Amazon is the world’s largest retailer, and it is only getting bigger. The good news for anyone looking to make money online is that Amazon allows third-party sellers to reach its massive audience by selling products on their site. That means there are endless possibilities and huge income potential.
Selling on Amazon means many different things to different people:
- You could sell used items that you buy at yard sales and thrift stores.
- You could buy products on sale at retail stores and re-sell them for higher prices on Amazon (known as retail arbitrage).
- You could buy products wholesale and sell them on Amazon.
- You could write and sell e-books for Kindle.
- You could create your own custom products.
- You could find a manufacturer and hire them to create products for your own brand (private label).
Each approach has its own set of pros and cons, and there are people doing very well with each of these business models. My wife and I built a six-figure business selling private label products part-time on Amazon (more on that in a minute), and this article will show how to sell on Amazon.
What is FBA?
As a third-party seller on Amazon, you can fulfill orders yourself, or you can join their FBA program. FBA stands for Fulfillment by Amazon, and essentially the program allows you to sell your products on Amazon without having all of the headaches associated with order fulfillment. You’ll send your products to one or more of Amazon’s warehouses and they’ll store the product for you. When someone orders your product Amazon will pack it up and ship it to the customer.
Of course, Amazon will take a cut of the sale as a fee for the service, but it’s well worth the cost. You’ll be able to free up your time for more important tasks related to running the business, and customer orders will be fulfilled and shipped quickly.
And possibly the best thing about selling your products FBA is that they will be eligible for free shipping. Amazon Prime members will be able to get free 2-day shipping when they buy your product. Those who aren’t Prime members will be able to get free shipping on your product if the order meets Amazon’s required minimum for free shipping.
Amazon FBA really is a game-changer. The number of Prime members keeps growing, and these people (I am one of them) buy more and more on Amazon. FBA also makes it possible to realistically run an Amazon business as a part-time venture. You won’t need to dedicate your time to order fulfillment, and you won’t need to be tied to your home or office.
Not only does Amazon handle order fulfillment, but they also handle customer returns and any customer service issues related to shipping.
Summary Highlights of Selling Through Amazon’s FBA Program:
- All of the order fulfillment and shipping is handled for you.
- All returns and customer service related to shipping is handled for you.
- No need to store inventory in your home or office.
- No need to run to the post office every day to ship orders.
- Your products will be eligible for free shipping (which means more sales for you).
- Makes it possible for sellers to run a legit ecommerce business part-time.
→ Related reading: 100 Amazing Resources for Amazon Sellers
What is Private Labeling?
I really had no interest in selling on Amazon, or selling physical products in general, until I realized the power of combining the FBA program with private labeling. I was aware of both, but never thought about how the two could work together to make such a great business opportunity.
First, let’s talk about private labeling and what it is.
Essentially, private labeling is when you have a manufacturer or supplier put your logo on a product and sell it under your own brand. You don’t need to own a manufacturing facility, you simply have someone else create the product for you.
Exactly what qualifies as private labeling is a matter of opinion. Many people who sell private label products on Amazon buy a standard, stock product from a manufacturer and simply slap their own logo on the product. If you’ve spent much time on Amazon you may have seen a few different companies selling what appears to be the same identical product, aside from the logo. Sometimes they may even be using the same photos.
This is the fastest, easiest approach to selling your own products on Amazon, but it also presents a lot of potential problems. If there are other established brands selling the same exact product as you (or at least, extremely similar), how are you going to get people to buy yours instead of theirs?
And even if you are successful, it’s very easy for someone else to have the same product created and directly compete with yours. On Amazon, this usually leads to price wars that cut profit margins down to the point that you aren’t making any money.
The other approach is to have a manufacturer create a custom product for you based on your design or specs.
Or, you can start with one of their stock products and ask them to make certain changes or customizations that will improve the product and make yours unique. Most manufacturers are very willing to make customizations for you. This is a realistic way for you to differentiate your product from competitors, so you’re not trying to sell the same exact thing as everyone else. This is the approach that we took.
When I refer to private labeling, really I am talking about having a manufacturer create a product for your brand with your logo on it. It could be a product the same as everyone else’s, it could be customized, or it could be completely your own design. Regardless, you’re finding someone else to make the product for you.
Why Private Label?
Despite the challenges that you may face by selling a private label product, there is also a significant upside. Here are some of the main reasons why you might want to consider taking the private label approach:
- You can completely outsource the manufacturing process, which makes it possible to run an e-commerce business with much lower overhead and risk.
