Today we get into the details on how to start an Amazon business and help you navigate which marketplace to start on and why FBA is an amazing solution to grow a new real business or expand an existing business.
BASICS OF FBA
Fulfillment by Amazon (FBA) means sending products to Amazon’s warehouse and when an order comes in Amazon will send the products to your customers. They will be the one in charge with customer support, product dispatch and tracking.
All you need to do is create a listing, send your products to Amazon’s warehouse and they will do the rest of the work for you. Every two weeks Amazon will be sending to you a bank deposit for all your sales.
Fulfillment by Merchant (FBM) may not be as common as FBA but is still sometimes use by sellers on Amazon. Sellers will be posting their listing on Amazon as well but instead of sending it to the Amazon warehouse, products may be kept at the merchants home and they will be the one in charge with the dispatch, customer support and its tracking. Amazon does not have a control with the products courier and its tracking.
Amazon vs. eBay
You may also think that Amazon is the same but eBay, however they are entirely different. I found eBay as more of a cowboy land with less controls as sellers are directly dealing with its customers. All sellers on eBay are actually storing their items at their own house or warehouse and when you buy they are the ones who send out. The downside of it will be, products can sometimes take many days before the eBay seller ships them out.
With Amazon FBA, products are already stored in their warehouse, the moment you purchase a product items will be shipped out within 24 hours.
Building a Brand
Basically to start your business in Amazon you have to find a great product, source it, improve it and create a listing. Competition is increasing and the model has changed where its essential to start building a brand.
Having a brand allows you to
- • charge a higher premium for your products
- • add your own packaging to products and a value to your products that differentiate them to the competition
- • makes it easier to sell your business as creates brand value
FINDING A MARKETPLACE
Amazon has warehouses across the globe from the USA, Canada, Europe, Germany, South America and soon in Australia. If you are living in a country where Amazon has its marketplace, it is highly recommended to start selling there. The reason for this would be, you already know the laws and importing products is much easier. However if your country does not have a marketplace yet, you can start selling in the USA. USA is by far has the biggest Amazon marketplace, population has a 5x more population compared to other marketplace.
In sourcing your product you can either source it from your home country or source it in China. When sourcing products in China the biggest marketplace to find suppliers would be alibaba.com
Alibaba is great to start off with; they have a wide range of products. However finding your products in Alibaba can be easier but it may also means a higher chance for other sellers to copy your product.
When you are done in negotiating and sourcing your products, make sure to add a Unique Product code (UPC). This UPC will serve your products ID number on the Amazon warehouse. This can either be added by your supplier or by Amazon. Amazon will most probably charge you 20 cents for doing it while cost can be cut to half if you will ask your manufacturer in China to do it for you.
There are two ways in shipping your products it can be either air freight or sea shipping.
Air freight is recommended when you are just starting your business; it will deliver your product to Amazon quicker, but air freight is only suitable for small and lightweight products.
If your products are starting to sell higher volumes then it’s recommended to use sea freight rather than the air freight. Using sea freight can be up to 60% – 80% cheaper than air freight, but only suitable when import pallet size orders.
OUTLINE FOR THE EPISODE
[0:43] – Basics of FBA
[2:00] – Amazon vs. eBay
[4:24] – Building a Brand
[6:50] – Finding a Marketplace
[8:20] – Product Sourcing
[10:43] – Freight Options
CoachAMZ is an Amazon FBA expert that offers various services including Amazon product listing optimization to increase entrepreneurs’ Amazon sales.
If you want some help in getting started, then I would love to help out. Please reach out to me so that I can organize an Amazon Selling Strategy Session
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****** Full Podcast Transcription below *******
We feel very proud to talk all things Amazon speaking with Amazon FBA Expert from around the world to help you grow and build your Amazon business and also grow your Amazon Australia business by helping you with How to Sell on Amazon Australia.
Hi guys and welcome to the article today where I talk about how to get started on Amazon. Going through the basics explain what Amazon FBA means Fulfillment by Amazon and also fulfillment by merchant, gets through the basics of Amazon. Also, some more advanced stuff tells you how to get started what marketplace you should look at and really give you the confidence to take the first step.
