Amazon and Shopify have been the most popular ways people get into eCommerce for years.
While many people may be more familiar with Shopify dropshipping, a ton of sellers (almost 2 million active sellers) use Amazon to run their eCommerce businesses.
Out of these 2 million sellers, it's said that the average Amazon business earns around $200K-$300K per year in revenue.
These numbers are very impressive, and it's not surprising given Amazon's massive customer base.
On average, Amazon.com alone gets around 2.7 billion visits per month, with over 200 million Prime members worldwide.
With all that said, there's one big question that everyone still wonders. "What's the difference between selling on Amazon and selling on Shopify."
While we've covered Shopify dropshipping a ton already and even compared Amazon and Shopify to see which is more profitable, we've never directly talked about selling on Amazon.
There are two ways one can sell on Amazon - FBA, and FBM.
While FBA is the most popular, FBM is also very profitable as it allows sellers to sell their own products and handle shipping.
FBA, on the other hand, stands for 'fulfilled by Amazon' whereby Amazon does the fulfillment of products for you.
This comes with a ton of benefits such as fast delivery and less stress over warehouse management.
In this article, I'm bringing you the A-Z guide on how to build a successful six-figure Amazon FBA business so that you can decide which eCommerce platform you would like to start your business on.
Selling on Amazon
Before we begin, it's only right to mention Amazon's registration process.
To sell on Amazon, you'd have to first create an account on Amazon Seller Central.
There are two membership types - one that costs a flat $40 monthly fee, and another which is free but comes with slightly more limited usage and a $1 fee per item sold.
On top of that, there are referrals fees that vary from product category to product category as well as fulfillment fees for Amazon FBA.
After you create an account, fill in some details, and choose your seller market (the market in which you're going to sell products), you will then need to book a quick verification call with an Amazon representative to verify you're really who you say you are.
It's a very quick process, and pretty simple to pass.
Ensure you bring your documentation and passport to the call since they'll be using those for verification.
After a few hours, you'll get an email telling you you're ready to start selling!
Finding your product
Like any other eCommerce business, the product you sell will be the most important decision you make as an Amazon seller.
While most products have the potential to make you a six-figure income, there are some gems that can make you millions per month once built into a full-on brand.
Fortunately for us, we've discussed what the perfect (or as close to perfect as we can get) eCommerce product looks like.
You can read the article which talks about the winning product criteria to learn more.
Before we talk about some product research tips, here are some of the best categories to search for products in:
- Home & Kitchen
- Sports & Outdoors
- Beauty & Personal Care
- Health, Household & Baby Care
- Kitchen & Dining
- Office Products
Amazon is such a massive platform, that it's managed to create its own market - Amazon sellers.
This gives software developers a chance to build tools that help this niche market, and we've seen some amazingly helpful tools come out.
My last article mentioned a tool called Junglescout - it's a tool that can help you find really good products to sell, as well as help you find suppliers.
However, my favorite alternative to JunglesScout is Helium10.
Helium10 has a Chrome extension that helps you find and analyze products on Amazon to see trends like sales, revenue, growth curves, reviews, and much more.
To add to the article outlining the winning eCommerce product criteria, we will want to look at a few more factors to ensure we pick the right products.
These are the:
- BSR (Best seller ranking)
- Number of reviews
- Price - should be between $15-$50
These figures can easily be found within extensions like Junglescout or Helium10 - they're even visible on the listing page of products on Amazon.
With the BSR, we don't want to go too low, while we also don't want to go too high with these numbers.
The perfect BSR comes in a range that varies from category to category.
Next, we want to find products that aren't swarmed with competition - this means products without 10s of thousands of reviews.
If you find a product where at least one of the top 3 sellers has less than 1000 reviews, you could be onto a winning product.
Simply pick a category, then start to search for products within that category.
Use the criteria from the previous article along with the Chrome extension to narrow down a list of products you could sell.
Sometimes, it's best to follow your gut and choose the product your gut tells you.
From here, it's time to move to step 2.
Once you've found your product, you're not done there.
A lot of people think that once you know what product to sell, you can choose any supplier to help run your business.
This is simply not true - not all suppliers are made equal.
While some suppliers might be amazing business partners, others are only out for your money.
Luckily, it's pretty simple to differentiate between the two - I wrote an article yesterday talking about the only 5 places you should go to find eCommerce suppliers.
One of the most popular places people find suppliers is China - more specifically, through Alibaba.
Alibaba is a website that brings suppliers and businesses together - they have a B2C side of the business, Aliexpress, which can also be used to find suppliers for your products.
However, I would stick to Alibaba since it's much simpler and better optimized for B2B.
You'll want to look for suppliers who manufacture the products you're looking to sell - make sure they're at least verified with the trade assurance badge too.
Start looking through all the potential suppliers and keep in mind the reviews each one has.
If you really want to speed up this process, you can use the fifth point I mentioned in my article yesterday, which is finding your competitor's suppliers.
This strategy might not work 100% of the time, however, if it does, then you'll be able to find a very reliable supplier.
When you look for suppliers, you'll want to get in touch with as many as you can, since not every supplier will end up being a good fit.
Don't worry too much about the price as most suppliers are open to negotiation.
When you make first contact, you'll want to tell the supplier you're a business that's looking to introduce [product x] into their catalog and looking for a reliable supplier.
The most important factors you must consider are:
- Product price
- Product quality
- Supply chain (How well can they manage supply)
- Private labeling
As you scale your business, these factors only become more important, so it's best to start off on the right foot.
Considering all of these factors, you'll want to make sure that you narrow down a list of suppliers (3-5) who are perfect fits for your business.
From here, your job is not over.
You'll want to order samples to compare the quality of the products and ensure you're choosing the best supplier.
