Your Ultimate Amazon FBA Guide to Success

posted on 19/Thu/03/2020 08:36
What Is Amazon FBA?
How to Sell on Amazon FBA?
How to Find Products to Sell on Amazon FBA
Benefits of Using Amazon FBA
Disadvantages of Using Amazon FBA
Final Thoughts

Wouldn’t it be great to have a shelf at a big box store that was set aside for your products? Well, that’s kind of how Amazon FBA works. They take care of all the customer-related needs while you just focus on attracting customers’ eyes to your shelf.

amazon fba product research

What Is Amazon FBA?

That all sounds great, but you’re likely asking yourself, “How does Amazon FBA work?” Amazon FBA, or Amazon Fulfilled-By-Amazon, essentially takes care of the behind-the-scenes work that most consumers take for granted.

This service handles all the sorting, packing, and shipping. Anyone who has tried their hand at online selling knows all too well how difficult it can be.

Not only do you have to come up with clever ways to attract business, but you also have to spend a good deal of time ensuring that your products are properly shipped out. On top of that, your time can quickly become monopolized by customer service.

If there’s a problem at any point between selling and getting your customer’s package to them, your business can come to a screeching halt. You’ll soon find yourself juggling customer complaints and customer satisfaction.

As an Amazon FBA seller, this will effectively eliminate such potentialities. They handle all customer service aspects, including shipping and returns. Depending on how much volume you generate every month, this service can give you the advantage you need to stay ahead of your competition.

How to Sell on Amazon FBA?

The great thing about Amazon FBA is that you aren’t locked into a specific method of vending your goods. In fact, there are several routes sellers take to maximize their profits. Let’s take a moment to discuss some of the most reliable ways sellers operate their businesses.

Books

Remember when Amazon was all about books? Well, some sellers still heavily rely on reading material for their income. Many will nab deals at thrift shops, flea markets, or yard sales so they can resell them for more money on Amazon FBA.

Wholesale

This is where sellers buy up products in mass quantities. They get a discount on the items or items for buying so many. They then turn around and resell the products on Amazon at a price that nets them more income.

Arbitrage

Sellers will scour brick-and-mortar or online stores for low-cost goods. They will then resell these goods on Amazon at a higher cost than what they paid for them.

Private Label

These are goods that you personally develop. Whether it’s an idea that already exists or a completely new product, you are in charge of everything that goes into manufacturing the item. Some of the most prosperous sellers who use Amazon FBA have their own private label.

Now that you’ve learned a few of the ways sellers make profits, let’s look at some of the best products to sell on Amazon FBA. This will help you get the most out of Amazon and your business.

Baby Stuff

Children’s goods, specifically ones for newborns, are a huge business. Due to the ever-changing size of babies, these products vary wildly and stretch across a wide range of categories. As you can imagine, this can be quite the money-making machine.

Jewelry

If you have ever perused a jewelry store in search of a gift or personal ornament, you know first-hand just how expensive this stuff can get. The markup is absolutely dizzying. While there are a lot of vendors on Amazon trying to peddle their wares, if done correctly, you too can get a piece of the pie.

Books

You’d be forgiven for thinking books are dying out, but the truth is quite the opposite. Book sales remain very high, so it’s no wonder why so many sellers are capitalizing on their success. The profit margin on reselling them is huge, with many vendors buying up bulk amounts.

Some sellers focus solely on them and are quite successful in doing so. But if you’re new to the game, it’s a good idea to have them be only a small part of your business. By offering a variety of other items, you’ll stand a much better chance of seeing profits.

Electronics

It should go without saying, but electronics are a booming industry. New gadgets are popping up all the time, and most of society can’t wait to get their hands on them. If you’ve ever seen or been a part of the launch of a new iPhone, you know how rabid people are for their electronics.

Athletic Wear

You might be surprised to learn this, but workout clothing is big business. This mostly applies to new clothing for obvious reasons. But higher-quality used exercise wear has its place. For those in the business, bulk amounts of clothing are bought at a low price. The seller then turns around to make a huge profit on Amazon.

Specialty designer wear plays a large part in this, too. Outfits that are hard to come by are nabbed up before selling out. The vendor is then able to have more control over their profit margins.

amazon fba recipe for success

How to Find Products to Sell on Amazon FBA

While there are many applications and resources that will point you to Amazon FBA product research, we’d like to focus on three that we feel are the most effective. Your mileage may vary, but the results of each of these products speak for themselves.

IO Scout

This is a user-friendly web application that scans marketplaces to find which products are currently trending. Those that are generating the most revenue to their sellers are relayed to the user. You can then adjust your sales strategy to meet the demands of consumers.

