eCommerce has been an integral part of making money online for a number of years. However, you don’t need to have your own website in order to sell to the masses.
While that’s certainly a route you can go down, many people are choosing to sell their products on established eCommerce networks. In this way, they can take advantage of that company’s existing customer database, marketing strategy, and sometimes, fulfilment options.
In this guide we’re going to look at this method of selling online. More specifically, we’re going to look at selling through Amazon FBA.
Amazon FBA (Fulfilment By Amazon) enables you to list your items on Amazon, letting them take care of payment and delivery, in exchange for a percentage of your sale.
For newcomers to eCommerce, it’s a great way of reaching a huge base of customers that wouldn’t be available to you if you were to start your own online store. Building up a database of customers takes time and by utilising Amazon’s, you’re cutting that time right down.
That’s not to say you can shove something up there and expect hundreds of people to start buying it. It still takes a lot of work to become a reputable Amazon Seller. You need to have the right product that lots of people are interested in and that can still give you a healthy profit margin once all of the FBA fees have been applied.
In this guide we’ll go through identifying a product to sell, sourcing suppliers, pricing, listing, and marketing.
If you’re thought about becoming an online seller but were thrown by the thoughts of handling your own website, payment, and delivery, Amazon FBA may be the perfect option for you.
In this article, we’ll be looking at the process of sourcing your own branded products and listing them on Amazon. There are other methods but I don’t see them as being as sustainable as this method, therefore this is the area we’re going to explore for your residual business.
Identifying a Potentially Popular Product
The biggest factor in determining your Success on Amazon is the product you’re selling. There are a number of factors you’ll need to take into account in order to choose the right product. Use the following as a checklist:
- Product sells for between $40-80
- Product is brandable
- Product is light – ideally between lower than 4 pounds
- Product is not electronic and doesn’t contain lot’s of parts – hard to break
- You’re able to source and sell more products that are related
- Product not competing with named brands
- Product cost is no more than 20-25% of selling price
- Product is high quality
- Product solves a problem many people face
- Product is sought after year round
- Product contains multiple searchable keywords that garner over 100,000 monthly searches
- Product can be made by a supplier you have access to
- Product relates to the niche of your blog.
This might seem like a big list but there are certainly more you could add. However, these are the major components you need to address and we’ll go through them all in a little more detail so you can see just why they’re so important.
Product sells for between $40 – $80
Previously, the sweet spot would have seemed to between $10-$50. It’s true that people find it easier to part with the lower amount but it throws up a lot of problems in making this a product for you to sell long-term.
This is because there will be people looking to see what’s doing well on Amazon and by having a relatively cheaper product, you’re not presenting a high barrier to entry.
Meaning that you’re more than likely going to be copied.
I’ve seen this happen to many people selling on Amazon. They go through the long process of finding a great product and supplier. Put tons of time and effort into their marketing strategies and gaining reviews, only to be undercut by someone who has essentially copied their entire business model.
Now, there is a risk of this happening no matter what you are selling, however, there are steps you can take to make it harder for someone to break into the same market.
One of these is finding a product that costs more to produce. This also has the downside of making your initial investment higher but you will find that far fewer people will have the money to replicate your success.
Here you’d be looking at an initial investment of around $10,000.
Now I know that’s not feasible for most.
So there is also the option of finding a cheaper product with the aim of selling your complete stock and not re-ordering. This allows you to generate more funds for your next product but has the downside of wasting product reviews for the initial product. Often, for someone to go in and fill the gap you’ve just left.
It’s definitely something for you to think about. A lot of people are selling on Amazon and what worked before isn’t working as well now. It’s important to keep on top of the latest trends in order to ensure the longevity of your business.
Product is Brandable
Putting your own brand on a product is going to distinguish your product from others and make it harder to replicate. It can also lead to a massive boost for your marketing efforts. People forget generic but they remember brands. It also allows you to add related branded products to your itinerary and is essential for scaling your business down the line.
This is one of the elements you’ll need to check with your supplier. To be honest, it’s not usually a big deal for most suppliers unless you’re completely ripping off an existing product. In that case you’re going to face issues whether you put your brand on it or not.
Product is Light
This not only lessens the shipping costs for the customer, but drastically reduces the shipping costs you pay to your supplier every time they’re replenishing your inventory.
Product is Hard to Break
This is obvious, but one of the biggest headaches you can have is from products getting damaged on delivery, or stopping working shortly after a customer purchases one.
Avoid electronics all together as you there will inevitably be a lot of issues, even if it’s as simple as a customer not knowing how it works correctly etc. You minimise the admin you need to have a product that’s not electronic and not made up of lots of breakable parts.