So, what is when people talk what they sell on Amazon what does that mean? And often use a term FBA which means Fulfillment by Amazon. Basically, it means that you have a product you send into Amazon’s warehouse. They have a barcode on it or you can put one on. They store it you have a Amazon Product Listing Optimization on their website, when someone buys it from the website Amazon sends it out to him and sends any and does or the customer support as well. They do the tracking they do everything for you. Every two weeks for all the sales you get Amazon sends you a deposit into your check.
So it’s basically people talk what people mean when they say selling on Amazon. People they also mention fulfillment by Merchant, FBM. It’s not as common as we have a listing on Amazon. Buy your product because you actually keep your product at home. I’ve done that. I’ve tried that I’ve found that if you have an FBA product compared on FBM product you sell 90 percent more for FBA. If you got 100 units, 90 percent would be FBA and only 10 percent would be FBM.
The reason I believe that is Amazon wants to promote its service its FBA because when its FBM they don’t have control over the couriers the tracking so it doesn’t have that same level of service. People also ask is Amazon like eBay? It’s very different. I find eBay is more of a cowboy land has less control. The service is not good you know dealing direct with a buyer or the customers on eBay actually store the products in their own house or warehouse. And when you buy they send out.
And the downside of that is sometimes you go on eBay and you buy something and it may be five days until they ship it out to was with Amazon because it’s in their own warehouse. They pretty much when that order comes in within 12 hours it’s already sent out. Tracking everything. And that’s one of the big reasons. Amazon’s exploding growth and why eBay’s being left behind. Another thing about eBay is you can send more random products.
For example, if you have a random old 90 100 typewriter on eBay and sell it whereas Amazon is more about products with stock involved so it’s better for scaling. So, people are really serious about building a business. It’s better to go on the Amazon model. I found that eBay doesn’t have the same scale.
For example, if you’re selling maybe 10 units a day in one on eBay quite easily but if you go to a place where you’re selling 50 a hundred two hundred five hundred units a day is very hard to run that from your own house you spend all day packing it all you have to have a lot of staff in a warehouse to store it. Where as in Amazon you can easily be a one-man band and selling 200 units a day an Amazon takes care of or the fulfillment customer service as well the reasons it’s exploded. It’s an amazing model.
So with Amazon you go on their you probably noticed that all the products they have and there’s a couple of million sorry 200 million different SKUs which means about 200 million different products at Amazon you’ll find brands like Nike Reebok or the big brands but also be what I call private label brands where people have started their own products and that’s where a lot of the growth is in Amazon has come.
So when I initially got started, it was about four years ago and a lot of people the industry had this approached up to about two years ago you’re going to Amazon find a great product with the good Amazon Product Listing Optimization, that is making a lot of money. Source your own one improves it and put it on their site in sales is fantastic.
You’ll find another product source at Amazon great listings start selling it and you could really quickly scale a business from six to seven figures within 12 to 18 months. It was amazing. But there’s more competitions come in the models changed and people now start to build a brand rather than just having random products. And there’s a few reasons you want to build a brand. When the main ones are that a brand really allows you to charge a premium price. We put your own packaging together advertise products that differentiate from other people that it’s actually better than the alternate options it allows you to charge a higher premium. Also, when you have a brand you add complimentary products.
For example, if you’re selling a brand of sports goods say American footballs then say okay let’s what’s complementary to that. Maybe some American football gloves and what ends up happening is Amazon actually starts promoting your product. When people buy your first product a then they buy your second product because Amazon has a feature called people or they bought this so they naturally you get a big kicker just by having complementary products.
And also, a brand allows you to sell the business much easier and maybe one two or three years’ time if you have a brand has much more equity much more value that makes it more enticing for a buyer. We have a range of random products. It’s harder to scale up and get those incremental scales.