IO Scout offers a handy Chrome extension, as well. This lets you keep a constant eye on changes in the Amazon market. You’ll have instant access to invaluable information on Amazon analytics.

You’ll be able to find hot keywords across millions of items being sold. To make your searches easy, IO Scout implements several filter tools to help you narrow down your desired category. You can then monitor stock, prices, sales figures, and more.

What we like about IO Scout is its ability to look at each product’s history. You can see the trends it has followed over the course of its inception on Amazon. This helps the seller to gauge whether any one product is worth investing in.

SellerLabs

If you’re new to selling on Amazon, SellerLabs was built with you in mind. It’s quite different from other resources of this nature. You pay for only the features that are beneficial to you. Most other brands offer pre-set bundles of their choosing.

Although SellerLabs’ packages follow the same guidelines as their competition, your choices are somewhat better-aimed at your selling level. Let’s take a moment to look at what each package consists of so you get a better idea which suits you best.

  • Option 1 - The first package gives you access to research information regarding your competition and their listings. You also get valuable data on products and popular keywords. This will help you adjust your sales and marketing strategies to better accommodate your client base.
  • Option 2 - This package helps you to better manage your inventory and sales data. If you feel you’re pretty grounded in the other aspects of your business, this option will give you the edge you need to get a better grasp of your products and the revenue they generate.
  • Option 3 - So you’ve got sales, marketing, and research down-pat. The next logical step would be to focus on customer reviews and feedback. This will give you a better understanding of what you need to adjust in your business model. By having an inside look into the minds of consumers, you can position yourself to address their most important needs.
  • Option 4 - The final option helps you manage any ad campaigns you might be running with Amazon. Depending on how successful you are, keeping an eye on and properly maintaining these campaigns can be overwhelming. SellerLabs helps you get a handle on such matters.

Jungle Scout

As one of the highest-rated Amazon FBA selling applications on the market, Jungle Scout is a workhorse that produces results. It gives you access to a wealth of information that helps you stay ahead of the curve. 

You’ll know which products are generating money, and which ones aren’t. Jungle Scout does a lot of market research to deliver the most accurate and up-to-date sales data. It lets you know what kind of figures your competition is pulling in and how well products are selling.

By knowing what’s hot, you can rework your business model if necessary to better accommodate your customers. You’ll also be told the best amount you should be charging for any one item. This helps you avoid over or underpricing your goods or potential goods.

Benefits of Using Amazon FBA

To determine whether you would benefit from selling on Amazon FBA, let’s first go over how the process works. By gauging the volume of your business, you’ll be able to tell if this option is right for you.

  • Step 1 - The first thing you need to do is get your product together. Whether you make this yourself or you buy your products from a store, it is important that you know exactly what you're wanting to sell.
  • Step 2 - Once amassing your desired items, you will then need to send those to an Amazon Fulfillment Center. There are situations that allow you to send the items directly to these fulfillment centers, effectively bypassing your home or business.
  •   Step 3 - At this juncture, Amazon will store your items within their fulfillment center’s warehouse.
  • Step 4 - When a customer orders your product, Amazon will be notified and will then work to get your product located and shipped out to the customer in a timely fashion. How the item is shipped is based on the customer’s chosen preference at the time of purchase.
  • Step 5 - Both the customer and you will be able to monitor and track the location of the item via Amazon. You will know when the item has safely arrived at your buyer’s residence.

The best part about all of this is that Amazon handles any customer complaints and any returns that might arise. 

Depending on what kind of items you specialize in selling, there is a good possibility that you may never have to look at or handle an item ever again. This takes the hassle completely out of your hands and places it directly into Amazon's capable hands. 

This is especially useful if you are an individual or a small team. You simply may not have the resources or the finances to rent a large warehouse and ship and pack the items yourself. With Amazon taking care of business on the back end, you can focus solely on the marketing and selling aspects of your brand

Now, of course Amazon is going to get their cut. But depending on how much you sell, this fee can be well worth the price. Imagine, no more headaches involved with shipping, and no need to worry about inventory.

To many sellers, the best part is no longer having to deal with customers. This isn't meant in a malicious way, but fighting with customers and handling their complaints can be a huge drain on any business. 

This will give you much more freedom to focus on more important things in life. If you’re a small business owner who does big numbers, you owe it to yourself to give this service a try. Amazon has proven methods of keeping their customers happy.

The numbers don’t lie. In 2019 alone, Amazon did well over 280 billion dollars in sales. This is nearly 50 billion dollars more than what they did in 2018. It is evident that customers aren’t going anywhere any time soon.

