If you are a beginner Amazon FBA seller then this article is for you because I am going to go over everything that you need to know so you can start selling and making money on Amazon FBA. This article is perfect for you if you are someone that is just starting to sell on Amazon FBA. These are the most important things that you must know as a beginner. If you are on your Amazon FBA journey for less than 6 months, I highly recommend you to read this article until the very end.
Of course, there is so much more information that comes with starting a real Amazon FBA business but these are, like I said, the most important things that you must know. And a lot of things here that I am going to over is going to save you a ton of money long term.
Open Professional Seller Account:
- Information you give Amazon has, to match your utility bill (name and address)
- If citizenship country is not listed, choose the country that you reside in.
- Takes a few days to a few weeks
- Email Amazon to reimburse the monthly professional fee if you are not selling yet
The very first thing that I want to go over is opening a professional seller account and what you need to know if you are just starting to open one. All you do is go onto Amazon Seller Central and this is the very first page that where you enter your name, email, and password to start a Seller Central account.
I am not going to walk you through the entire process because it’s straightforward. However, there are some things that you have to know.
Now, if you are doing Fulfillment By Amazon, meaning you are shipping your products to the Amazon warehouse to sell, then you have to use a professional seller account. There’s also an option for individual seller accounts but you have to have a professional account if you are planning to grow your business big on Amazon.
One very common question that sellers have been asking is, “why can I not start my Amazon seller central account, and why does Amazon not accept my information?”.
You have to make sure that the information that you send to Amazon when you are going through this sign up process, this information has to match the information that you are providing to them when they ask for a utility bill, or a cell phone bill, or whatever bill that you are presenting to Amazon, your name and your address has to match what you signed up for in your Seller Central account.
If the name and the address do not match, Amazon may likely not accept your account. That is why you may not get accepted. Some sellers also told me that their country is not listed when they signed up for a Seller Central account. And if the citizenship country is not listed, all you do is choose the country that you live in. For example, if you have Mexican citizenship, but they do not have Mexico in their dropdown when you are trying to sign up for your account, but you live in the United States, then all you do is choose the United States. After you select the country that you do live in, Amazon will accept your account. However, if they still do not accept your account then what I suggest you do is just email them and explain your situation and tell them where you live.
Now, if your utility bill address is from the country that is not listed on Amazon, then all you do is call your cell phone company or whatever company that you are using and then tell them to change the address to match the country that you live in. You can always adjust the addresses from whatever bill that you are trying to send to Amazon. I want to point that out because a lot of people lately have been telling me that they cannot get accepted for whatever reason. The whole process takes a few days to a few weeks. And after you get accepted, you will be charged $39.99 if you were to open an account on Amazon.com.
Now if you are not selling yet, if you are still doing product research or trying to get your product manufactured, then all you do is email Amazon to reimburse you that monthly fee. And when you are ready to sell, you can switch over to a professional seller account when your products are ready to be sold on Amazon. You can always get that monthly fee back. But don’t keep on doing this. Make sure you only ask Amazon one time for the $39.99 reimbursement.
Low-risk Amazon Products:
- Light (under 2lbs)
- Unbreakable through transportation
- Not saturated but high in demand
- Cost between $2-$4 to source on Alibaba
Let me give you an example of a low-risk product. (the kid’s cutlery set), is in my opinion, a low-risk product.
Now, please do not go sourcing this product because there are lots of people reading this article. But this is an example where I think it’s a good product to source, that is light, that is not fragile, and that has low FBA fees. If you ever want to look at the fees or anything else that is associated with this product, let’s just look at this competitor
If you have Helium 10 Chrome Extension, which is this chrome extension installed
You can calculate fees for this specific seller. And you can do that for any seller as well on Amazon.com. If you put in the right dimensions and everything else related to your product, it’s going to tell you the referral fee and the FBA fee, and everything else that is on this profitability calculator.
I highly recommend you to enter the information on this calculator so you know exactly how much you will be paying. It’s as simple as this. If you need the dimension and weight information, all you do is contact your supplier and ask them for the weight and dimension and everything else.
I am not going to go into this in detail because it’s quite obvious and straightforward, but what you want to do for your first product is to source something that is low risk. For example, the kid’s cutlery set is light, it’s under 2 pounds. If you start to source something that is over 2 pounds, it’s going to cost you more. It’s going to cost you more for FBA fees and your shipping fees will be more as well.