- When you combine it with the FBA program, you can outsource two of the biggest aspects of an e-commerce business (manufacturing and fulfillment).
- With both manufacturing and fulfillment outsourced, you have the possibility for passive income.
- It’s easy and (relatively) inexpensive to get started, compared to other types of businesses.
- You can expand your product line quickly and easily.
- You won’t need to constantly source new products, which is a drawback of the retail arbitrage approach.
Of all the different ways you can sell on Amazon, private labeling is my favorite. Some people do very well selling used items or doing retail arbitrage, but that requires you to constantly find products that you can buy and sell at a profit. You’ll be on a never-ending quest to find products, and that sounds pretty miserable to me.
By having your own private label brand you can have a product created, and if you’re successful you can continue to sell that product for years to come. Once the product is selling, your main focus will be on:
- Providing customer service (which is pretty limited if you’re selling FBA)
- Monitoring some ad campaigns
- Making sure that you re-order in time to keep your inventory in stock.
- Researching new products, if you want to expand.
With the combination of essentially outsourcing the manufacturing and the order fulfillment, it is possible to have a fairly passive business. It won’t be completely passive, but it’s possible to run a profitable business with just a minimal time investment.
Of course, this is an ideal scenario and not every product you launch will be a huge money maker. But hopefully, you see why selling private label products on Amazon is a great opportunity.
Because you’re outsourcing the manufacturing and the order fulfillment, adding additional products and scaling your business is very realistic. The table below shows the impact of having just a few simple products that sell.
|Number of Products||Average Number of Sales Per Product Per Day||Average Profit Per Sale||Total Monthly Profit|
As you can see by the numbers from the table, with just 4 products that each make 10 sales per day and $10 in profit per sale, you can make $12,000 of profit per month! Reaching 10 sales per day is very realistic, although it may not be easy. My wife and I averaged more than 10 sales per day per product with our part-time business.
But this is also something that you could do on a small scale. If all you’re looking to do is make an extra $1,000 per month, that’s possible too.
My wife and I sold products on Amazon through a private label brand from 2015 – 2017. I’ve worked online full-time since 2008, and many times over the years we talked about the possibility of finding a business that we could work on together.
In 2014, I started reading more about people selling private label products through FBA, and I thought it would be a great opportunity for us to finally work together on something. I talked to my wife about it, and she was interested too.
We started doing some research into potential products, but we didn’t find anything that we really thought would work. We put the idea on hold for a while, and then in the spring of 2015, I came across someone promoting Amazing Selling Machine, an 8-week course that takes you through the process of setting up your own private label brand.
The course wasn’t cheap (we paid $5,000), but we felt like it was the right opportunity for us, so we went ahead and purchased it. By the time the 8-week course was over, we had selected a product and a supplier and we had placed our first order for 1,000 units of our product.
When our product went live we expected the sales would grow very slowly, and didn’t anticipate making sales before we had a decent number of positive reviews (at that time Amazon allowed you to give away products in exchange for a review).
But to our surprise, we started making sales almost immediately.
About a week after it went live I remember the two of us were out looking at some houses, and every time I checked my phone we had made another sale! I think we made about 20 sales that day, without any paid advertising.
We wound up running out of our first 1,000 units in less than 4 weeks, and then we were out of stock for several weeks while we waited for more of our products to be made.
For the first few months, our biggest challenge was that we kept running out of inventory.
Fortunately, we placed a much bigger order ahead of the holidays and we were back in stock in November, a few weeks ahead of Black Friday. For a 30-day period between Thanksgiving and Christmas we had over $50,000 in sales (that’s gross sales, not profit) and at that point we still only had one product that sold for between $15 and $20.
We made more than 3,000 sales of that one product in a 30 day span, with no advertising.
In early 2016 we added several other products. Each one of them was profitable. None of them matched the success of our first product, but the cumulative result of having seven different products was a nice increase in profit.
We did around $500,000 in sales in 2016, with around $165,000 in profit.
Remember, this was a part-time business and 2016 was our first full year of selling on Amazon.
The business had grown nicely, and the revenue was much higher than our original goals, but in 2017 we decided it was time to move on and we sold the business.
Here’s a quick summary of our results selling private label products on Amazon (part-time):
- We sold through our initial order of 1,000 units in less than 4 weeks.
- During a 30-day span before Christmas, we made more than $50,000 in sales with just a single product that had only been live for a few months.