Source a product that’s all one piece or flexible.
Even though you’re only starting, you need to be thinking of your follow up products.
What related products would go well with your first one?
Think about the ‘Frequently Bought Together’ box you see at the end of products. What product would go well there?
This is important because as you grow your shop you can pick up a lot of extra sales here. It’s also important in building your brand and scaling your business. Eventually you want people to think of you when they have a need for a group of products.
The ultimate goal is to have customers looking for your products rather you focussing all your efforts on convincing them that they should be shopping from you.
Not Competing with Big Brands
Make sure to check any products you’re considering and ensure larger brands aren’t creating the same or a similar product. If you have to compete with a large brand you’re going to find it very hard to out sell them, if not impossible.
It’s much better to find a product where you can establish yourself as a market leader. It will still take work but you’re giving yourself the best chance.
Product Cost Maximum 20-25% of Selling Price
This includes dividing your supplier shipping price across the cost of your products. You need to make a margin and once you take Amazon’s FBA fees into account, you need to make sure you’re making a healthy profit.
Amazon’s FBA fees come in at around 15%. This isn’t exact and you can use the Amazon FBA Fee Calculator to get a more accurate price. Find a similar product with the same dimensions, weight etc. to see what you’ll make on each sale.
Product is High Quality
Another hugely important factor in ensuring your success is customer reviews.
You’ll need to build of quite a few high quality reviews in order to start gaining traction on your product. In order to get good reviews you need to be selling products of a high quality. Anything less and you can expect negative reviews to start coming in quickly.
Keep in mind that people are much more likely to go to the effort of leaving a bad review than they are a good one. This is just the way it is unfortunately, but that doesn’t mean you shouldn’t expect good ones.
Instead make your product so good that when the reviews come in, they’re going to be recommendations. On average you’ll receive 1 review for every 30 purchases. You can run certain promotions in order to improve on these numbers but amazon are very strict on this so you need to ensure you’re doing this in the correct way. We’ll look at how you can do this later in the article when we discuss marketing.
Product Related to the Niche of Your Blog
Hopefully you’ve read our article on setting up your own profitable blog. Even though this is a separate business in itself it can be a major driving factor in the success of your other businesses. Marketing your product on amazon can be difficult and having a ready made stream of traffic via your website and mailing list can make a huge difference.
If your blog is in the gardening niche, then selling gardening products is what you need to be doing. Have a cooking or baking website? Create related products.
This all ties in to you being able to create a business that grows and expands on its revenue streams. Make sure your product relates to your existing website. If you haven’t got a website yet, then build one. Trust me, it will be the thing that ties everything together in the end. If sales go well, you could be selling from your own online store and taking away more of the profit.
Amazon Keyword Research
If you haven’t read our article on becoming a self-published author, then it might be worth giving it a quick read now. Particularly the part on keyword research. Although we look at books here the premise is largely the same. We’ll look at it again briefly here.
When you gather product ideas, you need to head over and see what the best sellers are for keywords as well as the categories you’re aiming to rank in.
So let’s say you’re looking into the dining sector and you think focussing on wedding cake stands specifically would be a good idea. First of all, you would need to go into the ‘cake stand’ category and examine the best selling ranks of those products.
You want to target people hosting events, weddings, or professional bakers so you’re thinking a 6 tier cake stand would be good and it seems to fall within the right selling price. The first thing you notice is that the single – 4 tiered stands seem to come in a wide range of designs and materials, but the wedding cake stands at 5-6 tier all seem to be the plain acrylic?
Maybe there’s a gap there for you to merge the higher tiers with different materials? That would be something you’d have to find out from a supplier, but first you need to see what the selling potential is.
So take a look at the first wedding cake stand in the cake stand category.
Under product information, you’ll be able to find not only the sellers rank, but other information.
We can see that the weight is a bit on the heavy side, that would be a negative and you’d need to check with a supplier as to what effect that would have on your costing.
It’s got lots of high reviews and was first listed over a year ago so that looks positive for sustainability.
We can see that it’s listed as #12,134 in the entire home & kitchen section and there’s a way we can see how many monthly sales that equates to.
You can do this by using Jungle Scout, a free Amazon product research tool that lets you see what sales rank equates to in sales volume.
So as we can see, a sales rank of #12,134 in home & kitchen amounts to around 365 sales per month. Let’s break down the margins on this.
