How to Make Money Selling on Amazon FBA [Ultimate Guide 2019]

How to Make Money Selling On Amazon [Ultimate Guide 2019]

how to make money on amazon

 

Do you want to start an online business that allows you to escape the rat race and live life on your own terms?

Are you tired of being trapped in your day job?

Would you like a passive revenue stream so you could spend more time with your family and friends doing the things you love?

I’m going to teach you a proven process that’s been battle-tested for years and show you how easy it is to tap into a 200 Billion Dollar eCommerce ecosystem, a.k.a Amazon.

The same process that’s allowed myself and countless others to make a living online. If you follow this guide and use the associated resources you will have a step-by-step plan for starting, growing, and scaling your insanely profitable Amazon FBA business.

For example here’s a screenshot of sales of a recent product that one of our FosterLabs members launched roughly 4 weeks after their product went live on Amazon. Almost $3K in 1 week!

 

how to make money on amazon

 

The incredibly amazing part is how quick this can be done, I’ve seen people go from learning how to sell on Amazon to to doing over $3000/month in as little as 7 to 8 weeks.

We want this to be your story!

Ready? Let’s go…

 

 

Why sell on Amazon?

why-sell-on-amazon

Well, Amazon has become the world’s largest online retailer. That’s why. If you haven’t started selling there you are missing out on huge opportunities.

Here are some stats for you to chew on:

  • Valuation = $872.3 Billion Dollars
  • Annual Revenue from Book Sales = $5.25 Billion Dollars
  • Unique Monthly Site Visitors = 184 Million
  • Number of items shipper per second = ~35
  • Avg Amount spent per unique user = $189
  • Loss to Amazon when their website went down for 49 minutes = $4.8 Million Dollars

184 million site visitors in a month? These are actual numbers of people looking to buy products. That’s what makes this marketplace so appealing – as a seller you don’t have to worry about finding buyers, the buyers find you. But you will need a good product that is in demand, an optimized listing, and a competitive price point.

Amazon has also become a symbol of trust in the customers eye. They have built such a strong level of credibility that you or I cannot replicate as a new merchant. Customers trust that if they purchase something on their site, it will arrive on time, and if the contents are not as advertised, Amazon will take care of getting it returned and the money refunded back to the customer. So as a seller you can get your product on Amazon and since Amazon facilitates the sale – they automatically pass their credibility on to you as a new seller. It is also super simple to open up a seller account, get approved, and be selling on their platform as soon as you send your product to their warehouse.

This is invaluable and what makes Amazon such a great marketplace to build your business.

 

How To Make Money Selling On Amazon?

Economics 101: probably the easiest way to put it would be to find something that you can “Buy Low, Sell High” repeatedly. If you can find such a product that has a demand for it in a particular niche and your product is off a good quality then you will make money on Amazon even while you’re asleep. That’s the beauty of selling on Amazon.

 

make money amazon

 

Now there are 4 main methods of finding inventory that people use for selling on Amazon.

They are:

  • Private Label
  • Wholesale
  • Retail or Online Arbitrage (i.e. Reseller)
  • Dropshipping

 

The way that we primarily use ourselves and teach our clients to “source” (the term for finding products) in our recommended A-Z Amazon FBA course by our FosterLabs Chief Mentor is “Private Label”.

I’ll do a quick dive into these 4 business models so you can make your own choice as an Amazon Seller regarding your selling strategy.

 

Private Label on Amazon

 

private label on amazon

 

This is the business model I love and that I’ve personally used to make a steady $3000/month with. Basically a private labeler is someone who buys a generic product from a manufacturer (typically this is factories in the far east like China, Hong Kong, etc) and you ask them to improve on it based on what you see the competition offering, either in the functionality, specifications, or the packaging. You then slap a logo on it and sell it under their own brand. Voila, you are a private labeler with your own unique product that you can now sell to Amazon’s customers.  

As a private labeler, you can completely control the quality of your product and ensure you drive the customer user experience that in turn gets you brand loyalty and following. Many $1M/year sellers start their brands on Amazon and then following its success branched out to Shopify and other eCommerce platforms.

