There’s plenty of buzz around the internet around the benefits of using Amazon FBA to market your products. Stepping in as an e-commerce seller and leveraging the power of Amazon’s FBA platform has tremendous possibilities for you, but it’s also easy to read through some of these success stories and feel like the market might be too crowded or competitive, making it impossible or difficult to break in. It’s the savvy sellers who stick with it, do their research and continue to work hard that are able to leverage their company to maximum levels of success.
Who knows, you might even jump into the Amazon FBA game today and list your company for sale years down the road with the support of the business brokers at Website Closers. We’ve seen these success stories across the board and we’ve also heard from plenty of people who have room to improve and come back to the drawing board to list their company for sale after they’ve done some work to make things even better.
Is Amazon FBA Still Profitable?
Most people recognize that launching their Amazon FBA business means that they might have to break even or even take a loss for a short period of time. It doesn’t matter whether it’s your goal to have your Amazon FBA company be your full time income, a side hustle or just a hobby as you learn the ins and outs of e-commerce, you still want your business on Amazon FBA to be generating some money. You wouldn’t put in all of this effort and time learning if you didn’t want to see some form of return in the form of revenue and ultimately profit.
There is no tried and true step by step roadmap to help get you to the top of Amazon FBA. You’ll hear mixed results from people across the internet of varying levels of time invested in their Amazon FBA business telling you what to do and what not to do. In fact, you can drive yourself crazy and easily become overwhelmed by looking at all of these stories and feel like you don’t have enough information to make a firm decision about what’s best for you. There are several factors, however, that most successful Amazon FBA sellers have in common, and using these early on will help put you in a solid position to grow your business as successfully as possible. It all begins with what you decide to sell. Everything else in your Amazon FBA company can be evaluated and pivoted from that point. However, choosing the wrong product can set you up for significant failures and make it impossible for you to even turn a profit months into the business. This is why the research aspect of launching your Amazon FBA company is so important and should be done early on. Don’t skip past it or you could find yourself wishing you hadn’t rushed this specific part of the process. Within this resource page, you’ll learn more about what it really takes to launch an Amazon FBA company successfully and why you need to do your research into the right niches and products before you even get started. As a new Amazon FBA seller, the more you can put yourself off on the right foot, the easier it will be to start generating sales and to make a solid case sooner in the future that your company should be sold for good solid multiple.
Understanding Amazon FBA
Lots of people confuse the term e-commerce and Amazon FBA. While it is certainly true that using fulfillment by Amazon means that you are an e-commerce seller, this platform functions differently than if you sold products on Shopify, for example. One of the leading reasons for fulfillment by Amazon to be so popular with new entrepreneurs is that you don’t have to think about the dangers of storing your inventory. So many new e-commerce sellers break in using Amazon FBA because Amazon stores your inventory in one of their warehouses. This also takes out a massive part of the e-commerce process for you because when a product sells of yours, Amazon will select it, pack it and ship it directly to customers on your behalf. Sounds easy, right? But you can exactly why it’s so important to select the right product from the outset. Having a product stored in Amazon’s warehouses that doesn’t sell at all or isn’t popular enough with buyers to even get some interest, means that you are still sitting on unused inventory even if it’s not stored in your personal facility. Start the process of launching an Amazon FBA company by doing your own research about case studies of successful Amazon FBA sellers. This can lead you down a rabbit hole of thinking that only certain niches and certain types of people will be successful with fulfillment by Amazon. However, reading these success stories can also be disheartening because a lot of times the sellers don’t give their inside secrets about what it really took to get to that point or in fact, all of the challenges and obstacles they had to overcome to even begin turning a profit. What all of these companies have in common, however, is that they created or found a product that was in demand from an audience and then worked hard to use the Amazon FBA platform to target that audience that needed it the most.