This particular product sold at $56.99. Using the maximum cost of 25% we can estimate that the product is costing us around $14.25 a unit. Amazon’s fees are roughly 15% of your selling price which would amount to $8.55. So:
Selling Price: $56.99
Less Product Cost: –$14.25
Less FBA Fees: –$8.55
Total Profit per unit : $34.19
X 365 sales per month =
Total Monthly Profit: $12,479.35
Not bad at all.
However, remember this item is heavier than what we would like to be shipping and this affects the costs, so it’s important to run the FBA Fee calculator as well. Simply enter the ASIN from the product you identified to get a breakdown of costs.
We still need to minus the product cost from this which leaves us with:
Total profit per item sold: $25.58
X 365 monthly sales =
Total monthly profit of: $9,336.70
Can you see how much difference a couple of pounds on your product can make? This is still a nice monthly profit provided you reach that volume but maybe start thinking how you could reduce the cost. Maybe designing the product with intricate wiring would help reduce weight?
Let’s look further through the list to make sure this sales volume stays high down the list.
Down in the recesses of page five, there’s a nice 6-tier square wedding cake stand.
So this is ranked at #43,296 which according to Jungle Scout equates to 160 sales per month. This sells for $53.88 but notice that it’s almost 2 pounds heavier than the last product. Lets see what effect this has on the monthly profits.
Minus a product cost of $13.47 X by 160 units per month =
Monthly profit of: $3,667.20
Still not bad, however it’s a big drop from the first on the list.
This product could be feasible if you could angle your costs closer to 20% of your total selling price and get the weight down on the product.
The next thing we’ll look at is how often keywords are searched on Amazon. To do this, we’ll use the tool merchant words which will give you 5 results back for free. Head on over and make sure you’re searching by category and sorting by highest search volume.
As you can see, we’re far exceeding the 100,000 monthly searches for the term ‘Wedding Cake Stand’. However, ideally you’d like to see 2 or more keywords with searches of over 100k per month.
The next thing you’ll need to do is search your product by the keyword and check the sales rank using this method. You want steady sales results through the top 100 results. If it drops off to nothing, then it’s going to be much harder to make a profit.
Remember this is an essential component in your success and it’s going to take time. It needs to take time in order to make sure you don’t end up with a warehouse full of product that nobody wants to buy.
Take your time and come up with a few possibilities before moving onto the next stage – sourcing the product.
Sourcing Your Product
By far, the best place to look for suppliers is by using Alibaba. They have a huge network of manufacturers and because competition is fierce, they’re usually very helpful and quick to come back to you.
Head on over to Alibaba and we’ll start searching for your new supplier.
Now if you search the term “Cake Stand” you’re going to get a lot of results. Interestingly, you’re going to see the exact models that are sold on Amazon at present.
But you want to differentiate yourself, so when looking for a supplier, read through their descriptions and make sure that it says customisation available. Even better, find the suppliers that say they will work with you on your own design.
The key to standing out on Amazon at present is to be different from the rest of the crowd. You can sketch out your own design or tell the supplier what you’re looking for and they’ll be able to tell you if they can do it or not.
There are fantastic suppliers available on alibaba and many that will work with you to get your own design made. Importantly, you want to make sure that you get your brand on there as well, as this can help with copycat situations down the road.
These are the things you need to find out from your supplier:
- What you need to find out is the minimum order quantity
- Time from order to delivery to designated Amazon warehouse
- How many units can be produced a month
- Shipping costs
Also make note of reviews from other people who are using these companies. It’s important to make sure that people are satisfied with their work. Also, suppliers on alibaba will offer sample orders so use this option to make sure you’re happy with the product before you order hundreds or thousands.
Again this takes time, but you need to be confident with your supplier.
Once you have finalised a design you are happy with, you need to find a backup supplier who will be happy to make this should anything happen to your original supplier.
You can’t put all your eggs in one basket and it’s not unheard of for a supplier to either go out of business, or be unable to fulfil your order right when you need it the most. Have at least two options and take turns in ordering from them. This ensures you keep a relationship with both.
When you receive your sample, you need to really look at it from a consumers point of view. Ask other people to look at it as well.
- Is it high quality?
- Is it durable?
- Would it break easily?
- Would people buy it?
There are the questions you need to be happy with.
Marketing Your Amazon Products
Ok, so you’ve got your product, put your first order in and the goods have arrived at an Amazon FBA warehouse, ready to be shipped to paying customers.
However, you’re not finished by a long shot.
Getting to the top rankings within a category takes a lot of work and a lot of clever marketing.
Ideally, you would have your own blog and mailing list after reading our topic on setting up a profitable blog.
So first things first. The most important aspect in getting people to buy your product is by amounting a good amount of reviews. Initially, we’re going to look at getting 20 reviews.