- In 2016, our first full year selling on Amazon, we did about $500,000 in sales and $165,000 in profit.
- We made over $450,000 in less than two years running the business (the profit while we owned the business, plus the selling price).
→ Related reading: 10 Amazing Ways to Make Money with Amazon
How to Find a Product to Sell
Ok, so if you’ve decided that selling a private label product on Amazon might be a good fit for you, you’re probably wondering what you should sell.
That’s what I was wondering too.
And in fact, deciding on our first product was probably the hardest part of the entire business.
It was a stumbling block that held us up, and for a long time it looked like we’d never actually get started because we couldn’t find the right product.
There are a few different approaches you can use when you are trying to find the right product to private label. The main approach that most people take is to find an example product on Amazon that is selling well and, ideally, doesn’t have a ton of direct competition. Then you can have your own version of the product made and sell it.
Of course, you don’t want to copy or rip off the existing product, but create your own version of that product. You can use a tool like Jungle Scout to help with product research (more on that in a minute).
Another approach is to get your product ideas from places other than Amazon. Look around your house at the products you use and like, walk through retail stores for product ideas, and even look at websites other than Amazon. Then once you’ve got a few ideas, search for them on Amazon and see how many similar products are being sold.
The problem with the first approach is that you are basing your research on what other people are already selling. You could be missing some great opportunities to find holes in the market that aren’t being filled by sellers on Amazon.
That being said, we did use the first approach to find our initial product. It worked out pretty well for us, but we did evaluate many different products before we ultimately found the one that we wanted to sell.
As far as the type of product is concerned, there are a few different approaches here as well. Most of the private label training teaches you to find product that meets certain criteria:
- Small enough to fit into a shoebox
- Simple to use with minimal instructions needed
- Selling price between $10 – $50
- No batteries or electronics
- Nothing that goes on your skin or in your mouth
Let’s take a look at why each of these are considered to be important:
Small enough to fit into a shoebox – Size will impact your shipping costs and storage fees from Amazon (part of the fees for using the FBA program), which in turn will impact your profit margin. Larger products may also create logistical challenges for you if you have the products shipped to your house before they get sent in to Amazon.
Lightweight – Weight will also impact shipping costs, as well as the fees from Amazon.
Simple to use with minimal instructions needed – Simple products will require less customer service and will typically have fewer returns.
Selling price between $10 – $50 – It’s hard to turn a profit on products that sell for less than $10, partly due to the FBA fees. You’ll also have lower earning potential with cheap products. Products in the $10 – $50 range tend to be impulse purchases. Also, more expensive products will require more capital to invest in inventory, which also means more risk.
No batteries or electronics – Batteries can cause issues with customs. Electronic products are also more prone to defects and breakage and can lead to increased customer service.
Nothing that goes on your skin or in your mouth – Supplements and beauty products can have great potential, but there is more risk involved, which is usually best to avoid if you are a new seller. If you are going to sell one of these products, it’s best if you use a manufacturer in the U.S.
All of our products met the criteria listed above. This made it possible for us to have our products shipped by air express (UPS, DHL, or FedEx) rather than by sea. Air express was more expensive (and reduced our profit margin a little), but it reduces the amount of inventory that you need to keep on hand because you can get new inventory faster.
The Problem with the Common Approach
The problem with limiting yourself to small, lightweight products is that the majority of people selling private label products will be doing the same thing. This, of course, means more competition.
The opposite approach is to look for oversized products, heavy products, higher priced products, or something else that bucks the trend. You’ll run into some additional obstacles, but you’ll have much less competition because most Amazon sellers don’t want to deal with it.
If I were to start a new private label brand, I would consider going this route to avoid some competition.
You’ll also need to consider the category of the product that you want to sell. Amazon has restrictions in place for many categories. In some cases, you can easily get approved just by providing some basic information, and in other cases it can be a long, drawn-out process to get approval (if you’re able to get approved).
We sold in two restricted categories. One of those categories took about 30 seconds to get approved. The other took about a month of back-and-forth and many frustrating emails with Amazon seller support, but eventually, we did get approved.
The category that you choose is up to you, but for a first product, I would recommend keeping it simple. Something with low risk of liability, and something that won’t require much customer service.
Ok, so now that we’ve talked about some of the factors related to the type of product you choose, now let’s move on and do some real research.