You’ll have the peace of mind that your brand and its products are well-protected. You can also rest easy knowing your client base is in good hands.

selling on amazon fba

Disadvantages of Using Amazon FBA

In this section, we want to look at the disadvantages. We have to give you all the information possible, and this will help you decide whether Amazon FBA is right for you and your brand. As we have shown,

Amazon FBA can be mighty beneficial to many businesses. But like anything else, there are some drawbacks. Let’s look at each of these one at a time so you can see how they may negatively impact your business model.

Fees

To take advantage of Amazon’s well-oiled machine, they are going to require a cut of the profits. Remember that $280 billion we just mentioned? They didn’t pull in those figures by giving things away. If you want access to their huge warehouses and shipping expertise, it’s going to cost you.

The takeaway from this is to get the best understanding possible as to how fast your products move. This will help you to cut down on how long your products sit in Amazon’s warehouses. If you can get them out of there sooner rather than later, you will save money.

It’s also important to gauge whether the items you are selling are still making you money. If consumers have shifted their interests to other products, there is no need to keep a mass quantity of items sitting at Amazon’s warehouses. You’ll need to move quickly to get them out of there so you don’t keep losing money on a product that is no longer selling.

Long-term Fees

This goes hand-in-hand with what we just mentioned above. However, the great part is that most items aren’t going to rack up a bunch of charges unless they have been taking up space in Amazon’s warehouses for longer than six months.

Just like you, Amazon wants to move product and move it fast. They aren’t in the storage business, after all. If your items are hogging up valuable room, you can bet you’re going to be charged for it.

In fact, if you bought bulk quantities of any one item that turns out to be a dud, it’s likely going to sit for a while. Amazon is not too keen on this happening. Those storage fees can increase in order to put pressure on you to get them out of their warehouses.

Returns

Yes, the dreaded return. All businesses deal with this aspect at one point or another. While it’s great to have Amazon at your side to help deal with customer complaints, this does have its drawbacks.

Since the return policy is so accessible to customers, there’s a greater chance of them returning your product for any reason. Customers often have a trigger-finger with their mouse button. This results in a lot of impulse purchases that are regretted by the time the item arrives.

As you can imagine, this results in more returns than any business likes to see. Now, there are ways to combat this, but it can have a negative impact on your brand. With many sellers, you’ll notice a no-return policy. That sounds great from the outset. You, the seller, no longer have to worry about Amazon’s storage fees and you can keep your products rotating out.

However, this can cause your customer satisfaction rating to plummet, effectively killing your brand. If a customer feels like they were duped, you can bet your bottom dollar they will jump online to give you a bad review.

If your reviews stay consistently low, less eyes will see your storefront. You have to know how to balance this. But let us tell you now, even the best and most successful sellers have yet to figure it out.

Preparation

If you’re new to selling on Amazon, it can take you a while before you get Amazon’s guidelines down to a science. They have very strict rules for how items are delivered to them. You must ensure that you properly enter the correct sales data into their vast database.

Your products must also be labeled correctly and shipped out to the correct Amazon warehouse. Any mishaps along the way, and you can be sure that you will be responsible for making it right.

Tracking

This can be a challenge in itself. You need to make sure you understand how to order your products in a timely manner. And it is vital that you stay on top of what is currently trending with consumers.

Sales Tax

As you are likely already aware, each state has different taxes. This isn’t a big deal if you just sell in your home state. But once you start shipping outside state lines, it’s going to get hairy. Since inventory moves from Amazon warehouse to Amazon warehouse, you may have to pay taxes if it’s stored in another state, regardless of how long it sits there.

Pooling Merchandise

Amazon is always working to increase efficiency. One of the ways they do this is by giving sellers the option to pool together their inventory. It’s a great way to cut down on product preparation, as mentioned above.

However, depending on the legitimacy of other sellers, you can get caught in the crossfires of unscrupulous sales tactics. There’s always the possibility that you’ll receive fake or counterfeit goods.

While it’s completely out of your hands, this can result in bad reviews that end up hurting your brand. Use caution and wisdom before signing off on this practice.

Final Thoughts

We hope you found our Amazon FBA review to be helpful. By now, you should have a pretty good idea as to whether Amazon FBA is right for you and your business model. If you’re just starting out, you may want to see how your potential business does before going the Amazon FBA route.

If you start to see a major increase in traffic and sales, Amazon FBA might be your best option. Growth, if handled incorrectly, can cripple a business faster than anything. By having a seasoned team in place at Amazon, you stand a greater chance at maintaining your success.