This might seem impossible given that you’re not getting traction yet, however, we’re going to run a promotion to make sure you manage it.
Let’s run with the Wedding Cake Stand again. We’re going to set up a promotion that let’s the lucky customer get your branded wedding cake stand for just $1 in exchange for a review.
Now there are a couple of elements to this. Firstly you’ll need to create a landing page for your promotion.
If you’re comfortable with coding you can create a page on your blog. If you’re not and would like an out of the box page, then consider Lead Pages. To be honest, they create amazing templates so I don’t bother to waste time making my own anymore. Instead I head on over and pick a template that i feel would appeal to my target market.
When you’ve done that you need to create the copy. Simply, what you’re doing here is highlighting your product, it’s picture, and the price it normally sells for. Your stating that by signing up to this newsletter, the customer will receive a coupon to receive the wedding cake stand for $1. All you’re looking for in return is for them to review your product.
You can set up this campaign in Amazon promotions by using Claim Codes.
Make sure you create a mailing list solely for this promotion as you’re going to use it to follow up after they’ve made their purchase.
Set a limit as to how many people you want to avail of this promotion. You want 20 reviews but it would be highly optimistic to expect that from 20 customers. Try 30 initially and you can always expand on the amount if you need to later.
I know that you’re giving your products away but it will come back to you in sales.
Now that you’re set up, you’re going to run a Facebook PPC campaign targeted at people interested in Weddings and bringing them directly to your landing page. The advert can simply be a picture of your wedding cake stand with the copy “Claim your elegant wedding cake stand for just $1 today!”. Give yourself a daily budget, you shouldn’t need too many clicks in order to fill your quota so you won’t spend more than $50 in total on this campaign, provided you targeted correctly.
We’ll be going into Facebook advertising in detail on another article, but if you need any help in the meantime, let us know in the comments below.
Ok, so your campaign is set up not let it run.
Follow up with your customers to make sure you get the review and use this opportunity to get some feedback.
Once you’ve got your 20 amazon reviews, it’s time to move on to the next stage.
Amazon pay per click advertising is a really useful tool in promoting your product and they have fantastic keyword tools that allow you to refine your campaign.
However, no matter how good your campaign is, you’re not going to get the conversions if you have no reviews. This is why we took the time to create a promotion specifically for collecting reviews.
Armed with your 20+ reviews, you can now make good use of advertising on Amazon.
There will be the option to ‘promote and advertise” next to each of your listed products, or you can simply head over to Amazon Marketing Services.
Here you will be given the option of two types of campaigns; Sponsored Products or Product Display Ads.
This allows you to push your product towards the top of the list for specific search terms. This means when a customer is searching for a specific item related to your product, your item will appear towards the top so long as you have a bid on that keyword.
You should have your main keywords identified, however, Amazon is useful in recommended keywords that might work as well. On top of this, they have a breakdown on your campaign that allows you to see which keywords are performing the best including money spent, sales made, conversion rates, and money made.
This is really useful for dropping non-performing keywords and adding new ones, allowing you to refine your ad to perform very well.
Simply go down through the recommendations and add the ones you’d like to run with. You can manually enter more keywords they might have missed as well.
Select your daily budget, there’s a minimum of $1 per day, and how long you’d like the campaign to run for.
Finally, you’ll be allowed to enter 150 characters of text on your add so make sure you make it compelling.
When you’re happy with your ad, simply press submit for review. And your done!
It can take a day or two for Amazon to approve your ad but once it’s up and running your perfectly fine to adjust the keywords and leave it active.
Selling on Amazon has changed dramatically over the past few years and you’ll always going to try to stay on top of these changes. It can take a lot of work to become a best seller or make steady sales but if you follow the steps listed here you’re off to a great start.
Getting your first product up and running is the hardest part. Every time you repeat the process it’s going to be a little easier. On top of this, having multiple products usually boosts the sales of your other products so you should always be looking to expand.
Once you’ve got to the first page of results and you’re getting steady sales you need to start thinking about your next product.
On top of this, as your website grows you’ll want to start selling on your website as well. Amazon FBA allows multi-channel fulfilment which means they’ll perform the picking, packing, and sending, even if the product is ordered on your site, you just need to let them know.
It’s a useful way to grow and allows you to keep customers details.
There are a lot of routes to expansion, however, before you can consider these you need to get your first product listed on Amazon.
Good luck and if you have any other advice, please let us know below in the comments.
Also, if you think others would benefit from the information in this article, share! We want to make sure everyone is pursuing residual income in the right way!