Amazon’s huge presence in the e-commerce market gives you lots of opportunities to sell products people are buying, and you get a cut from every sale. Even better, Amazon does most of the heavy lifting when it comes to fulfilling your orders!
Amazon is a platform that truly needs no introduction. In 2020 alone, its sales accounted for a whopping 47% of all e-commerce in the United States! This is beyond what experts were predicting for 2020, but that’s also because no one knew that a global pandemic would push more people to shop online.
Part of its wild success lies behind its Amazon FBA program (Fulfilled By Amazon). This is where third-party sellers ship products to Amazon warehouses and let Amazon handle the fulfillment and logistics.
Sellers benefit in many ways: they can take a mostly hands-off approach to their retail business. Plus, they can tap into Amazon’s massive customer base to fuel their sales.
Amazon wins in many ways, too: they get to expand their product market to attract more business and earn a cut of every sale.
If you want to make money with Amazon FBA, this guide is for you. There’s still a lot of money to be made here, even though some may consider the platform “saturated.” Here’s what you need to know to start becoming a successful Amazon FBA seller.
Amazon FBA, in a Nutshell
Anyone can become an Amazon FBA seller, but you do need to go through a signup process first. Before you decide to go all in as an Amazon FBA seller, it’s important to know exactly what you’re signing up for.
Amazon FBA is a fulfillment service, plain and simple. They work with new and established sellers alike to take the headaches out of fulfillment processes so you can focus on other aspects of your business. All sales are made through the Amazon platform rather than your own e-commerce website.
There’s a lot that happens when a sale is made. Sellers have to:
- Store products in a warehouse
- Process payments from the customer
- Gather the purchased products
- Pack them in a box
- Print and apply a label
- Monitor inventory and reorder when items run low
And in some cases, you may have to:
- Receive returns
- Inspect goods for damage to see if they can be resold
- Process refunds
- Figure out what to do with returned goods if they’re not sellable
This is time-consuming, to say the least. In addition, sellers have to “rinse and repeat” with every order they receive! Amazon FBA handles a lot of these steps for you so that you can focus on other areas of your business. You do have to pay a fee for this FBA service, but think of all the money you save when you don’t have to hire a full staff of people to do this for you!
Seller Benefits of Amazon FBA
In addition to the above time-saving benefits, sellers stand to gain a lot from the FBA program.
Some of the top benefits include:
- Consistent, timely shipping experience for customers
- Professionally packed items for safe arrival
- Profits deposited directly to your account
- Customer service handled by Amazon
- More brand impressions when you sell on Amazon
- Chance to tap into a larger audience using Amazon’s platform
- No need to store your own inventory because inventory lives in Amazon’s warehouses’
There are many more reasons why sellers choose Amazon FBA. However, you shouldn’t get the wrong impression that Amazon sells for you. The Amazon FBA program is no substitute for optimized product listings, great reviews, and high-quality images.
Rather, its main benefits lie in fulfillment, so keep this in mind as you move forward.
How Do Sellers Make Money on Amazon FBA?
Now, for some tasty meat and potatoes: how do sellers make money on Amazon FBA?
This is a valid question, since Amazon doesn’t actually sell for you. You’re still in charge of your product listings and all the other aspects of your business.
Think of Amazon FBA as any other 3PL provider. The goal is to support your business, not run it. When you outsource certain functions like fulfillment, you’ll have more time and resources to work on marketing, new product sourcing, pricing strategies, and ultimately growing your business.
With this in mind, the right fulfillment partner can help you increase your profits in many ways, including:
A Massive Audience
Amazon now has more than 112 million Prime members in the United States. Not taking children into account, that’s like one in every 2.2 people in the United States who subscribes to Prime. Being an Amazon FBA seller means having a massive audience using the platform to find products like yours. If you relied only on your own e-commerce website, these same people might never find what you have to offer. But when everyone is shopping at the same place, you have a much better chance of being found — and you have to be found to make sales!
An Outstanding Reputation
One of the reasons people shop at Amazon in the first place is its reputation for consistency, variety, and customer service. Amazon really goes out of its way to make sure its customers have great experiences. Little things like free shipping, no-hassle returns, and clear tracking are not lost on the customer. Not to mention Amazon holds its sellers to very high standards. This is evident with its rules on gated products and categories, brand registries, and more. The result is a greater peace of mind for customers. They know they can shop with confidence and return items that don’t meet their needs. Consider this a direct extension of your own brand.
Free Shipping Offers
Amazon is arguably most recognized for its free shipping on millions of items. As an FBA seller, you can tap into this same practice. Free shipping isn’t “free,” as you probably know. But so many online shoppers have come to expect it that retailers feel pressured to offer it. It’s usually built into the price of the item, but this can also mean your prices are less competitive Being an FBA seller gives you the best of both worlds – free shipping AND competitive prices. And ultimately more sales!
Algorithm-Driven Visibility
Just like Google and YouTube, Amazon’s algorithm can determine where you land in the rankings when people search for your products. Part of this algorithm differentiates FBA sellers from non-FBA sellers. If you’re an FBA seller, you may be more likely to rank higher in search results, which means more visibility for your products.
More Time and Freedom
When you’re running an entire e-commerce show by yourself, stepping away isn’t usually an option. As soon as you do, someone will place an order that will call you back into action to fulfill. However, when someone else is fulfilling orders, you may find it easier to break away from work. This gives you the freedom you’ve always dreamed about in running your own business.
What Should I Sell as an Amazon FBA Seller?
If you’re a seasoned seller, figuring out what to sell on Amazon is pretty obvious: make it an extension of your current hustle.
However, if you’re brand new to selling online, you might be wondering “what can I sell on Amazon?”
Consider these options:
Your Own Private Label Products
Private label goods are pre-manufactured items that bear your own label. When a customer places an order, Amazon ships them your item with your brand on it.
Wholesale Products
One of the most popular sales models is to buy wholesale products and sell them for a profit. This is precisely what big box retail stores do!
Handcrafted Items
If you’re a skilled artisan, you might consider batch making some of your products to sell on Amazon.
Retail Arbitrage
Finding rock-bottom deals at various retail outlets and reselling them for profit can be a lucrative side gig. People are willing to pay good money for mainstream brands at a discount.
Original Designs
Got an artistic vein? You might try your hand at designing your own line of merch, from shirts and hats to coffee mugs and more.
Sign up for the Merch by Amazon program, then simply upload your designs. When a product sells, Amazon prints the design on the product and you get a cut of the sale.
Final Thoughts on Making Money as an Amazon FBA Seller
There’s no doubt you can make money as an Amazon FBA seller. The key is to set the right expectations from the get-go. This is a fulfillment service that frees up your time and can hopefully save you money on your operation costs.
The best way is to give it a try and find out yourself!
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