As I mentioned earlier, one effective way to come up with product ideas is simply to look around your house or walk through a retail store and see what might be a good fit. But for this section of the article, we’ll be looking at some tools that will help you to research online.
Amazon Best Sellers
Amazon provides a list of the best selling products. You can view the best sellers overall, or browse through the best sellers by category. When we researched products we would browse through the best sellers in a category or sub-category, and then if something looked like it met our criteria of size and weight (and was priced somewhere between $10 – $50), we would do a search to see how much competition it had.
This approach can work, but most of the products you find this way will have a lot of competition.
Amazon Search Suggestions
One good way to find products that Amazon users are searching for is to let Amazon show you what people are searching for. When you type in the Amazon search form it will provide search suggestions. Usually it’s adding a few words to your search phrase. These suggestions are based on what people are actually searching for, so it’s a great way to research potential products.
On each Amazon product listing you can also find other related products. Clicking through these related products is a great way to find many possibilities and get ideas. You’ll see a list of “sponsored products related to this item.” These are ads, and the sellers of these products are paying each time one of their ads is clicked.
Directly below that you will see “customers who bought this item also bought”, and then a list of related products. This can be extremely helpful for finding hidden opportunities.
Unicorn Smasher is a free Google Chrome extension made by AMZ Tracker. Once you have the extension installed you can do an Amazon search and click on the little icon to run it.
For this example I searched for “silicon baking mat” and then ran Unicorn Smasher. It looks at the Best Seller Rank of each product and estimates the number of monthly sales based on the BSR and the category that it is in. You can then get a rough idea of how many sales and how much sales volume a product is doing per month.
Of course, these are rough estimates. But from testing it with our own products, I found the estimates to be in the ballpark of the real sales numbers.
Using this data you can gauge the demand and potential for a product that would be similar to the ones you are researching.
How much sales volume should you be looking for?
Well, that’s a personal decision. The higher the sales the more likely it is to have a lot of competition.
Some of my favorite products of ours were not the big sellers. I liked having products that made 5-10 sales per day, or 150 – 300 sales per month. That’s enough that it is worth your time, and if you have several different products selling in that range, it will add up to a nice business. That way you’re not overly dependent on one product that sells really well. Diversification is a good thing because many products on Amazon have a limited life cycle, whether it is due to demand that fades or increased competition.
Jungle Scout is really popular for researching products. I listed Unicorn Smasher first because I have more experience with it, and because it’s free. But the premium version of Jungle Scout does even more. For example, you’ll get an “opportunity score” for any product that you research. That score is determined by the amount of competition and the demand for the product. A product with high demand and low competition would have a high opportunity score, so you want to look for higher numbers here.
Factors that You Want to Consider
As you are looking at products on Amazon that you might want to compete with, here are some factors that you should consider.
How many reviews do they have, and how good are they? Getting reviews is harder than it used to be before Amazon changed its policy on reviews (you used to be able to give away free or discounted products in exchange for a review, but that is no longer allowed). If all of the main competitors have hundreds or thousands of reviews, it’s going to be very hard for you to match that. But if your potential competitors only have around 20 reviews, that is a lot more attainable.
Of course, it’s not just the number of reviews that matters. Are the reviews good or bad? If the main competitors have a 3-star rating it should be pretty easy for you to do better than that. But if that competitor that has hundreds of reviews has a 5-star rating average, it’s going to be an uphill battle competing against them.
Take a look at your competitor’s listing on Amazon and see how good it looks. Do they have an optimized product title that uses the most important keywords? Do they have enticing bullet points that use keywords and tell you why you should buy the product? Are the photos good? Do the photos show everything that you’d want to see?
Some listings are really well optimized, and others are terrible.
If your main competitors are using a title that doesn’t include the most important keywords, if the bullet points are brief and uninspiring, and if the photos are bad, or if they only have one photo that just shows the front of the product, you can do better! This is the type of competition you want to go up against, if possible.
Is there a brand that is the clear leader in the market? If not, the competition is probably wide open and you may be able to have a lot of success. It’s usually best to avoid situations where there is one really dominant brand that would be difficult to compete against.
Lastly, you can research the search volume for the main keywords that people will use to find your product. I used MerchantWords for this type of keyword research, but you could also use a free tool like Sonar. MerchantWords will give you the number of estimated monthly searches for any word or phrase. Sonar will give each keyword a rating of 1-5. A score of 1 means that the keyword doesn’t get much search volume, and a 5 means that it gets a lot of searches.
