Jun 13, 2023

With how much money did you start your Amazon FBA business?

People will tell you you can start with 25$ or 500$, but reality is, you will need much more than that.

Here are the things you will need to spend on, assuming you’re going to do the Private Label FBA business (not retail arbitrage):

1. Product Samples, maybe a few (around 50-80$ each, so ~200$)

2. Manufactured product. If you want better prices to start making a profit right away, you will need to order following the manufacturer’s MOQ (minimum order quantity). So let’s say 300-500 units. In addition, cheap products are quickly getting saturated because of ease of entry, so you will want to order something that is a little more expensive. There goes ~2500$.

3. Inspection. On average inspection costs 0.20$ per unit in China. So you will pay ~100$ for a full inspection. I don’t recommend doing partial inspection, or skipping it, because you will lose more money if you don’t do a full inspection right away.

4. Shipping and Import Taxes. Now this depends on your product weight and dimensions, and also on the HS code, which determines the import tax rate. If shipping to USA by air and below $2500 in value, you may be able to avoid import taxes completely. So I will just use very broad averages here. Let’s say you will ship it by air, and pay around 5$ per kg, and your units are 200g each, so you will pay ~$400 for shipping and 0$ import taxes.

5. Product Images. You will have to get professional studio photos for your product. iPhone photos can work, but it’s unlikely - buyers are shopping with their eyes on Amazon, and without any reviews, you need to make a strong impact. So 6 photos for $50 each = $300. You can add lifestyle photos later, those are much more expensive.

6. Sponsored Ads. Your product will not start selling on its own - you will have to either run external paid traffic to it or buy Amazon Sponsored Ads, to give it the initial boost. Again, it will vary greatly, but I will just use arbitrary number like 7$ per sale. You will get about 1–2 reviews for 100 sales, and you only need about 4–5 reviews, for your product to start getting traction organically. Then you would slow down your spend, or stop it completely. That means you will need to get 200 sales, so you’ll spend $1400. Of course, this amount will be deducted from your revenue, so you don’t really need to spend cash from your pocket. But it’s a cost that you have to keep in mind.

In total, to just put up one product for sale on Amazon, you will need:

min $3500, not including Sponsored Ads costs.

What are the most important steps for getting into Amazon FBA?

Everyone here says you ‘need to do your research first’. Well, I would say, don’t get stuck on it for too long.

So many people get overwhelmed by the product research phase, that they never actually start their Amazon FBA business. Time is ticking. Amazon FBA will not be a goldmine forever. Maybe this year, and maybe the next, but after that many doors will be closed (more info on that later). 

I say, your most important steps are these:

1. Start fast. Start today. Don’t worry what product you choose. Choose any random thing that comes to mind first, order 20 units from AliExpress.

2. Get used to Seller Central. While you wait for product to arrive, open your Amazon seller account, get approved/ungated in categories you intend to sell in, create your listing with bullets and description, do some keyword research, find some product images (before you can upgrade them with your own, just use what you find online).

3. Promote your product. When it arrives, label it yourself and print the shipping labels, and send it to FBA warehouse. That way you will have first hand experience on how things work. Then create some Sponsored Ads campaigns, maybe reach out to a few bloggers. Research on how to rank your product and outbid the competition.

Once you know how things work, and in about a month you start to get a feel whether your product choice was a good one, you can repeat the steps to find a category you will want to stick with. Then start reaching out to Alibaba suppliers, etc.

To sum up, don’t do research until you’re stuck & dead. Order some products today, right now. You will be miles ahead of many other sellers who are just getting started.

Are most courses on how to be a successful Amazon FBA seller a waste of money?

Most likely, yes, a waste of money.

It will be hard to choose a good paid course, because:

1. Many of them are outdated: they focus on Retail Arbitrage Amazon FBA and not the Private Label FBA. While arbitrage is still doable, private label is much more profitable and scalable.

2. Teachers are there to make money: it will not feel like your friend is teaching you something specific to your situation. You will get a very general education, with little personal help.

3. There are no secrets shared: the information you will get is freely available online, and paying for the FBA course will not get you any special insider info that others don’t know about.

Here are some free resources to start with:

LISTENING:

Here are 3 of my favorite podcasts, which provide all the info you need to get started. I really like this format of learning, I just put my bluetooth headset on and go about my day.

1. Amazing Seller Podcast

    with Scott Voelker

2. AMPMPodcast

    with Manny Coats

3. Seller Sessions

    with Danny McMillan

READING:

If you like to read forums and groups, the best one is:

Amazing Seller FB Group - they have over 45,000 Amazon Sellers on it, and they are very helpful with any questions you may ask.

How much do Amazon FBA sellers who import from China usually make an average profit in 6 months?

If you Google this, you will find mostly large numbers for this. They will say ‘make six figures in 6 months!’. But most of those are from coaches who are trying to sell you their FBA courses. To make 6 figures in 6 months is certainly possible, but it’s highly unlikely.

I would say the normal median goes pretty much like this (assuming you’re not in the supplements category), if you start with one product:

1. First month, around 30–50 sales, so maybe 200 $ profit

2. Second and third months, around 100–200 sales, so 700$ profit

3. Then a boost happens, either your season comes, or Christmas, or you have more reviews and seller feedback, and start ranking much better. Always happens. So around 400–700 sales = 3500$ profit.

4. Then, it will even out at some point, it will highly depend on your category, demand for the product, competition, etc. But in about 6 months you can be making around 4000–5000$ profit from one product.

5. To make more money, you keep adding more products.

p.s. These numbers are so arbitrary, it’s really impossible to know exactly. You could make 10 times this or half as much, but I would say your minimum will be half the numbers above, if you choose a product with good demand.

I based these numbers on my own experience and what I heard from other sellers that I personally know.

Can I become a multi-millionaire by selling products on Amazon in 2019?

Yes, in 2019 you still can.

But the window of opportunity is closing soon. So maybe if you start in 2020 you will not be able to do it anymore.

I say the window is closing, because Amazon keeps making it harder:

1. Many categories are gated and tough to join;

2. New sellers cannot join FBA program during October-November-December period.

3. The free giveaways in exchange for honest product reviews are now forbidden, so it’s much harder to rank new products.

4. There are more than 100 coaches online, teaching new people how to do Amazon FBA.

5. Many categories, and bestseller product niches are quickly getting saturated.

6. Awareness of Amazon FBA as an easy way to quickly make money online is increasing. See Google Trends for ‘Amazon FBA’”:

That said, there is still a lot of opportunity. Choose higher priced items, something that’s not easy to do - maybe heavy products, something requiring USA-based testing, or similar. And, only Amazon.com is getting saturated quickly. Consider other Amazon marketplaces, like Amazon.co.uk or Amazon.co.jp - they are still quite easy to become a millionaire at.

If you're just starting to think what product you should sell, check out my list of Product Research Tools.