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If you’ve found your way here, you’re probably wondering…
How does Amazon FBA actually work?
What does FBA even mean?
Isn’t Amazon completely over-saturated?
(HINT: it’s definitely not!)
Is it even profitable?
And if it is, how do I get started?
My goal of this post is to explain everything above so you can get a much better understanding of what Amazon FBA actually is and show you just how possible it is to create a seriously profitable side income stream (or replace your income completely) with this simple online business model.
Are you ready?
Great!
Let’s get started.
What is Amazon FBA?
FBA is short for Fulfillment by Amazon.
And as individual third-party sellers, it’s a great way of using Amazon’s infrastructure to sell our own branded products on Amazon through something known as Private Labeling.
A private label product is manufactured by a supplier (usually in China), then sold under a brand name. You can specify everything about the product – what goes in it, how it’s packaged, what the label looks like – and pay to have it produced and shipped to you.
(The shipping part is very straightforward, especially when you ship them into one of our SuperHero Freight hubs, outside of Amazon. More on shipping later in the guide.)
The great thing about Amazon FBA is that 80% of the work is done for you, on your behalf. You don’t need to worry about packaging products, sending those products out to customers, or dealing with customer support and returns.
You don’t need:
- A warehouse (and all those expensive overheads!)
- A multilingual customer support team
- Or staff to run your warehouse
Amazon provides all this for you.
So Why Amazon?
Amazon is the world’s #1 eCommerce marketplace.
Marketplace = a place you can ‘plug in’ as an individual seller and sell your own branded products.
And right now, Amazon (and e-commerce as a whole) is BOOMING — even during the pandemic…
Amazon currently averages about 300 – 600 sales a second, depending on the time of year on Amazon.
MIND-BLOWING!
There are approximately 500,000,000 different products for sale on Amazon as well. It’s inevitable that these numbers will only continue to grow and demand will rise with it!
Basically, hundreds of millions of people use and trust Amazon.
They aren’t skeptical and you don’t need to convince them to purchase from Amazon.
People go to Amazon to BUY products.
And what’s more is that YOU get to leverage their name and brand, making it WAY easier than selling anywhere else.
They also help you with the marketing.
They are a search engine, which can allow you to get organic traffic and sales by knowing how to rank your product in search. They also have an advertising platform that helps you attract customers to your Amazon listing.
The benefits to selling on Amazon literally are endless…. and you don’t have to do much compared to any other business out there. And once you have a product selling on Amazon and consistently making sales for you, there isn’t much required to keep it going.
We’ve got hundreds of our members inside the Marketplace SuperHeroes community generating thousands of dollars (on autopilot) with hardly any maintenance, because it just remains steady and consistent.
Put simply… Starting a business based on Amazon is a HUGE opportunity right now that’s available to practically anybody looking to ‘plug in’ and make a part or full-time income.
How Much Does It Cost to Get Started?
One of the most common questions I get from people interested in selling on Amazon is…
“How much does it actually cost to get started?”
Roughly speaking, to get your very first product imported and selling on Amazon, you’re realistically looking at between $1500 – $3000.
Which really is a drop in the ocean compared to the costs of starting a ‘traditional’ style of business like a Coffee Shop (which would be more like $20k – $30k!)
For monthly on-going fees, there are three main things:
Seller Subscription Fee:
A seller subscription fee is either £25 for the UK or $39 for selling in the USA. This is paid regardless of if you’re selling or not (this is why we don’t recommend you open an Amazon Seller account until you have a product to sell.)
FBA Fee:
These fees depend on factors like, size, weight, marketplace, and item category. FBA fees usually always consist of a fulfillment and storage fee.
Fulfillment fee: A flat fee per unit based on the item’s dimension and weight.
Storage fee: Calculated per cubic foot per month, pro-rata*
* We actually created a freight and storage service (SuperHero Freight) for our members where we are able to offer much lower storage costs as well as taking care of all the importing of products from China – at a price that simply can’t be beaten.
Amazon Prime (And How it Benefits Sellers)
Amazon Prime is a membership that you and I can take on as a customer and it gives us access to expedited shipping from Amazon along with a number of other benefits, including:
- Free Same Day Delivery
- Amazon Prime Rewards
- Video Streaming
- Music Streaming
- Prime Now
You get all of this for one yearly (or monthly) fee which is huge!
There are hundreds of millions of customers who are members of Amazon’s Prime Program, and as an Amazon seller using FBA, you’ll get access to Amazon Prime too.
What does that mean?