There is no exact number of monthly searches that you need, but it is one factor that you should evaluate. Also keep in mind that people will be searching for all different kinds of combinations of words, so don’t get too caught up in the number of searches for one specific keyword.
How to Find a Supplier or Manufacturer
Once you have identified a potential product, or a few potential products, you’ll need to find out how much it will cost you to manufacture. Based on the research you already did, you should have an idea of about what price you could charge for the product. You can use that target price and the pricing info you get from suppliers, plug that into Amazon’s FBA fee calculator (we’ll go over this more later), and you can estimate your potential profit margin.
If your product is any type of supplement, cosmetic, or grocery I highly suggest that you only consider manufacturers based in the United States. But with most other products you will probably be looking at manufacturers overseas, especially China.
The biggest resource for finding a supplier is Alibaba. On Alibaba you can search for just about any product you can think of, and you’ll find companies willing to manufacture the product for you or sell it at wholesale.
When you search on Alibaba you can filter the results based on certain criteria, if you want to. For example, you could filter to only show “gold suppliers”, which is a supplier pre-qualified by Alibaba. Or you can filter to only show “assessed suppliers”, which means they’ve been assessed by a third-party inspection company. Some people will tell you this is important, and other people will tell you that it’s meaningless because companies simply buy their status. Honestly, I don’t know how much it matters. We only ordered from about 5 different suppliers, so its not really a large enough sample size to know how much the gold or assessed status really matters.
Let’s go through the process for an example product – a jump rope.
I’ll search for “jump rope” and of course products from many different products will be shown. On the search results you’ll see minimum order quantities (MOQs) and price ranges. I found that the prices listed here were often not accurate, so I would suggest that you do not put too much weight in those listed prices. Browse and see which ones look good to you.
Through the product listing you can email the supplier. I recommend sending an email telling the supplier that you sell products on Amazon.com and that you are looking for a supplier for repeat orders and a long-term business relationship. If you know how many items you would want for your first order you can go ahead and tell them, and ask for their pricing. If you don’t know how many units you would want to order you can simply asking for their pricing info. The prices will almost always decrease the more you order.
Determine Your Cost Per Unit
Once you have their quote you can determine the cost per unit. You’ll want to include all of the costs related to getting the product to you (or the Amazon warehouse).
If you’re using air express shipping this is pretty simple. In that case it is just the cost of the order (the products and shipping) divided by the number of units. You may also have to pay customs depending on the value of the shipment, but for smaller shipments done by air with low values, this often isn’t an issue.
If you are shipping by sea it can be more complicated. I would suggested contacting a freight forwarder like FBA Forward to get help understanding all the costs that will be involved. Come up with the total cost and divide it by the number of units that you are ordering.
Working With Manufacturers
A few things here.
- The minimum order quantity is almost always negotiable. You can even tell them that you want to place a test order and they will often reduce the MOQ for your first order. For example, the product listing on Alibaba may state that the MOQ is 1,000 units, but you can ask for a test order of 250 units. From my experience, they are likely to accept those terms, or at least compromise.
- Price is also negotiable. These suppliers are used to competing against each other, and most of them are pretty aggressive to get your business, so they will often lower the price if needed. I know some sellers who would automatically ask for a lower price 3 times, regardless of what price they are getting. I didn’t go that far, but I did negotiate to get lower prices.
Another thing to remember is that you will be communicating with people in their 2nd language. Most of them communicate very well, but you want to be clear and concise. Lay out exactly what you expect, especially if you are customizing a product. Avoid using slang or sayings that won’t make sense to people from other cultures.
Since you will be new to Amazon, I think it is also helpful if you work with a supplier that has some experience with other Amazon sellers. I recommend asking them if they are familiar with Amazon’s packaging guidelines and if they can place your sticker or barcode on the product for you.
Estimating Profit Margin
After you have some quotes from suppliers, it is time to take a look at your potential for profit. Head over to Amazon’s FBA fee calculator.
To use the calculator you will need to base it on a product that is currently selling on Amazon. The FBA fees will be impacted by the size and weight of the packaged product, so find a competing product that is as close as possible to the weight and dimensions of your product (you can get the weight and dimensions from your supplier). Also, make sure that you are using a product in the same category that yours will be listed.