It’s important to understand that this is not a get-rich-quick strategy. While you can very realistically make a couple of extra thousand dollars per month private labeling. It takes patience, due diligence and a willingness to research and stick to the process that I will outlay later on in this post.

 

Wholesaling on Amazon

In the wholesaling business model, you are simply buying in bulk from a manufacturer and reselling them on Amazon directly to the customer at a “retail” price.

In this model, you are not creating your own product but rather selling someone else’s product within a niche where there is a lot of demand for this product.

Wholesaling on Amazon

 

The real opportunity here is to find a manufacturer with a good quality product but that you can connect to direct consumers where there is not too much competition. As a Wholesaler, you do not have to worry about creating new listings, taking great photographs or create unique packaging, etc.

To get into this space, you’ll mostly need a wholesaler license and you’ll need to identify great wholesale suppliers that you can work great buying in bulk discounts with. These suppliers end up becoming your strongest connections and pivotal to your Amazon business when it comes to scaling.

A neat way to find these wholesale suppliers are to leverage the power of google using the following search terms:

[Product or Niche] + Wholesale Supplier

Ex:

umbrella + wholesale suppliers

Give that a whirl and you’ll see the power of how quickly you can make a list of the top 5-10 suppliers for the product/niche you are interested in going after.

 

Retail Arbitrage & Online Arbitrage Selling On Amazon

 

Did you know you could turn your regular shopping “expenses” into “income”? While you’re digesting that, let’s visualize walking through Walmart, Target to buy some toilet paper and you noticed they were having a massive sale, so you buy like 50 of them. Whoa!

Major upfront expense right? But what if you could keep 2 and then sell the remaining 48 packets of rolls to someone else for a higher price than what you paid for.

You just did retail arbitrage, my friend. That profit is yours to keep.

 

retail arbitrage

 

This business model is pretty straightforward, in retail arbitrage, one buys from retail stores like Walmart, Target, Dollar Store, etc when there are big sales going on and re-sell it on Craigslist, eBay, Facebook Marketplace or Amazon at a higher price.

Of course at FosterFBA we’re helping Amazon sellers with fulfillment by Amazon, so in this business model you would buy items that were deeply discounted by retail stores, send them to Amazon’s warehouse and Amazon ships the items to customers who purchase your items.

While this is not a method we talk about or help our clients with it is one of the easiest ways to find success selling on Amazon and it’s the business model followed by many given the small upfront initial investment needed.

If this is a method you want to learn more of, I recommend taking the Jumpstart Amazon FBA Retail Arbitrage Seller course by Stephen. It’s been a game changer for sellers in this space.

Before I go into the last business model to make money on Amazon, I want to touch upon Online Arbitrage (or OA). This is essentially the same as Retail Arbitrage but what you would do here is source your discounted product via other online sites.  Most resellers employing this business model use eBay to find items for cheap and they resell it on Amazon at a higher price, pocketing the difference. Most resellers use an Ebates account to do their shopping in this strategy so they got lots of cash back! It’s easy to make a couple hundred bucks a day with this method but you need to constantly be on the lookout online for deals or use arbitrage software out there.

 

Amazon Drop Shipping

amazon dropshipping

Let’s start with what drop shipping is – it’s basically where you sell someone else’s product without holding any inventory or doing the fulfilment yourself. When a drop shipper seller makes a sale to customer via a distribution channel (say Amazon FBA) they then turn around and purchase that item from a third party seller or even manufacturer and have it shipped directly to the customer.

As a result the dropshipper never sees or handles the product. Now, this is a business model we don’t recommend for a number of reasons – most importantly this is in its most basic form against Amazon’s Terms of Service. However they understand a number of sellers do this and have come up with a list of guidelines where sellers can still drop ship and be in compliance of Amazon’s rules.

The reason dropshipping gets a bad rap is because many sellers use cheap suppliers that aren’t fully vetted out and when they do get shipped directly by the supplier there is no visibility to the dropshipper on the quality of the product, the shipment and how long it can take for it to reach the end consumer. This means you cannot ultimately control the quality of your store as it’s essentially in the hands of your suppliers.  