It means YOU get access to Amazon Prime customers!
That means when people buy from you through their Prime membership, Amazon will then quickly ship your items to the customer using Fulfilment By Amazon.
Selling In More Than One Country
As of writing this, Amazon currently has 18 marketplaces worldwide, all of which allow third-party sellers like you and me to list and sell our products. And through these marketplaces, Amazon offers over 350 million products (that’s a LOT of items!)
Whether you’re based in the USA, the UK, or another country, you can easily set up and sell your products in more than one Amazon marketplace (and it’s really straightforward to do!)
That exposes you to millions more customers across the world, making it possible for you to multiply your profits with practically no extra work involved.
This ‘marketplace multiplication’ can completely transform your business.
In fact, we created a simple formula to show you its potential…
The Rule Of 5
At Marketplace SuperHeroes, whenever we are explaining how our business model works, we talk about the rule of five.
In simple terms, we’re saying that if you’re:
- Selling 5 units per day…
- In 5 different countries…
- At an average of $5 net profit per sale…
And then you multiply that by approximately 30 days in a month… you’re running a net profit of $18,750 per month!
Now that’s impressive!
A lot of people get excited when we talk about the rule of five, but in order to achieve it, we have to make sure our profit margin is at the right level.
So if you’re selling something for $20, your profit margin must be 30% of the sale price.
That’s how much we have to be making in net profit before tax.
In other words, after all is said and done, we must be putting 30% of the sales price back in our pocket…
Or in hand…
Wherever you want to put it!
That’s the beauty of doing this on a global scale.
Let’s Talk About Europe
If you’re based in the USA, or any other country that has an Amazon marketplace, at some stage you may want to consider expanding your product line into Europe.
Again, as discussed above, this is very straightforward.
The European Seller Central fee is £25 /$39.99 per month, and this covers you for all the countries inside the European Union, including:
France
Germany
Italy
The Netherlands
Poland
Spain
Sweden
Turkey
And what’s even better is that you can fulfill orders from any of these countries, while only holding your product stock in one of them.
So you could hold stock in Germany, and fulfill orders to France.
The one main thing that you will need for each of these different marketplaces are translated listings.
Marketplace SuperHeroes actually provides this service, along with many others, for a very low cost (we really are focused on having all the services you could possibly need inside our own Ecosystem – this is something that makes us massively different to other programs in this space.)
Once translated, you can list your product with your different translations, so now your product is appealing to a French person who buys your product on Amazon.fr.
That ordered product will be taken from your German stock in Amazon’s warehouse and shipped to the customer in France.
You do pay a small fee which is an EFN fee (European Fulfillment Network). The great thing is that you don’t have to worry about having to send stock to warehouses all around Europe, it can just be kept in one place.
Don’t worry!
When starting out, you don’t have to send batches of stock to all the different countries in Europe!
You can just send it to one place and let Amazon do the rest.
But as you grow in time, you may send those products to different countries through a method known as MCI (Multi Country Inventory), but that’s not something you want to do straight away, hence why you will begin with the EFN method.
It’s for tax reasons that we follow this timeline, however, we won’t get into the tax side of the business in this guide as it’s a little more advanced (we cover all of this inside our Ignite program!).
So, that’s the beauty of being able to sell in Europe and in the US at the same time.
These are the markets that we recommend right now. There are other markets as well like Japan, Canada, Australia, and Mexico which you can sell in too (and a lot of our members do!).
We won’t talk about these today also, because they require a little bit of extra setup, but the same principles we’re discussing here apply in all of these different marketplaces, too.
We want to just provide you with the basics in the beginning, so you don’t get overwhelmed.
Final Things You Need to Sell on Amazon
First thing is that you get a company set up. Typically, the best type of company is a Limited Company because when you’re selling on Amazon there are countries of residence that are accepted and not accepted. But for most people, that’s not going to be an issue whatsoever.
You can Google this to see which countries Amazon does and does not accept.
If you need further advice on getting your company set up correctly, we’d recommend speaking to an accountant in your country of residence!
Really that’s all you need in order to get started.
Obviously, you need at least one product to start with but we do recommend trying to get a couple up and running as soon as you can to really get that multiplication effect started.
We don’t recommend that you get an Amazon account until you actually have a product ready to go. Why? Because it doesn’t make sense to waste $39.99/month when you haven’t got a product that’s selling in the marketplace.
I hope this short post has given you the clarity you need to see exactly how Amazon FBA works, and what’s required to get started.
You can find more information about the course by clicking here.
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