I’m going to use a baking mat as an example, so I’ll use this product currently selling on Amazon. Let’s assume that the dimensions and weight are very close to the product I will have manufactured. On the product listing, go to the “product details” and you’ll find the ASIN (the ASIN is also listed in the URL). In this case the ASIN is B00MM80ZLW. The ASIN is an ID number used for an Amazon product. Enter that ASIN, your target price, and the price that you would be paying for the product into the FBA calculator and it will spit out some numbers. Let’s say I’m using an item price of $14.95, and my cost per product will be $5.00. The calculator shows that Amazon will pay me $9.71 for each one that I sell at $14.95. It also shows a net profit of $4.71 per sale, or a profit margin of 31.51%. Obviously, the higher the profit margin the better.
There are some things to consider when you evaluate the profit margin.
First, this is an estimate. You don’t really know at what price you’ll be able to sell the product. With some products your selling price may fluctuate based on factors like seasonality, how much inventory you have, and what your competitors are doing. I recommend estimated the selling price conservatively, and then if you are able to sell it for more that will just be a bonus.
Second, the cost per product (what you pay to have it manufactured and shipped) is subject to change. At first, you are probably ordering in small quantities, so the cost per product is going to be high. You will likely be able to lower that cost per product by ordering larger quantities in the future once you know that you can sell the product. Also, you may be able to ship it by sea in the future to reduce the price you pay per product.
Some people will say you should look for a 40-50% profit margin, but those products are difficult to find these days with so much competition already on Amazon. Personally, I liked to see at least a 30% profit margin to start, and if it could get to 40% or higher in the future that is great.
So using the quotes that you get from suppliers and the info from the FBA calculator, you can determine if this product has the potential to be profitable. If it’s close but not quite there, I recommend going back to the supplier and explaining that you would like to order the product but you can only do it if they are able to lower the price. The worst that can happen is they say “no”.
If you have a profit margin that you are happy with, it’s on to the next step.
Now you’ll need to order a sample product from the suppliers that you are considering. I suggest getting samples from a few different suppliers so you can compare and choose the best one. You’ll have to pay for the samples, but it is a necessary cost that you shouldn’t try to avoid. If the supplier has a sample just sitting around and doesn’t have to make it especially for you, you may be able to get the sample for a low price, something like $30. If the supplier has to make the sample custom for you, you’re going to have to pay more.
We paid as much as $100 for samples, plus shipping (of course, the amount will depend on the product). If you are customizing the product, I recommend getting the sample as close as possible to the exact product that you want to sell. That way there are no unpleasant surprises later.
It will usually take a few weeks for the sample to be made and shipped. Once you have samples from a few suppliers you can test them and see which one you like best. Once you have the product in your hands and you try using it, you may have some other ideas for changes that could be made to the product.
When it comes to choosing a supplier do not just pick the one with the lowest price. Ideally, this supplier will be essentially a long-term partner in your business. Do not go with a supplier that has shown poor communication up to this point. I always preferred dealing with suppliers that communicated well and got back to me quickly, even if the price was a little higher.
Also, the quality of the product is extremely important. The goal here is to create a product that will sell for a long time. If the product is garbage you may be able to make some quick sales, but inevitably you’ll get bad reviews and sales will die off.
If the product is good, you will get positive reviews that will lead to more sales. And customers will wind up buying the product for friends, or buying your other products when you have multiple products to offer. Quality is extremely important to your long-term success on Amazon.
Placing Your First Order
Once you’ve decided on a supplier, you can go ahead and order the product. Most suppliers will charge about 30% up front and the final 70% when the product is completed. I would recommend asking the supplier to send you photos of the finished product and packaging before making the final payment. There are also inspection companies you can hire to check the product before making the final payment.
There are a few different ways to make payments. Most suppliers will not accept PayPal because PayPal is very buyer-friendly. That means that buyers can dispute charges and PayPal is likely to side with the buyer, and in that case the supplier would be screwed. Most of them will accept wire transfers from your bank, and some accept payment through Alibaba.
With a wire transfer, you will have a fee from your bank, but the fee will vary, so check with your bank. We paid a fee of $45 for each international wire transfer. To pay directly through Alibaba you will link it to your bank account by providing the routing number and account number. We paid a fee of $15 per payment through Alibaba. Check with the supplier to see what type of payment they accept and go from there.
Once your order has been placed it will take at least a few weeks, in most cases, until the production is completed. Most of our orders were completed in about 4 weeks, but that varies by supplier, the product, and the size of the order. During this waiting time, you can work on getting your Amazon seller account set up and create your listing so it is ready to go.
