2021 Amazon FBA Business Guide: How to Sell, Fees and More

1.1 How Amazon FBA works?

Let’s take a closer look at how Amazon FBA works based on each component of the service provided.

1.3 Who should invest in Amazon FBA?

2.2 Do Some Product Research

Later, we’ll provide some additional insight into how to establish more advanced product research. At this stage, though, you need to consider what you can sell on Amazon.

What research should you do?

It’s important to understand the Amazon business model. You need to be sure that the type of product you plan to sell can do well on the site. If you don’t have a good working knowledge of the company’s platform, start there.

Then, you need to consider more advanced research. This includes looking at the product category to see if it is one that’s worthwhile. Determine if there’s a market on the site for your product by starting with the category it falls under.

Then, look at the competitors on the site.

• Are there many that are a direct competitor for you?
• Do a competitive analysis to determine how well you can compete with them.
• Look at product reviews to see how well the products have faired and what concerns consumers have had.
• Look for ways to make your product a solution to those problems.
• Be sure there is room for profit with the product you select.

Once you have a good idea of what you plan to sell, you can move on to choosing the business model.

What is private label?

One of the key best practices for doing well on FBA is to establish a private label business model. There are other options (we’ll come back to that), but what you will find is that a private label business model offers some key advantages.

When you use Amazon FBA with your private label, you still maintain complete control. It’s a misconception that Amazon takes away from brand recognition and establishment. In fact, building your brand using the site is often easier than doing so offsite.

At this point, you have your sellers account in place, you have your product research done, and you’re making your product (if you choose to use a private label business model). What happens next?

Get Your Product to Amazon

Remember, Amazon will manage the warehousing and sorting of your product. That’s what makes it so effortless to use the site. You have to cover inbound fulfillment yourself, though. You’ll need to work with your supplier, or use an Amazon Delivery Service Partner to get the product delivered to the warehouses that Amazon needs them at. This can be an initially confusing step, but Amazon has the reps and support to help you. With Amazon FBA consulting available, this even makes it easier to get shipment to Amazon set up.

They Order, Amazon Ships, and Handles Returns

When establishing your account, you’ll learn just how handy Amazon can be in these areas. There are no customers to talk to over the phone or complications to worry about in managing a UPS pickup. It is all done for you. Even better, Amazon is all about impressing their customers and, to do so, they work hard to get your products where they are supposed to be on time.

If there is any instance where a customer has a problem, your FBA account means they handle that work for you as well. That means effortless returns of your product.

3.1 The Arbitrage Business Model

One of the ways you can create an Amazon FBA is to use the arbitrage model where you find low-priced products and then resell them on Amazon. Your goal is to sell them at a higher value than you’ve purchased them. You need to factor in your time, any investments you’ll need to make, and the Amazon fees to make this method a profitable option.

It’s much like the old eBay model used to be. People would purchase clearance products, mark them up, and then list them on the site. It can work well, if you have access to products like this. Frankly, many people don’t. For those who have a resource for finding products like this to sell on a consistent basis (it’s important to know that Amazon FBA is best for those who have true inventory, not just one or two items to sell), it can work profitably.

3.2 The Wholesale Business Model

Let’s go back even further. If you have access to purchasing wholesale products – and there are various ways to do that – you can purchase them at wholesale prices, mark them up, and sell them on Amazon. This is a pretty straightforward solution overall.

You’ll buy product in bulk at a discounted rate. Then, you can resell them on Amazon at a higher price point. If you go this route, it’s best to purchase branded products. There are many websites that sell “cheap” quality products at highly discounted prices. That’s, again, not what Amazon is aiming for within its business model. As such, it may not be an option for you, either. Instead, look for a wholesaler of a product you love and buy directly at a discount.

Wholesale options like this can work for startups, too. If your friend or colleague has a company that is starting up and manufacturing products, and you have access, this is one way you could participate in their model.

3.3 The Private Label Business Model

There are many ways to sell on Amazon, but this particular method is one of the best overall. As noted previously, in this model, you will be researching and then manufacturing a product – one that you brand yourself – and selling it on Amazon.

This is a fantastic way to reach your initial customers and to build a brand following. Amazon’s private label business is where you can reach new customers and really get the attention of investors, too. Your goal is to sell your product and what better audience to do that than on the largest e-commerce website in the world?

As we’ve mentioned, when it comes to best practices, this is the golden option in business models. Choosing to go private label gives you more of the playing cards and a much higher profit potential. Let’s talk about why.

3.5 Digging Deeper with Your Amazon FBA Beginners Guide – Where’s Your Product

Here’s the biggest concern many people have when trying to build their Amazon FBA business. “Where can I actually find products like this to sell?”

We can’t provide you with the exact sources, especially without knowing your goals and needs, though some Amazon FBA consulting can help with this need. However, we can offer some ideas to help you get started.

As your business grows, you’ll gain access to more products that can work well in the same area. Once you have a product in hand, get it listed on Amazon. Later, you’ll learn more about creating an Amazon listing and optimizing it for the best possible sale. For now, your goal is to create your business model.

Even in this step by step Amazon FBA guide, we can’t tell you outright what products are going to do the very best on Amazon. It’s about research and uncovering the types of businesses already doing well. If you have a niche that interests you dig into the data to find a product that can perform well. Let our consultants offer some help in guiding this decision, too.