A lot business buyer prefers buying a brand rather than just random products. So how do you get started in choosing a product? Well I’ll go into detail about how you actually choose it. In another article because a really detailed process you need to find out about yourself your passions interest for How to Sell on Amazon Australia. We actually have some criteria you used to actually find out which product going to be a winner which ones aren’t we special tools we provide with Amazon Seller Consulting Services about that but that’s a whole article so I won’t get into that today but it is something you want to specialize in.
When I started out it was just more ad hoc that looks good that doesn’t look good that doesn’t have too many reviews it was more trial and error and over the last three or four years I’ve actually really tighten the screws on it where I know exactly what product I want. How much competition how much sales how to improve it the size of the product how to launch it. So, when the product rise in Amazon you know you’d be off to a great start and that’s really important because in the past I’ve had products were spent thousands and thousands of dollars and they just sat there now of that it process have put that in place. So, when a product comes in you know you’re going to get sales from day one and look feel free to contact me about that and was happy to help you out.
Details in the below article I’ll get to that in another article. So now you know the basics of FBA where to start selling? Amazon is across a lot of marketplaces these days in the US there in Canada U.K. all throughout Europe that open up in Australia soon. And what we recommend if you live in a country where there is Amazon marketplace such as Canada, US, UK, Europe or Australia shortly then start selling that marketplace. The reason is you know the laws it’s much easier import ones we know in the country to get samples to test it. There’s a whole range of benefits.
However, if in a country that doesn’t have its own marketplace that we recommend starting with the US the US is by far the biggest marketplace. I personally sell across the UK in all of Europe Canada in the US and I find my sales in the US to the UK are about 10 to one. Even the population size is only five to one. So, the US has about 300 million people. UK has 60 to 70 million people. So, population is only five times bigger. Brazil 10 times more in the US. I believe that’s because the US culture they have much more of a culture where they buy online and provide feedback online.
Amazon has amazing service with Amazon Prime. In some states you actually order in the morning and Amazon and get it that afternoon. So, if you need to brush your teeth with a new toothbrush you log in the morning have an Amazon Prime account and that night get a toothbrush delivered not pay any delivery fee. It turns up on your doorstep you see why Amazon is such an amazing business. Also, that make me so easy to represent you Amazon Seller Consulting Services to increase the sales of the product.
So once you determine your location need to find your product. Now there’s two ways of going about it. You can source one in your local country. But generally, those prices are higher. What most FBA sellers do they source from China and the biggest market place to go to is Alibaba to find that. Alibaba is great to start off with because it has a range of products. But one downside is if you’re going to Alibaba to find your product it means other people can find him as well. So, it’s much easier for competition to copy you if you have a great product.
So what you normally do is you find a product go through the methodology that I can teach about how to find a product and then you go and source from China and probably what you do is, when you go to China you go to a few suppliers you negotiate deals and then you get samples sent and you want to make sure the sample is exactly what you’re buying. You test it and that’s why we recommend when you build a brand it’s in one of your passion areas your interest.
If you’re buying something you know you love you know what’s really good about the product what’s not good what needs to be improved. If you’re just in a random product you know nothing about. It’s really hard to know if that’s a great product or just an average product and you can be caught out by that ways if you just put average products on Amazon. You’ll get bad reviews and when you get better reviews Amazon put you down the ranks and people don’t buy from bad reviews. So, it’s what’s really important and you find your product that is the areas that you know as it makes you a really good fit for testing it and have proper Amazon Product Listing Optimization.
Once you’ve gone through the negotiation the purchasing and you’re ready to send it to Amazon. There’s really two ways to go about it and this is one of the minor points is very important. Yet this bit right was otherwise a goods can get lost in Amazon we need to put a UPC unique product code on the product and what it is it’s a barcode. So, when arrives in Amazon they know who product it is and where it’s stored in a warehouse. You either do these two ways you can actually buy yourself a UPC and get your supplier to stick it on or make as part of the artwork or you get Amazon to do as part of the prep and they receive it. You can ask Amazon to do it’s about 20 cents to manufacture to do it in China you pay about half of that. What I recommend is that when you find a winning product and you start scaling it I actually build it into product packaging it makes it look way more professional and it doesn’t look like a sticker that has being put on the product. When you put UPC there you ready to ship it.