If the sample you received is exactly the same as the product you will be selling, you can go ahead and take photos of the product for your listing. I’ll cover more about product photos in the next section.
Creating Your Amazon Seller Account
You’ll need to create a seller account in order to be able to list products on Amazon. Go to this page to create the account. I won’t go through all of the details of setting up the account, because you are mostly just entering basic personal or business information that Amazon will ask for.
The thing you need to consider at this point is if you want a personal or business account. With a personal account, you’ll pay an extra $0.99 fee for each sale. With a business plan you’ll pay $39.99 monthly, but no fee per sale. So basically, if you’re making at least 40 sales per month you’ll want the business account. You can upgrade from a personal account to a business account, so if you’d like you can wait until you need to upgrade.
Creating Your Amazon Listing
Once you have your seller account set up, it’s now time to create the listing for your product. This is a really big topic. I’ll cover the basics here, but if you want to go more in-depth and learn to create a listing that converts, I recommend the Amazon Conversion Maximizer course by Karyn Thomas.
The product listing is very important, so take the time to write the best listing possible. Write everything in Word, or some other program, and when you’re done enter it into Amazon Seller Central.
The first thing you’ll have to determine is what category your product should fall under. Amazon has sub-categories for almost every type of product, so you shouldn’t have much trouble finding the appropriate category and sub-category.
The product title is one of the most important elements of your listing. You already did some keyword research when you were deciding which product to create and sell, so you probably already have a good idea of the main keywords for your product. Your title is the most important place to include keywords in your listing, so be sure that your most important keywords are in your title.
Remember that titles are important for human visitors too, not just for the Amazon search engine. Don’t stuff your title with keywords to the point that it makes no sense to read. Be sure that your title is reader-friendly and makes sense, while still including the most important keywords. Don’t just quickly throw a title together. Take some time to write an effective title that works for both human visitors and search engines.
The title in the screenshot below is long and has plenty of keywords in it, but it still makes sense to read.
Another tip is to use the most important keyword near the beginning of your title. In some cases the full title will not be shown (like on mobile search results pages), and the visitor may need to click through to your listing to see the full title. Use the most important keywords at the beginning of the title so they don’t get cut off. Plus, some people say the words at the beginning of the title carry more weight for search rankings.
Amazon gives you a place to list the main product features, which show up as bullet points on your listing. This is another very important part of your listing. You’ll come across some listings with very short bullet points that give very little information. You’ll also come across listings with really long bullet points that are stuffed with every keyword possible. Just like with the title, your goal with the bullet points should be to create something that catches the attention of human visitors, is easy to read and makes sense, but still incorporates as many keywords as possible.
One of the best approaches is to focus on how customers will benefit from your product. You can also tie those benefits back to the specific features of your product that make the benefit possible.
Look at the bullet points of your competitors and see what stands out to you. You can also check totally unrelated products and just see how they approach the bullet points, and get ideas that you can incorporate into your own listing.
Like the example below, you can use capital letters to grab attention.
The product description is not as important as the title or bullet points, but still should get your attention. Here you have more space to elaborate on the features and benefits that you mentioned in the bullet points. You can also touch on things that you weren’t able to mention in the bullet points.
Amazon also gives you the option to enter keywords in the back end of your product listing. These search terms are not visible to visitors who are seeing your product listing, but they can be used by Amazon’s search engine to determine what search phrases your product should rank for.
Amazon gives you a lot of space for keywords here, and I recommend using as much of it as possible. This is a good place to list the names of your competitors. People often search for a specific brand. You may not want to put other brand names in your listing, but you can put them here where visitors will not see it.
Product photos are as important to the success of your product as any other element in your listing, and maybe more important. Some customers will buy based on photos without even reading any of the text.
Amazon allows you to use 9 photos, and I suggest that you use all 9 of those spots. A lot of bad listings only use one or two photos. Your main photo needs to be just your product on an all white background. You can’t include text or other things in the main image.
You’ll have more flexibility with your secondary images. You can include text to point out the main features of the product, and take lifestyle photos to show the product in use. You should include photos of the product from different angles, include other objects for size comparison, and show the packaging. With most products you can easily come up with ideas for 9 different photos.
If you’re taking the photos yourself, I recommend using the best camera you have. You don’t need a professional camera, but having a DSLR will usually give you a clearer picture than a cell phone camera. You can buy a light box or small studio if you want, but personally I like to photograph products in natural light.