As a beginner, I really suggest you start selling light products and products that are not fragile. They will not break through transportation. Nothing that is glass. No electronics. Nothing that can be easily broken through air or sea shipping.
Pick a product that is not saturated but high in demand. There is a difference between products that are saturated and high in demand. For example, you should not be selling a cell phone case because that is so saturated. You must know how to do your product research before you start selling on Amazon. The cost per unit that you should start with is anywhere between $2 to $4 on Alibaba. If we go on to Alibaba to look for the product, you want to make sure that the cost per unit is $2 to $4.
I only suggest $2 to $4 for beginners because, again, it’s much lower risk. If you were to lose this amount of money per unit, it’s probably not going to hurt you as bad compared to sourcing a product that is over $8 to $10. Imagine you sourced a product and something doesn’t work out along the way, you just lost $8 to $10 per unit. As a beginner, I think staying around $2 to $4, maybe even $5, for your first product to sell on Amazon is the best way to go.
Low FBA Fees:
- Double-check your FBA fees here: https://sellercentral.amazon.com/gp/help/external/G200209150
- The fulfillment fee should not exceed $5 for beginners
- Check out monthly storage fees (short term & 356 days – long term)
- Calculate your referral fee, between 8% and 15% (with a minimum referral fee of $0.30 per sale) to amazon after selling each unit: https://sell.amazon.com/pricing.html
As a beginner, I really want you to become familiar with how much money you are actually paying Amazon.
I get questions all the time from beginner sellers and they are always saying, “how come I am not making a profit on Amazon?” And my response is, “well, did you do the proper math to find your profit margin, and is your FBA fee low enough for you to make a profit on Amazon?” Just go to this website https://sellercentral.amazon.com/gp/help/external/G200209150 This page is so important if you are a beginner. You want to go through all of the fees that are listed there because you can potentially be charged with any of these fees, especially fulfillment fees for orders on Amazon because you will get charged for every unit that Amazon helps ship to your customer, every time they buy your product.
What you want to do is look at standard-size product tiers. As a newbie seller, I really recommend not going over $4.90.
I think over $5 for FBA fees as a beginner is too much. Just like what I said here, (fulfillment fees should not exceed $5 for beginners). I think this will really lower your risk for your very first product on Amazon. In case something goes wrong along the way, you are not crying out for help after losing so much money for fulfillment fees. If you’re a beginner, I think falling within this range right here is perfect
Anything before large standard-sized, 1 to 2 pounds. As you can see, if you go over 2 pounds, it’s going to start charging you more and if you go over 3 pounds, it’s going to charge you much more.
Please take some time to go over the fees that you may be paying Amazon.
You should also look at monthly inventory storage fees, and get yourself familiar with long-term storage fees.
Now, long-term storage fees only occur after 365 days. If you have inventory sitting in the Amazon warehouse for longer than this period of time, then they will charge you something called long-term storage fees. But if you know how to sell on Amazon, and your product is selling off the shelves, you will never get charged long-term storage fees. For me, I never get charged long-term storage fees because my products sell super fast.
Make sure you check your monthly storage fees. There are short-term storage fees as well and that would be storage fees that are less than 365 days, just go back to this page and look at how much you will be charged for the storage fee. I will leave this up to you. This is the one you want to look at right here
Now you also want to calculate your referral fees. Our referral fees are kind of like a commission that you pay to Amazon for each unit that you sell. Because obviously if you are using their online platform to sell your product, they are going to take a small commission. And that can be anywhere between 8% to 15% with a minimum referral fee of $0.30 per sale. You probably see why now you should be calculating your exact profit margin for your FBA fees, your cost per unit, and your referral fee when you are selling on Amazon. You should know how much you have to list your product on Amazon so you can actually make a profit.
If you want more information on referral fees, then go to this link https://sell.amazon.com/pricing.html
I want to go over a few things when you are paying your supplier on Alibaba
- Always use Trade Assurance for peace of mind
- Use a credit card if you receive extra points
- Do not use TT wire transfer
- Supplier may make you pay a processing fee (a fee for them accepting payment through Alibaba)
- Paypal is expensive, but is another option; use “Send as a service”, Not “Send as a friend”.
