There are approximately 2.5 million sellers on Amazon with one product; 66% are top sellers using FBA, or Fulfillment by Amazon. If more than half of Amazon’s top sellers are FBA users, this should tell it is incredibly profitable to start an FBA business.
Many of those FBA sellers also participate in private label sales. Private label selling involves taking ownership of a product manufactured by a third party with your unique branding. This enables you to leverage better tools and acquire loyal customers who recognize your brand.
Below, we will provide you with the steps you need to make your PL FBA business successful.
Five Steps For Starting An Amazon FBA Business
All FBA businesses start with these five steps:
- Product research
- Finding suppliers
- Choosing FBA/FBM
- Creating product listings
- Promoting your products
1. Product research
To find what to sell on Amazon, you need to go through product research. To start with sound research, you need to know how to use the right tools. Here’s a list:
- Using third-party analytical tools designed explicitly for Amazon. These tools (like AMZScout) enable you to dig into historical data, search counts, and sales numbers that Amazon doesn’t provide you.
- Researching the latest social media trends will tell you what people are looking for. Pinterest and Twitter are two great starting points to use pins and hashtags to look across multiple niches.
- Using the Amazon Trend Report gives you a comprehensive look at overall trends for the industry. This gives you a potential starting niche. For example, the 2021 trend report is all about the growth of social exercising, which includes multiple possible products in the workout niche.
- The Best Sellers category tells you the most popular products set into multiple product categories. Look into narrow categories and avoid exceptionally competitive products at the very top.
- The Movers & Shakers category is the short-term look at top-selling products. This targets lower competitiveness items, but you’ll still want to look at historical data from this-party apps.
The majority of product research comes down to knowing what to look for. Finding low-competitively high-demand products with consistent sales is crucial. Using a combination of data from above, you’ll find what you need to make confident decisions.
2. Find a supplier or manufacturer
Finding a product supplier (or manufacturer) is a complex process. Besides general niche research, people get hung up here a lot. However, you can narrow your search by using well-known sites.
Alibaba or AliExpress include a wide range of manufacturers from overseas. These manufacturers leverage the low-cost labor from their country to give you better rates. If you prefer a more localized option, you might consider Thomas.
When finding a manufacturer or supplier, here’s how you need to approach it:
- Take a look at their online reputation. Manufacturers on sites like Alibaba will have positive and negative reviews. You might also google “supplier” reviews.
- Speak with multiple suppliers of the product you want to offer. Use their rates to compare amongst each other.
- Test quality by requesting samples from the supplier. If the quality of a single product is good, that bodes well.
- Consider how you will make your product unique. Ask how the manufacturer can add custom elements to the item and make some requests about design to see their limitations.
Selecting the best company and making your product together is known as prototyping. Prototyping requests that you make a single unit of the product for testing, eventually building up to larger quantities of the product.
3. Choose FBA or FBM
When deciding how to ship and store the product, you have FBA (Fulfillment By Amazon) or FBM (Fulfillment By Merchant).
FBA, as mentioned briefly above, is handing off all warehousing and shipment duties to Amazon. In cases where you don’t have enough money to hire a team and buy/rent a warehouse, this is your best option. However, you will have to calculate fulfillment fees as part of your costs.
FBM is when you (the merchant) fulfill all orders yourself. This means you handle shipping, typically relying on FedEx, UPS, or USPS during your early days. You also have to worry about storage, which might not be an issue if you have extra room in the garage. However, renting a warehouse can get pricey.
Amazon strongly prefers its users to go with FBA, typically because it means Amazon gets a more significant piece of your sales. The online retailer will often allow you to outrank fellow FBM competitors, giving you many reasons to go with FBA. In either case, you still need to keep a close eye on your inventory levels.
4. Create product listings
Once you get through the Amazon signup process and get your items, you will want to create product listings. If you are a PL seller, you get to create a custom listing. These listings have the potential to be found through search. Your ability to show up at the top of those results is known as eCommerce SEO.
A big part of eCommerce SEO is the strategic placement of multiple keywords. Your primary keyword appears in the title, while secondary keywords are on the backend and in your product listing. When creating a listing, you’ll want to be sure to do your keyword research.
Long-tail keywords, or a string of words that describe your product in detail, are often best. These long-tail targets also contain short cousins, allowing you to hit multiple keywords simultaneously. Longer keywords also enable you to better buyer intent or closely meet the buyer’s needs.
Many of the third-party analysis tools mentioned above also offer keyword research services. However, you can also use Amazon’s built-in PPC tools to find out what people are searching for. Higher costs of PPC typically mean that it is harder to rank organically.
5. Promote products
As you might imagine, Amazon PPC (Pay Per Click) is their primary form of advertising. The advantage of using this form is that you only pay as much as you want to. You also only pay if your ad draws clicks, often saving you money.
Going back to keyword research, many PPC is finding the most appropriate keyword and creating the best advertising. When you pay for a keyword, this is typically a “sponsored product.” The sponsored product section enables you to appear at the top of search results.
The more sales and positive customer reviews you get from this advertising, the more likely you’ll appear there organically. Ideally, this means you can shift your advertising budget to other things. However, you can also choose to maintain that top-slot ownership, giving yourself more significant sales from the target keyword.
However, you might also transition your ad budget to alternative keywords or products. What you do depends entirely on your priorities, but advertising will always be a continuous part of any good marketing strategy.
Conclusion
When starting an FBA business, PL is one of the best starting points. So, if you’ve always thought about starting a business, Amazon FBA is an excellent opportunity.