Step 1: Finding the Right Products to Sell on Amazon
Don’t use the case studies that you completed in the previous step as your launch point for what sells on Amazon. You need to do your own research and get inspired about a product or niche that isn’t already oversaturated. What type of product to sell is the first question to answer when you are looking at Amazon FBA. There is lots of information available to you on Amazon and bonus points if you’re already a customer on the site too because you’ll already be thinking like your target audience. Start by looking at which products and categories are best sellers. An easy way to do this is to leverage Amazon’s bestseller ranking. The higher that this ranking goes the more profitable the product and the faster that particular niche is growing. Some of the top product lists are usually clothing and accessories, electronic accessories, and home and kitchen products. You can monitor these for a couple of weeks to see what’s topping the charts and what the most successful products have in common. By thinking more like your consumer, you’ll be in a better position to select a product that doesn’t already have a need fulfilled on Amazon FBA. In order to verify whether or not a product you are thinking about offering or a complementary product you intend to launch is the right fit, look at the total number of product reviews. If there are massive product reviews, this is an indication that there’s demand but it could also show that this current Amazon FBA seller has already successfully launched their business to be a strong competitor. In addition to using Amazon FBA’s own research tools, you can also look at other platforms, such as Instagram to see which kinds of products are selling based on hashtags. Google Trends is another powerful tool to identify how many people are searching for the kind of products that you want to sell.
This is especially important when you’re looking at a product that hasn’t yet been developed because you’ll need to leverage the different types of keywords, questions, and obstacles that your consumers might have before developing the product. This will be extremely important to lead back into your marketing, particularly if you intend to sell this product off of Amazon as well. When you’re looking at hashtags, see what kind of popularity each hashtag has and the total following on Instagram. This will give you further information about whether or not you should also be using Instagram as a channel to sell this product. One of the most important things you can do as a new Amazon FBA seller is to think specific. This often means diving down into a niche to make money with Amazon.
Generic products and categories are simply far too competitive on Amazon FBA, and by purchasing a lot of inventory and having it not sell, you’re setting yourself up to take a loss. Another reason to dive down into a niche as an Amazon FBA seller is that niche buyers are much more likely to purchase. You can look at hashtags and niche keywords that are specific to your category, making it easier to target the buyers who are ready to purchase.
Understand Your Locations
Amazon is everywhere, or so it seems. But not everyone will make money with Amazon.
But this can also set you up for misunderstanding how location still plays an important part in an Amazon FBA business. There are ten online marketplaces operated by Amazon around the world. This does pose tremendous potential for you to be successful as an international seller. However, you’ll need to do research based on where you are currently located to understand which kinds of Amazon marketplaces you can sell your product in. Depending on those warehouse locations and your original country for registration, and your overall product, this will help to find which kinds of marketplaces in which you should list. Look for products that might not yet be available in your area.
This is one excellent way to leverage your current location to your advantage. Furthermore, when the shipping costs are greatly reduced, customers are far more likely to select a product that is available to them locally. Be aware that in the product selection process, it can be a big mistake to pick too many things to offer. While it certainly seems tempting of the possibility of scaling up the business tremendously by having multiple products for sale at once, this can be a real disaster particularly if these products are in different categories.
First of all, you’ll have to purchase so much inventory that it will be available for each of these individual products. If all of them tank, however, you’ve got a lot invested across the board. It pays to not spread yourself thin when you’re first launching your Amazon FBA business. Think about how you can capitalize on the lessons learned from your very first product and potentially expand out from there. What you don’t want is to be failing at everything across the board when you first get started. It’s much easier to get a grasp on things when you’ve done all the necessary research to launch a product and then take all of the lessons and challenges that you learned from that process to turn it into a repeatable procedure. Understand that there are some potential barriers to getting started with Amazon FBA, even though it seems relatively easy to get your business set up in just a couple of weeks. To make money with Amazon FBA, you’ve got to be smart about it from day one.