If you do not use Alibaba, then this may be irrelevant to you. But I think it’s worth knowing just in case one day, you decide to source your product on Alibaba. There’s nothing wrong with sourcing products on Alibaba. If you were to source products from the US or in your own country, it’s going to cost so much more.
Let’s go over some things that you should know when you are making payments on Alibaba.
- You should always use Trade Assurance for peace of mind. Trade Assurance will cover your butt if something goes wrong with your shipment. Maybe your supplier refuses to make your product on time. Maybe your supplier makes a whole new different product that you never asked for. Some things could always go wrong. But it’s very rare that something like that will go wrong.
- You can also use your credit card to pay your suppliers if you have extra points on your credit card. But if you use your credit card, I do believe they charge an extra fee for that. It’s a very small fee but still, you get charged more.
- One thing I do not recommend is using TT Wire Transfer. You do not want to use a wire transfer if you are a beginner and you are trying to pay your supplier because if something goes wrong, your money is gone. If you use a credit card, you can always try to get your money back from a credit card payment. And if you use Trade Assurance, you can get your money back as well.
- One thing you should be doing is linking your bank account, linking your US bank account on Alibaba so when you use Trade Assurance to pay, that will automatically debit money from your bank account to the supplier.
And there is protection on that as well. I do not ever use my credit card. I only use my debit card account which is my bank account, using Trade Assurance, to pay all of my suppliers so I can get peace of mind.
Now, when you use Trade Assurance, the supplier may ask you to pay a processing fee. This is a fee that Alibaba charges the supplier for using Trade Assurance. Sometimes that fee is already negotiated in every single cost per unit so they may not ask for it. But don’t be surprised if they ask you to pay a processing fee. All of our processing fees are around $70 for my main supplier so it’s not that much but you should be aware of this just in case your supplier asks you to pay a processing fee. They are not making additional money off of you. This is just what Alibaba charges them for having you use Trade Assurance. I hope that makes sense.
You can also use PayPal but personally, I never use PayPal to pay my suppliers because it’s very expensive. There is an additional fee if you were to use “Send as a service”. Do not use PayPal to send as a friend. If you use PayPal to send money to your supplier as a friend, you are not going to get your money back from PayPal if something were to go wrong. Always use send as a service in case something does happen, you can always go to PayPal to try to get your money back. That’s just another layer of protection. They may charge you more if using PayPal, send as a service. But if you are a beginner, do not send as a friend. Stay away from that.
Amazon Product Labelling:
- Buy a UPC barcode from speedybarcodes.com
- Use an FNKSU barcode if you’re the only one selling on Amazon
- Labeling requirement: https://sellercentral.amazon.com/gp/help/external/200141490?language=en-US&ref=mpbc_200243200_cont_200141490
Ask your supplier to label all units, do not use Amazon labeling service. Amazon FBA label service fee is $0.30 per item.
A lot of new Amazon sellers get confused with Amazon product labeling. But it’s actually really easy.
What you want to do is buy a UPC barcode. Some people like to buy from GS1. For us, we still buy from Speedybarcodes because we are only selling on Amazon.com. If you plan to expand in the future into really big retailers such as Walmart or Target, but even for me, that is so far away for me, I don’t know if I will ever do that. But if you are planning to really blow up big with your product, then yes, get your UPC code from GS1. But if you are just starting, just get your barcode from Speedybarcodes to build your product listing. After you get your barcode from Speedybarcodes, you want to create a new product listing. Put your barcode in that listing and use the FNSKU barcode, put that barcode on every single unit. Make sure you ask your supplier to label all of the units with your FNSKU barcode.
Do not use Amazon’s labeling service because they charge you quite a bit. And if you get your supplier to label all of your units with the FNSKU barcode, they should not charge you very much. My supplier does it for me for free because my barcode is already printed on my product packaging. But if you have to use sticker barcodes, then they should charge you very little. As low as $0.2 per unit. If you want to check out more labeling requirements from Amazon themselves then you should look at this link right here https://sellercentral.amazon.com/gp/help/external/200141500
If you do not understand the difference between UPC and FNSKU barcodes, that’s totally okay. After you start creating your listing with the UPC barcode, you will automatically see your FNSKU barcode pop up and you can print your label from your Seller Central account.
