.
List your first product(s)
This is the part where it gets exciting because your Amazon FBA selling dreams are coming to fruition. In the past, you were searching on Amazon for items you’d like to buy. Now, you are so close to getting others to buy products from you!
We’ve previously written an article dedicated to this crucial step in starting an Amazon FBA business. It’s called How To Create Amazon Listing Properly in 2021 and we encourage you to read it. This part of starting your Amazon FBA business takes much more than a step-by-step tutorial, and we even teach you how to optimize keywords.
You can list items one-by-one or in bulk, but if you want to be an FBA seller, make sure that you list products as “Merchant to Amazon” under the Fulfilled by value.
Manage Your FBA Inventory
Now that you have products in your inventory and you are listed as an FBA seller, you need to send them over to Amazon so they can fulfill orders for you!
Amazon has a page for helping you create a shipping plan so you can send your inventory to Amazon and allow them to fulfill your orders.
Once you’ve accomplished that, your products can start selling! Thankfully, Amazon also contacts their sellers regarding their inventory levels so that they know when it’s time to start replenishing items.
We recommend that you don’t stop there, continue to educate yourself on best practices of inventory management, managing cash flow, and improving your product listings to keep your business running smoothly.
Where can I get support in building my Amazon FBA business?
Friends and Family
Start with the people closest to you! Some buyers are wary of ordering from sellers who don’t have a lot of positive reviews, so getting your loved ones as your first buyers so they can leave product reviews on your seller page can make a huge difference in your sales velocity.
With a simple click, businesses can drastically grow because of social media exposure. Utilize these free tools and spend time curating the best posts you can to promote your store. You can even consider reaching out to content creators and influencers to do affiliate marketing through your store’s products.
Amazon Seller podcasts
Thankfully, the experts are not greedy with the information and knowledge they possess. Create a healthy mentality of eagerness to constantly grow and learn even in small ways, which you can do by listening to one Amazon FBA podcast episode per day.
Look no further! The Sourcing Monster blog is entirely dedicated to helping you find success as a seller on Amazon, and we even have 1-on-1 coaching that specializes in helping you get started.
The Amazon FBA opportunity has changed how many people are able to start and sustain their own businesses. It’s an exciting way for aspiring entrepreneurs to start small, but it does require some upfront investment in time and resources.
If you want to get started as soon as possible, first consider how much time and energy you have available each week to dedicate to researching your new venture before investing any money into it.
Hopefully, with this blog, you understand better now that sometimes it’s not about the money we invest that makes a business successful, but it’s about understanding the market and working with what we have.
We’re here to help! Contact us and tune into our weekly live streams on our YouTube Channel to learn how to make your Amazon business the best it can be!