 

 

How To Build A Profitable Amazon FBA Private Label Business

 

Great so now that you’re armed with the 4 main business models to make money selling on Amazon.

Let’s dive further into the exact steps to go about becoming a Private Label seller making a couple thousand dollars recurring per month, passively so that it can easily be done on the side once setup.

 

Step #1: Determine Your Starting Budget

 

We get this question all the time, so I wanted to head this off. There are many factors that go into the initial budget like the actual cost of the product you plan to sell, how much it’s selling per month for your top competitor, etc. Someone selling a $15 product will have a different initial budget than someone selling a $30 product.

The question is not so much “how much should I have to launch a Private Label Product”, rather it should be “how many units should I buy to launch a private label product AND be successful?

This line of questioning is way more powerful because it causes you think about the following factors which determines success in this business:

  • How many units I need to sell per month to give me the profit I am looking for (assume your profit margin is 30%)
  • How many units I need to giveaway If I want to rank for a particular relevant keyword (more on this in Step 9)
  • How long of a lead time does my supplier need to get the next batch of inventory from manufacturing into the warehouse (more on this in Step 3)
  • How much would professional photos of my product cost (more on this in Step 6)
  • How much would trademarking my brand cost (more on this in Step 11)
  • How much would creating a simple one page website for my brand cost me

Based on my personal experience and what we’ve seen, I always recommend our clients have around 2.5 months of inventory available when first launching, this gives you enough runway to do a solid giveaway, keep up with the demand from the continued sales, as well as be able to get paid out by Amazon since they typically take up to 30 days for their 1st payment to new sellers and covers your expected lead time assuming it’s 2 to 4 weeks to get your next shipment out.

I know that doesn’t give you a “number” for your initial budget because a number would be meaningless and out of context. Every seller will have their own number.

There are ways to maximize your profits by stacking rewards points and cash back offers.

What I and a lot of sellers do is put the cost for inventory on a high rewards credit card so that those points start stacking up. Some sellers use an Ebates account do shopping if they were doing Online Arbitrage as a selling strategy so they got lots of cash back!

 

Step #2: Research Profitable Products

A very important and I would argue the MOST important task that’s going to be instrumental in your future Amazon business’s success is doing good product research. There are so many products floating on Amazon today with some products having 1000’s of sellers. So in this sea of competition, how do we figure out a product that we can private label and sell on Amazon? More importantly,  how can we do it profitably, so we don’t go broke? The last thing we want is to do all this research and analysis, commit to a supplier to manufacture your product, expend your capital to get it manufactured and shipped to Amazon only to find one of the following pitfalls:

  • There was not enough demand for the product
  • The competition was too much
  • There wasn’t enough wiggle room in your margins so things like shipping fees, FBA fees, and advertising fees were eliminating any profits and you were losing money on each sale
  • The supplier was providing inferior product which hurt your brand and your sales

You’re in luck as there is a method to the madness to find profitable products to sell and make money on Amazon.

 

Step #3: Find and contact Suppliers

Depending on the product you choose, you will then need to consider where to source it from. There are suppliers all around the world looking to sell their wares in bulk. It’s commonplace for Sellers in the Amazon US market to source their products from China through say Alibaba (typically used by Private Labelers) or Aliexpress (good for testing samples or dropshipping). Nowadays there are some sellers branching out to other sourcing hubs like Hong Kong using Global Sources which is the Hong Kong equivalent to Alibaba but many say is much more trusted, safer and provide access to more English speaking representatives.  I brief in this post how to find overseas suppliers and how to approach them, what questions to ask, etc.

 

Step #4: Pick Your Brand Name & Create Your Seller Central Account

Based on the product or products you plan to sell you’d want to choose your Brand Name. There are 2 types of Private Labelers typically – those that stick to 1 niche and dominate it and those that like to sell different products from different niches and be diversified. Both approaches are good and have their own pros and cons which I’m not going to go into here on this post but when it comes to thinking of a Brand Name, you want to choose something that complements your strategy. That means something very specific if you were a niche seller and something more broad like “XYZ Shop” if you were selling toiletries and say unicorn plushies.