Shipping Internationally To Amazon.com
- Hire a freight forwarder to take care of all shipping needs
- Compare prices with supplier and freight forwarder
- Ask for a quote for shipping before you may pay your supplier
- Calculate margins, best to not go under 30%
I have always been hiring a freight forwarder to pick up my products from my supplier’s warehouse and then bring it on the boat, all the way to the Amazon warehouse in the United States. I have always been doing that since day 1. We have a really good relationship with our freight forwarder and I’ve never changed that. I do not recommend using your supplier to ship your products because sometimes you don’t know what extra charges the supplier is adding on top of every shipment. They will likely not break it down for you. But if you ask a freight forwarder, they will break down every single fee so you know exactly how much you are paying. If your supplier ever does break the fees down for you, which I don’t think that they will because when you use a supplier to ship your products to the Amazon warehouse, they have a freight forwarder as well. Just so you know. The supplier is not the one that is running to the FedEx or DHL center to help ship your product. The supplier has their own freight forwarder, believe it or not.
- After you calculate the shipping and the cost per unit for your inventory, you have to make sure that there is a margin. If you already paid your supplier for your products and then you ask for a quote from your freight forwarder, what if there are no more margins left? What if your margins are super slim because unexpectedly, your freight forwarder is telling you that it’s going to cost so much more to ship your products. You always want to make sure you get a quote for everything before you pay your supplier to make your products.
- The best profit margin percentage I think is 30%. We will never source products that are below 30% and this is before PPC ad spend. If you go under 30% before PPC ad spending, it’s going to be extremely hard for you to make a profit on Amazon because to launch your products on Amazon, you are going to have to pay for Pay Per Click advertising to launch your products. And that is after you master how to launch your products using Amazon PPC. Only then you can make a good profit on Amazon. That’s why I always like that 30% profit margin rule before PPC.
There’s one more thing you should be aware of. If you are paying your freight forwarder or your supplier, which I don’t recommend, using PayPal, make sure you go over the PayPal fees. And on this page, it’s going to show you all of the PayPal fees if you were to send money over to your freight forwarder using Send As A Service. You will get charged a fee and you have to be aware of that fee. You can also create an example through your own PayPal account. For example, if you have to pay your freight forwarder $1,000, go into your PayPal account, try to send $1,000 to your freight forwarder using sent as a service, and then you can see the fee that will pop up. Of course, you want to know the fee because depending on how much money you are sending over, you may get charged a high fee. That’s another reason why it’s so important to build a relationship with your freight forwarder so you can do what I do and start sending money as a friend in PayPal, after you built that trust and then you no longer have to pay an additional fee to PayPal.
- Start with the amount of money that you are comfortable with
- A common amount of money to start with is from $3,000 to $5,000
- Make sure you have income coming in
- You cannot start this business with $0 income
How much money do you really need to start selling on Amazon FBA? You should always start with the amount of money that you are comfortable with. What you are comfortable with is different for every single person. Some people start with over $10,000 because they are sourcing a more expensive product. Remember earlier, we talked about the cost per unit. If you are someone that is sourcing a product that is over $10 per unit from your supplier, I think you will have to start with over $10,000 altogether. But we are not going to get that crazy. In fact, I still do not source products that are super expensive. All of our products are under $4 per unit.
A common amount of money to start with Amazon is from $3,000 to $5,000. This is the most common amount of money I see people get started with. With this amount, $3,000 to $5,000, this includes all of the subscriptions that you have. It includes inventory that you are paying to your supplier and it includes the amount that you are paying your freight forwarder to ship your products to the Amazon warehouse.
You have to have income coming in. If you don’t have a job right now and you are completely broke, this business is not for you because you cannot start a business with zero dollars coming in. You have to have some sort of money coming in because you need money for PPC ad spend. When you launch your product on Amazon, you need to invest some money into PPC advertising and that will cost money. I cannot tell you how much money it will cost because it’s different for every single person. But just to give you an idea, you at least need $20 per day to get any sort of result for PPC.
That’s why if you have a normal 9 to 5 job or if you just have a part-time job, you can still sell on Amazon. Because you have money coming in to feed your Amazon business. But for inventory and shipping to Amazon and subscriptions, all you need is $3,000 to $5,000 if you follow my rule to only source low-risk products from $2 to $5 per unit.
I hope this article has helped everyone. if you are a beginner trying to sell on Amazon. Please take these points into consideration because not a lot of people know this. A lot of people that are new to selling on Amazon are very confused. I hope this article has cleared that up for you.