Give the products around a month to arrive - until then, you can move on to step 4 (Yes, we're skipping step 3, sending products to Amazon, for now).
Sending products to Amazon
Once you've received your samples and made up your mind on which supplier you'll ultimately be choosing, it's time to get your products to an Amazon warehouse.
If you're selling via Amazon FBM, you don't need to worry about sending products to Amazon - you simply create a listing, and get it approved on Amazon.
However, if you're following the Amazon FBA process in this article, there's more that goes into it.
Depending on where you're going to sell your products (USA, Europe, etc) you're able to send your products to an Amazon warehouse within that location.
However, this is one of the most confusing parts of the whole process, and so I'm going to quickly explain how it all works to clear the air of any misconceptions.
You're able to get your suppliers to send in products from China to Amazon directly.
However, you're going to need to orchestrate the entire process.
This includes finding a freight forwarder that picks up your shipment which was sent from China to a US dock.
Services like FreightOS are created to help you with this process.
Once your shipment is in your selling region, however, it's get a little simpler.
To start, go into 'manage inventory' in your Amazon seller dashboard and create the listing - choose FBA as your fulfillment method and follow what it tells you.
You'll need to set up a shipping plan in order to get your products sent to Amazon.
Keep in mind that the 'ship from' address will be the address of your freight forwarder which you've chosen to work with.
Once you have your freight forwarder in place and your supplier from China has shipped your products, it's all about communication to understand where your product is and how long it might be till it's in the USA and at Amazon.
NOTE: Amazon requires all products to have a barcode (UPC) in order to sell on their platform. This can be done by your supplier or by Amazon upon arrival.
Getting your first order
Congratulations! You've done the hard work and managed to get your first shipment into Amazon - it's time to make some sales now.
It's always best to start with 1, and scale your way to 10, 20, 50, and 100+ orders per day.
There are a bunch of ways to go about getting your first order.
The first is simply by optimizing your listing (something I've left out since it can be an article on its own!) and letting people discover your products organically.
Amazon, as we've established 100 times over on my blog, is the largest platform in the world for eCommerce.
In the USA alone, the site gets almost 3 billion monthly visits meaning there are 3 billion chances for you to make a sale per month.
With that said, this is one of the biggest advantages that Amazon FBA has over selling on Shopify, for example.
While selling on Shopify requires that you go out and find your customers either by building a brand or running paid adverts, Amazon is able to bring you customers and takes a small referral fee for it.
However, we don't like sitting around and hoping for sales to come - we're more about going out there and getting our hands dirty.
Amazon has its own PPC program. While many complain that it's expensive, it's a great opportunity for you to get your first few sales.
After you have 10 reviews on Amazon, you're able to see the momentum building rapidly.
However, before you have 10 reviews, it can be difficult to see some traction.
Amazon PPC is costly and can lead to a short-term loss, so I wouldn't suggest running PPC ads for a long time.
PPC ads are very easy to set up, as all it takes is to choose a few keywords and sometimes set up some creatives depending on the sort of PPC ads you'd like.
Finally, there's a method that one of my favorite eCommerce entrepreneurs lives by, Ryan Daniel Moran.
Ryan teaches entrepreneurs to build a small 'tribe' around their business before they even have a business.
I've talked about building a brand before building a business before, and why content is so important.
Creating and posting content is one of the best ways to build a community around yourself or your products/services organically.
People coming from content were not stopped by disruptive Facebook ads, but by stumbling across your content and enjoying what they see.
The reason I suggested jumping from step 2 to step 4 is because you should focus on building a small following before you start and launch your eCommerce business.
This way you don't need to worry about where your first sale is coming from - you would already have secured it by building a small following who are ready for your product.
Post content about your industry, the audience you're solving a problem for, or about your progress with the brand.
You can run engagement ads to speed up the audience-building phase.
Growing the brand
Here's what I love to talk about! Scale!
Scaling businesses to insane numbers like $1m per year, $10m per year, and $100m per year plus is what excites me.
To reach these insane numbers is much simpler than you think.
It doesn't take a lot more effort than what you're currently doing to run your small Amazon FBA business.
To begin with, however, you need systems and processes in place to ensure you never run out of products to sell.
Once you start making sales, the snowball keeps rolling.
The only thing(s) that can kill your upwards momentum are terrible reviews and running out of stock.
When people can't order from you, they'll simply turn to another product that does have stock.
This brings us back to the community building asepct - it's crucial to have a community so that even if things like low-stock happen, you don't run the risk of losing customers.
You can hire people to help you keep your stock in check and coordinate restocks ahead of time with your supplier to ensure you have ample time before you run out of stock.
Next, you'll want to find one key source of sales, then double down on it.
If your primary source of sales and revenue is Amazon PPC, you shouldn't worry about starting your own store on Shopify, because it will likely cost money to bring it up to the same performance level as your PPC ads.
The best thing you can do is ensure your packaging material gives your customers a way to join your email list or group in order to take them off Amazon, and bring them into your ecosystem.
That way, once you start to introduce new products into your business, you don't need to find new customers, you simply advertise to those who are already familiar with your brand.
Those are some of the most important scaling principles to think about when growing your brand.
- Supply chain
- Branding & community
- Sales channels
- Product expansion
If your business can master these 5 things, you can scale into the 8, and even 9 figure range.
Did you find this article helpful?
If so, please leave your thoughts in the comments below - let's get some conversations going!
Share this article on social media and with others, let's help more entrepreneurs realize their dreams!
Join my Quora group where we're building the largest community of online entrepreneurs in the world.
Don't forget to subscribe for free and get the 1-page business plan template!
(Find me on social media if you don't receive it)
Till next time,
Post a Comment