With your brand name figured out you want to create your Amazon Pro Seller Account. We don’t recommend the free individual account as you’re limited to selling 40 units per month – if you’re reading this, I’m assuming you want a lifestyle business that will allow you to quit your 9 to 5. If so you would want to aim to sell more than 40 units per month. The reason the individual seller account is capped at 40 items is because Amazon charges $0.99 per item sale you make – so as soon as you reach 40 units your fees essentially are what you’d pay with a pro account ($39.99/month) but without the other benefits of having a pro account. So save your time and money and start off right!

You can create your seller central account here, after which you’d choose the professional seller central account type. Once the account type is chosen, you’ll be asked to login or create your Amazon seller account with your preferred email.

 

amazon-seller-account-1

The next step would be to provide the following information:

  • Business Name & Address
  • Agree to Seller Agreement
  • Mobile Number
  • Billing Method / Credit Card Info
  • Tax Information

In addition to your name and address, you’ll need to choose your “Display Name”. This will be the name buyers see next to the item you’re selling. Typically you want this to be the same as your brand name. Finally, you need to provide your billing information like credit card or bank account/routing for deposits. Initially Amazon places your account under review and would request for identification like your government issued ID and bank statements which you would need to upload. Make sure to blank out your bank account numbers and totals as that data is sensitive and not consequential to the Amazon review team.

I always recommend to use your personal name and bank account initially and later switching to a business bank account and business legal entity.

Once applied, typically within a day or two, Amazon will confirm your seller account is now active and you’ll be greeted by a home-screen that looks something like this:

 

amazon seller account

 

Step #5: Get a Logo, Design and Packaging done

 

Typically we recommend this step and step 4 be done in parallel with Step 3 to save time. Once you find a supplier that can manufacture your product, you need to think about logo and packaging design. Some products look better in a box which would then need to be designed, some products are just fine in a clear polyethylene bag. It all depends on how you plan to market it.

Don’t worry you can use tools and services to do this and stand apart from your competition – we recommend:

 

Tool or ServiceCategoryPricing
99 DesignsBrand Logo Design, Product Label Design, etc. Crowd sourced. $99+
CanvaEasy to create, fliers, ads for your product or general graphics designFree

There are also freelance options like Fiverr and Upwork.

 

Step #6: Get Professional Photos Made

 

Once you have a product and supplier chosen, you want to find a good photographer to capture your product on white background, lifestyle, infographics, etc. Product photos are the top most converting factor in a product’s sales and so it something that you need to pay important focus to. It’s worth the initial investment to ensure the long term success of your business. Top recommendations here are:

 

Tool or ServiceCategoryPricing
Products On White (POW)Best for White Background Images$37.99 per photo
Virtuous GraphicsBest for Lifestyle Images, Product Insert Design$495 and up

 

Step #7: Do Your Keyword Research & Optimize Listing

Amazon has widely been known to be the only “search engine” that customers (i.e. Amazon shoppers) exhibit high purchase intent as opposed to Google or anything else and as such, it’s extremely important for you as a seller to appear in the Page 1 results of Amazon’s catalogue when someone searches for a phrase or keyword that is relevant to your product.

Good keyword research is the difference between successful listings and those that just sit on Page 300 practically dead. Increasing your listing’s relevancy is something that is immediately in your control once we understand the fundamentals. In this post I go in detail on how to perform keyword research and what to focus on when creating a killer listing.