With shipping there’s two ways to go about it is air freight or sea shipping. Air freight I really recommend at the start that your product is on as quick as possible testing it feedback but air freight is only suitable for small and lightweight products if you’re importing for say an oversized product maybe a tent, then airfreight is not suitable. You often pay more in air freight then your product cost and in general often even air freight in small products the air freight alone is often the same price as your product cost.
Normally after three to four orders when you know your products are a winner even great sale every day that’s when I use sea freight and I always recommend going through freight forwarder. You want to use these guys they’re expert at it. They know the rules about it so when you import it there’s no delays.
I’ve actually had issues where I’ve had a product held up in customs and I couldn’t get through to them. You speak to their call center goes around in circles and about nine months later they actually return the product to the supplier, because there are some issues with the importation. That was one of the lessons I learned starting out. Now I’ve got great contact the freight forwarder.
Also, our Amazon FBA Expert are here to help out. They look after everything it’s a seamless process. The great thing is that once you get that scale you start using sea freight you probably reduce your cost by up to 60 to 70 maybe 80 percent when you’re putting on a large scale. And that’s a huge benefit to your bottom line. If you’d add that much margins your product is like selling almost like an additional 60 80 percent of products per day. I really recommend that once you get some scale a winning product you look at sea freight at the start I always recommend going with air just get the product in there test it find out how it’s going.
So, what I’ve really covered today is the basics of the marketplace how and where to source a product what freight mechanism to use and just get the freight mechanism it deeper. If you use air freight once it leaves the supplier it can take between the quickest I’ve had been about six days and the longest is about 14 days to riving Amazon. If you use sea freight the quickest I add is about 25-28 days the longest about 45 days. The reason it got up to 45 is Amazon actually re-diverted the goods when it reached air where one of the warehouses and one of the other options you consider when sending in products Amazon is where you want to send it to one destination like one warehouse or let Amazon decide whether they split it up.
We are here with the best Amazon Seller Consulting Services in such cases. I think by default, Amazon splits up the order which is no good when you’re signing it from overseas so you can consolidate it to one Amazon it’s part of the settings. Then once it lands then Amazon will redistribute it through the different warehouses. So, there’s lots of other cool things you get into about freight about oversize, which products require different legislation and importation documents. But I will cover that in a whole day. I have a whole article about importation and some things to be caught out on. That’s one of the things I always recommend to partner up with someone who’s done this before.
If you do your own from the start there’s so many things that can catch you out and it’s trial and error that cost you time and money. I always recommend working with an Amazon FBA Expert in the area so they can fast track you and remodel someone with success since you’ve taken 12 months to learn the lessons you’ll learn in one month and get the success that someone takes 12 months to achieve. You can do in one month and that’s when the goal is you’d have it if you’re serious about the Amazon you can really scale it very quickly to six figure business within 12 months.
And if you’ve got some capital behind you a seven-figure online business within 12 months is no other realms. I’ve seen it happen. I took that as one of my goals to go from six to seven figures I achieved it in under one year. That’s what’s great about this business model in scale it’s so quick so with Amazon I’ve covered a range of things and to recap it today. FBA, that means Fulfillment by Amazon were used in a product to Amazon’s warehouse they store it they send it they do the marketing the customer service they do everything for you. It’s different eBay where eBay normally the owner the supplier actually stores a product and they send it out from their own house or warehouse rather than a centralized warehouse.
Branding, we always recommend go for a brand find your passion build a brand around that rather than just choosing random products that make money. Where to sell, we recommend if you live in one of the marketplace where Amazon sells get that marketplace and if you’re outside of that go to the US because it’s the biggest market and we talked about freight for first order, we recommend airfreight. And then maybe after three or four orders move to see freight because it’s a huge saving in costs. Look that sums it up for today. Get your feedback lovely hear how your success is going. Please feel free to reach out and wish you the best of luck.