3.6 What About Best-Seller Rankings?

Here’s another best practices tip for you. If you want to choose a product that is sure to do well, check out the best-seller rankings. This is a valuable part of researching your product and it is easier to do than you may think.

While best-seller rankings may make it easier for you to see if a product is worth buying if you’re a customer. Yet, it is also a very valuable tool for determining if you should think about selling a product, too.

It’s easy to locate this on any product search page. It’s generally listed under the “product details” section. You’ll see it lists as a rank with a pound sign, such as “#12 in category” – this is called Best Seller Ranking and is a per-category metric that Amazon uses to determine which products are selling best within a given category of products. . With any category of product, there is also a Best Sellers page that users can navigate to and browse:

What does this mean to you, then? Although it seems unintuitive, you want your product listing’s rank to be lower: as close to #1 as possible. If the rank is lower, that means it sells more readily on the site than other products that rank higher. And, that means a low rank offers more sales for you. It takes about 10 minutes to check out a range of products like this, but the insight it offers is fantastic.

Now that you have some product insight and may have some homework to do, let’s move on to the cost of using FBA. Amazon wouldn’t have launched this service if it wasn’t going to be profitable for them. It is, and because it does so well, it is also profitable for you, too.

4. Understand Amazon FBA Fees and Rates – Here’s What It Costs to Run Your Business

Amazon charges fees based on the amount of work it does for you. Remember, the key benefit of building a business on the site is that the company does all of the work for you. Yes, that costs some, but because the company is so large and has so many network opportunities available to your business, you are unlikely to find the same success outside of this site with the same opportunities.

In other words, don’t try to focus on the lowest figure available. Instead, look at how much each figure is saving you instead of doing this on your own outside of the site.

Competitive rates and fees are present. Most businesses find moving onto the site can save them some costs. And, because it comes with access to things like free shipping for your consumer – something just about determines whether or not a consumer buys today – it’s worth it. You also get more exposure of your product to a larger, global audience and all of the background help with customer service.

Now that we’ve plugged all the good of the company, let’s break down some fees. Fees can change. Be sure to verify this with Amazon before you get started.

4.1 What Are Fulfillment Fees?

Amazon charges these fees per unit. They include the cost of picking your orders and packing those orders – all of the work done within the warehouse. It also includes your shipping and handling, customer service, and product returns. In short, your fulfillment fees are the base structure of what it will cost.

The company breaks this down by size. Items that are considered standard size, which range from 10 ounces or less up to 21 pounds, are charged a rate per unit. Oversized items are charged at a higher rate. This accounts for products that are 71 pounds or less, but are smaller in package size, up to very large items that are 150 pounds or higher.

There are also some additional fees. Clothing items tend to have a bit of a markup as well. Any product that is sold that includes lithium batteries will also pay an additional fee.

4.2 Inventory Storage Fees

These fees are charged to you each month. They are charged per cubic foot for the items. It covers the cost to store your products at the company’s fulfillment centers across the. Fees are based on size, but there’s also a time factor. During the months of January through September, rates are lower than they are for October through December. This is due to the holiday season.

4.3 How to Determine Your Costs

Every product out there is going to have a different pricing point to consider. However, Amazon offers a nice little tool to help you. The Fulfillment by Amazon Revenue Calculator can provide you with specific information about just about any product with real-time accuracy. Check it out for more insight.

Also, remember that Amazon offers a number of different specialized services. These also can change up the pricing you’ll pay.

4.4 More Details on Fees and Rates

Check out a few other things you should know about rates. Remember, what you pay can vary from this information, too.

• Account type is a key concern. Individual seller fees will pay a flat fee per item shipped. Professional accounts have a monthly subscription fee.
• Referral fees are costs you pay after a product is sold on the site. It is usually a percentage of the sale price of the product. It varies significantly by the category of the item. Most of the time, these are under 15 percent of your sale price.
• Variable closing fees are attached to some products. This usually is in categories such as DVDs and books. There is a flat fee in addition.

It sounds like a lot of costs, but it really isn’t much when you consider how you would have to pay for these costs out of your own pocket otherwise. That’s a very important decision for those who are hoping to have a successful business.

5. Know the Rules – Amazon Has Some Key Standards to Follow

Throughout this Amazon FBA startup guide, we’ve talked about the company’s goal to dominate the e-commerce industry. You can be a part of that if you follow the company’s rules. Most of the time, they are rules that are best for all companies and create a better product or level of service for the customer. That’s good for everyone, of course!

It’s always best to go right to the source. Read the FBA policies and requirements on the company’s site as a failsafe. This is the information you have to have.

Are You Ready to Launch Your Business Model?

So far, we’ve covered just about every tip and trick for setting up your business on Amazon FBA.  Whether you use any type of Amazon FBA UK guide or one from the U.S., one thing is important. You need to develop a successful product listing to sell on the site.

Your product listing, or the site page that your customers will view when they visit your page, simply has to be as accurate and as optimized as possible to do well. Because this is so key, you should follow our Amazon FBA guide to creating your product listing as well.

Even better, turn to our Amazon consulting experts. We can help you every step of the way to set up your business and to make sure it thrives.  You don’t have to do that on your own. Our team has the tools to help you find the right products, create the best product listings, and to build your business from the ground up.

Why not be the next big seller on the world’s biggest e-commerce stage? It’s most certainly possible with Amazon FBA.