 

Step #8: Create a Shipping Plan

 

Next we’re going to need to create a “shipping plan” in order to tell Amazon we’re shipping our inventory to Amazon’s Warehouse so they can track it and know when to expect it. To begin, select the products that you want to send to Amazon:

  1. On the Manage Inventory page, select each product that you want to ship. Then select “Send/Replenish Inventory” from the Action on Selected drop-down menu.
  2. On the Send/Replenish Inventory page, select one of the following:
    • Create a new shipping plan to create a new shipping plan.
    • Add to an Existing Shipping plan to add products to an open shipping plan. Select an open plan from the Add to shipping plan drop-down list.
  3. Confirm your ship-from address. Your ship-from address is the location where your shipment will be picked up. It may be your home or business. If you work with suppliers, it may be from their warehouse. To change the ship-from address, click Ship from another address.
  4. Confirm the packing type of the products you are shipping to Amazon. Individual products are single products of varying quantities and conditions. Case-packed products are multiples of the same product packaged by the manufacturer, each case containing the same quantity in the same condition.

Note: An ASIN with multiple parts must be shipped in a single package.

      5. Click Continue to shipping plan.

 

Step #9: Send Your Inventory to Amazon’s Warehouse

 

One of Jeff Bezos’s brainchild in early 2015 was the “Fulfilled-By-Amazon” service and it has been the “one ring to rule them all” (Lord of Rings fans? ;)) fulfillment models that we at FosterFBA just love. This is what sets apart a successful new amazon seller from an amateur.

Haven’t seen it? Here’s what to look for in a listing to check if the Seller is using Amazon FBA:

amazon-fba-1

 

What’s so cool about being part of the FBA model? Off the top, it allows your product to be eligible for Amazon’s PRIME program and their 90 Million Amazon Prime subscribers (as of Sept 2017)! Amazon essentially advertises your product to their most LOYAL subscriber-base. These are customers that believe in everything Amazon puts out and buys product that interests them without hesitation and love getting it with their FREE 2 day shipping being part of the PRIME family. That’s huge!

Wait…it gets better. As part of FBA, Amazon also stores your product inventory for you and becomes your fulfillment service! Yep, you can forget about cramming it into the back of your garage or your 2nd bedroom.

How It Works In A Nutshell

  • You work out a deal with a supplier (local or overseas) that will manufacture your product for you
  • If working with local manufacturers, you create a shipment inside Amazon Seller Central, and email your labels to your manufacturer to put on your product. The manufacturer will send your inventory to the assigned Amazon FBA warehouses
  • If working with overseas manufacturers, search & hire a good Freight Forwarder to arrange everything for you for a small fee (no headaches than if you tried to intervene)
  • Amazon receives your product at one or multiple of their warehouses and updates your inventory
  • Customer finds and purchases your product(s) on amazon.com
  • Upon purchase, Amazon finds your product within its warehouses, packages it up, and sends it to the buyer all on your behalf!
  • If the customer has any questions on the product, Amazon’s customer service team makes itself available to the customer on your behalf!

amazon-fba-3

 

Have you heard of another business model that stores your own inventory, packages/ships and takes care of customer service for you? We haven’t. This is what has helped many sellers get to 6 figures online (even more) within a year and allowed them the ability to “scale up” without getting offices, employees, or storage space.

Sellers with a computer and access to the internet could run a successful Amazon FBA business selling products they loved from anywhere in the world.

 

Step #10: Do A Product Launch / Giveaway

 

You may have heard this statement thrown around, “how many units do I need to giveaway to get ranked?”. If not, no worries, what that statement is referring to is the process most new and experienced sellers go through when launching a product. They kick off with a “giveaway”, this is a highly discounted promotion of your product for a short period of time – anywhere from 2 days to a few weeks. The reason for this is that their boosting the “sales velocity” of their product which in turn sends signals to Amazon’s algorithm saying that this product has potential and as such it needs to be moved up in the ranks (i.e Best Seller Ranking or BSR). When a product has no reviews the only indicator to Amazon is sales and that’s what a giveaway offers. The length of a giveaway can depend on the keyword you are targeting and how competitive it is. We always recommend targeting a particular keyword so that you are not only making sales velocity overall but also ranking for a particular relevant keyword that will ultimately get you organic sales once your giveaway has completed. You can see more on how to do that with a Super URL and the best way to setup your launch funnel and get ranked on Page 1. You can also just contact me if you’d want us to manage your launch for you.

