In this post, we’ll teach you how to sell on Amazon and make money. First, focusing on this area is the first key to success.
Starting an Amazon business way back isn’t the same anymore as it is in 2023. The competition is insane & the costs involved have skyrocketed.
To make a profit you need to have a solid strategy!
Below I outlined a simple summary that explains the many factors that could affect your Amazon FBA selling journey.
The 5 big factors that will affect your profitability are the:
1. Market price
2. Product cost
3. Shipping costs
4. FBA fees
Before I explain the 5 factors here are helpful tools you need with your research so you'll have a better understanding of the 5 factors & can do it efficiently.
1. Helium10 – Helium is an Amazing tool that will make your Amazon FBA selling journey easier. They can be expensive but they have a limited free plan option that could jump-start your research. Click here to sign up https://www.helium10.com/pricing/
2. Amazon FBA calculator – Amazon has a free calculator that could immediately give you an idea of the costs involved. Click here to check it out https://sellercentral.amazon.com/fba/revenuecalculator/index?lang=en_US
3. Alibaba account – Asking for a quote is the best way to get accurate prices as it changes based on quantity and seasons. Sign up here https://www.alibaba.com/
So to Explain the 5 Factors Further:
1. Amazon Demand & Price
You can’t simply decide that you’ll be selling your product at this X amount.
You have to take into account the current prices on Amazon, especially your top competitors.
You need to get benchmark prices such as the lowest price, average price, and the highest price possible that you could sell your product.
2. Product Cost
So, before you start your product research you should now have a clear idea of your selling price.
Ideally, the smaller & lighter the product the better as this highly affects shipping & FBA fees.
3. Shipping Cost
As I have mentioned above the smaller & lighter the product the cheaper it would be. Shipping costs are sometimes more expensive than the product cost so you need to take that into account.
Another tip is if the product cost is cheap but shipping is expensive you can find a forwarder to do the shipping for you.
Lastly, you need to take into account if it’s DDP & DAP. Ideally, you should negotiate with your supplier DDP shipping door-to-door.
4. FBA Fees
Certain categories have higher fees but the biggest factor that will affect this is your selling price, package size, & package weight.
Ideally, the market price of the product you’re planning to sell on Amazon is above $15. Below this, the fees will be so high that you’ll have no profit left.
Advertising will also eat up a lot of your money, especially in the beginning.
That’s why we recommend a product that isn’t so cheap and ideally has lower fees so you have room for advertising spend as without it you won’t get many sales.
When you launch your product just expect to lose money unless you find a product with high revenue and high profit.
To make it simple it needs a lot of clicks/visits for your product before you make a sale. The dominant reason would be that you don’t have reviews. Another is because of your price, main image, product description, & overall look and feel of your site.
To make it simple, if you want to make 100$ a day you’ll lose $100/day. So all your revenue will just go to advertising & FBA fees.
So How To Do Product Research On Amazon?
You can check the best sellers section or when you have a product in mind, you just have to find the best sellers & do an in-depth check of their listings.
Check their prices, images, and number of reviews, & do a review analysis. For the review analysis, you can use Helium.
Check the best variation if it has one such as the colors or size then take notes on how your product will be an improvement to this product.
But this is just based on my experience, you can also have success if you just sell the exact same product as your top competitors, however, make sure that your price is competitive, you have a top-notch listing, and you generate reviews as quickly as possible.
See if the product is in-demand or not through the following ways:
1. Product keywords - Magnet is a powerful keyword research tool that allows Amazon sellers to start with a search term to reveal relevant and high intent keywords.
2. Product demand
3. Competitor research
4. Google Trends - This allows you to enter any keyword phrase and see graphics of how interest in that topic has waxed or waned throughout any time frame. You can also view the regional appeal of a given topic or business and inspect state maps that reflect places where these are most or least likely to be searched.
5. Low competition
6. Improve & Differentiate
How to Source a Product on Alibaba
Look at how to effectively and safely source a supplier for your product idea using the popular business directory Alibaba.
1. Prepare the questionnaire. The questions should depend on what product you are sourcing.
2. Start searching for the best suppliers that suit the criteria. Suppliers must have high ratings, with trade assurance, verified/gold supplier, and most of all, legit.
3. Communicate with the suppliers and ask for quotations for the quantity needed.
4. Encode all the information of the supplier in a sheet. Create columns for the company name, product photo, product features, prices, lead time, and other essential details.
5. Compute for profitability. To compute, add all the costs and deduct them to your selling price. The FBA fee, it’s 30-40% of your selling price. Amazon ADS is 30% of the selling price.
6. Profit Computation: Profit= Selling Price- (Product manufacturing cost + Shipping Costs FBA Fees + ADS.
7. Rank the suppliers based on profitability.
8. Choose the best suppliers. Consider the profit, lead time, product features and quality, customer support, warranty, and other factors in shortlisting suppliers.
9. Once you have compared shortlisted suppliers, choose the best supplier you want to make an order from.
10. Transact with your final supplier by asking for an accurate quotation, including DDP shipping to Amazon FC address, product & packaging customization cost, and any other cost.
11. Ensure all the details you provided are correct. Confirm to the supplier if you're on the same page.
12. Re-read/Backread your past conversation to make sure you don’t miss any details. You may also create a checklist of the essential information, like if the logo has been confirmed.
13. Consolidate all the information.
14. Once you have made a final decision and are ready to order, ask the supplier to create a payment link using an Alibaba account.
15. Once the payment has been made, inform the supplier to wait for shipping instructions once the production is finished.
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