There are some restricted items that cannot be sold on Amazon and you need to be aware of these restricted items before choosing your product. It might seem like a dream come true when you identify a product that has high demand based on search engine rankings but has no products on Amazon. This can be a clear indication that this is a restricted product so you’ll want to do your research. Some categories require you to obtain pre-approval from Amazon before listing in them and you might also need to provide a supplemental guarantee or additional information. FBA product restrictions is one of the most important things to review before selecting your product and starting your own company; you can’t make money with Amazon FBA without knowing the rules.
The FBA product restrictions could block you from launching. Some of the most common types of prohibited FBA products include:
Doing your research will help you clarify whether or not your product meets the overall requirements. It’s also important even if your product is approved by Amazon to think about what products really could be suitable for the fulfillment process. Not every type of product will lend itself easily to the way that Amazon FBA operates. For example, dangerous goods cannot be processed by fulfillment by Amazon but some products just aren’t a good fit for having Amazon package them. Make sure that you thought carefully about whether or not your product has been sourced appropriately.
Setting Yourself in Amazon Seller Central
In order to sell your products through Amazon seller central you will need to register as a professional or an individual seller. Professional sellers typically sell wholesale or private label products and individual sellers usually have a small number of products every month. It is important to recognize that regardless of which distinction you choose you will be required to pay sales tax. It’s a good idea to invest in some tools from the beginning to help you keep track of everything. You’ll want to look for tools that can help you automate the time consuming back office processes of working as an Amazon FBA seller.
This includes accounting, marketing, keyword research and more. By streamlining and automating as many processes as possible, you’ll also be able to gather valuable data that can help you to scale your business. You’ll have information at your fingertips that you can use to make more informed and faster decisions about your business. After you’ve done thorough research and sourced a good product, make sure that you follow through with customer expectations.
Use good quality items and set yourself up for success by delivering a consistent and solid experience for your customers. You’ll be able to scale your Amazon FBA business faster than you ever imagined and soon you might find yourself ready to start your next entrepreneurial venture. This is a good opportunity to discuss selling your Amazon FBA business with a trusted business broker.
Leveraging Your Success to Sell
The thrill of achieving your revenue and profit goals can be a great opportunity to step back and look at where you want to take the company in the near future. For some owners, that becomes all about what it really means to pass on the legacy to someone else. If you are thinking about selling your Amazon FBA business, you’d better do it with the support and help of a business broker.
Being profitable in order to make money with Amazon is certainly one of the biggest things that will make your company appealing from a buyer’s standpoint. But it’s not the only thing that a buyer of a company will look for. You’ve got to be able to present a compelling picture across the board.
A business broker can help you navigate some of the most significant challenges that many Amazon FBA sellers experience when they are deciding to list their company for sale. Finding the right buyer for your Amazon FBA business does not have to be difficult but it is strongly recommended that you work directly with experienced business brokers who know the market and can help to pre-qualify buyers to determine that those buyers are truly serious about what you have to offer. Schedule a consultation today with our trusted business brokers to learn more about how to leverage this success for yourself.
We know many of the most common pitfalls for business owners who are hoping to sell their company in the coming months. We’ve seen these kinds of arrangements many times in the past and we know what it takes to get through some of the most common negotiation challenges.
Don’t let your sale fall flat. Once you know how to make money with Amazon, let your profits speak for themselves, but be willing to step up and conquer the remaining aspects of what it really takes to set your business apart. From great relationships with suppliers to automated processes on the back end that show that you know what you’re doing, you can do a lot of legwork to get a buyer excited about the prospect of taking over your company.
Need support with that process of selling your company after you’ve learned how to make money with Amazon? There’s a reason that Website Closers has consistent success and reviews from thrilled clients: we make it our business to sell your business. We dive in at the beginning to help you look for ways to improve the valuation of your company so that you can use the funds from this sale to do whatever is in the next chapter for you.
For more help with your own business listing, schedule a call to talk through options with our dedicated business brokers today.
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