 

Step #11: Setup Your Business Entity & Trademark Your brand

 

Next step is for you to incorporate an business entity under which you plan to conduct your business. What entity you choose really depends on the product you’ve chosen, amount of revenue you expect and if you plan to hire employees eventually. I’m not a tax or legal expert but the common consensus is to start with a simple LLC (limited liability company) as a partnership (if you are doing this with someone else) or as a single member LLC. Then as sales come in, perhaps look at having your LLC taxed as an S-Corp to get some of the S Corp benefits without the limitations of a C Corp. Our go-to company for setting up our LLC’s is IncFile. It costs $49 to have them do all your paperwork + state filing fee (varies by state). The filing time for most states is 5 business days – so within a week you should have your LLC setup and registered to start doing business.

Once you create your business entity – you want to trademark your brand (text or image based) in the country you plan to sell. The reason for this is the access to Amazon’s Brand Registry program (explained more in the next step) and the ability to fight “hijackers” off your listing. These hijackers can cause you business – these are sellers that are employing other selling strategies like Retail or Online Arbitrage and perhaps got your product during your giveaway at a high discount and now looking to hijack your listing for a quick buck. These are what hijacker sellers look like – they will be waiting to get the “buy box”.

Buy-Box

This is a feature that gives other sellers  insane exposure to customers without the need to have their own listing, images etc. Amazon features your listing under “Other Sellers on Amazon” for a product that’s similar to yours. Here’s what that would look like –

amazon-fba-buy-box

Step #12: Enroll in the Amazon Brand Registry Program

 

Amazon’s brand registry program is another tool in the arsenal for Private Label Sellers to get access to Enhanced Brand content so they can build better looking product detail pages, get access to Brand Gating ( a provision to get your brand covered by Amazon against any brand or product infringement which is huge).

Ready to enroll in Amazon Brand Registry? You’ll need to complete the following steps:

  1. Review eligibility requirements

Brands must have a registered and active text or image-based trademark.  Review country-specific requirements here.

  1. Sign into Amazon Brand Registry

If you meet the eligibility requirements, sign in using your existing Seller or Vendor Central credentials. Or, if you don’t yet have an Amazon account, create one for free.

  1. Enroll your brand

Once you sign in, you will need to enroll your brand(s). After we have verified the information you submit during enrollment, you will be able to access Brand Registry’s features to help protect your brand.

 

At this point you should have an Amazon FBA Private Label business that’s fairly automated and making money passively. You can then work on further increasing it’s visibility, your listings conversion rate and constantly optimizing your bottom line.

 

How Much Can You Earn With Private Label?

 

The earning potential on Amazon FBA is massive. In fact, over 800,000+ Amazon Sellers make over 6 Figures every year! Isn’t that crazy??

Every member we bring on into our FosterLabs incubator we aim to have doing over $3000/month in PROFIT. While this is not a crazy goal we realize the power an extra $3000 per month can bring to a household and when you do not have to trade your time for this income stream given the passive nature of Amazon FBA that makes it so valuable.

While there is a lot of information in this post, we recommend you get a mentor, join Facebook Groups and speak to other sellers to find out what else is being done to stay ahead of the pack. Constantly be learning and taking action and you can be rest assured of a very successful and lucrative Amazon FBA business.

Hope you enjoyed this information, are you considering starting a private label business? Or have you already sold private label products and looking to scale? We’d love to hear about experience!

 

 

Not sure the best way to get started?  Follow these simple steps to hit the ground running with your Amazon business.

Step #1 – Get The FosterFBA Books & Free Product Audit:

Ultimate Seller Success Formula |

Seller Toolbox

Step #2 – Get into FosterLabs:

Amazon FBA Mentorship |

Dedicated Listing Advisor & Sponsored PPC Ads Management

Step #3 – Online Training & Reports To Ignite Your Business:

9 Days to Page 1 Amazon Ranking | FosterFBA Blog |

#HappyCustomers Reviews | Amazon FBA Course |

Top PPC Keywords Report

Step #4 – Connect With The Community:

FosterLabs Facebook Group

Facebook |  Instagram |  YouTube  | Pinterest

 

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