My typical process was to take the product outside on a cloudy, overcast day. You want to avoid harsh sunlight and shadows. Overcast days give a even light that won’t result in any ugly shadows on your product. I usually photographed products on a solid background by placing them on a concrete patio or a plain piece of brown cardboard. I’d take photos from a bunch of different angles and then send the best ones to this guy to have the background removed. He would place them on a white background and they would be ready for use on Amazon.
Another option is to hire a professional to take photos for you. Personally, I would try to avoid this expense until I know the product can sell, but you can invest the money right away if you want to.
Launching Your New Product
Once your first inventory order is done and it is in Amazon’s warehouse, you’re ready to start selling! You’ll need to give your new product a push so that it gets some sales and Amazon starts to move it up the search rankings for your main keywords.
At this point, you should have already put in the effort to create a quality listing, including good photos of the product. Over time you will tweak your listing as you come across other keywords that you may want to include, but for now your listing should be good enough to launch.
So now the question is how do you get exposure for your product and start to make some sales? Let’s look at a few possibilities.
Leverage Your Own Audience (if You Have One)
If you have an existing audience from a website, email list, or social media profiles, you can promote your product to that audience, assuming it’s relevant. Since we’re talking about getting started with a new product and new brand you probably won’t have the luxury of an existing audience. But if you do, be sure to use it. And if you don’t, you can start building an audience now so that when you launch your next product you’ll have a head start.
During the month or more that you are waiting for your product to be produced you could work on starting to build an audience if you want to. You could create a Facebook fan page and start posting things that would appeal to your target audience. You can use Facebook ads to get more likes for your page, and then by the time you’re ready to launch your product you may have an audience already built up. If so, create a coupon code and give your followers a special discount at launch.
You could do the same thing with an email list. Run ads or use social media profiles to send people to a landing page where they can join your email list (give them something for free or some incentive for them to join your list). Then send an email at launch and offer them a discount.
Amazon Sponsored Ads
Paying for Amazon’s pay-per-click (PPC) ads is one of the best ways to get exposure for your product. You can wait till you get a few reviews, or start running ads right away.
Amazon gives you the option to run an auto campaign or a manual campaign. With an auto campaign your ad will be shown whenever Amazon determines it is relevant, and with a manual campaign you will choose the specific keywords that you want to target. It’s usually best to start with an automatic campaign because you’ll generally get the most exposure quickly. You can then get some data from Amazon in terms of the keywords that get results for you. If you know the main keywords that customers would use to find your product, you could also set up a separate manual campaign and target those keywords.
You can get great exposure, right at the top of the search results, if you’re willing to pay for it. Some conversions here will help your product to rank organically.
Ads on Other Websites
A lot of Amazon sellers use Facebook ads to drive customers to their product listings. You can offer a deep discount through a coupon code, and promote that discount and code with your Facebook ad. The deep discount should help to get more sales and start to gain some momentum. You may also want to ask for an email address in order to get the coupon code for that deep discount.
If you get creative, you may even be able to find a website or Facebook group that has a targeted audience that would be a great fit for your product. Contact the owner of the website or Facebook group and introduce them to your product and how it can benefit their audience. Then give them an exclusive coupon code created especially for their audience and ask them to consider sharing it with their subscribers or fans. Some will, some won’t. But you won’t know if you don’t ask. To have the best results with this approach you should 1) make the discount as significant as possible, 2) select audiences that are a very good match for your product, and 3) have a quality, unique product that they don’t already have, or something that is always in demand.
Use a Launch Service
There are a number of websites that will allow you to sell your product at a deep discount to their audience of deal seekers. With these sites you will most likely lose money with each product that you sell (because of the deep discount), plus you’ll also have to pay for their service to promote your deal. But they can deliver a number of sales in a short period of time, which can help to get some momentum and sales velocity for your product.
Some of the sites you can use include:
Follow Up Email Sequence
As you start to get some sales, even if they are sold at deep discounts, it’s important that you work to get some product reviews. Reviews will be critical to your success on Amazon, so you need to get them as quickly as possible. One of the best ways to get reviews without violating Amazon’s terms is to use an automated email follow up sequence.
You can use a service like Salesbacker to automatically email customers after they buy your product. You can set the emails to go out a certain number of days after the product shipped, and you can even set up multiple emails. In these emails you can ask customers to leave an honest product review. You can’t ask for a positive review or do anything else to imply or suggest that they should leave a positive review, but you can ask for the review.
I highly suggest that you have this email sequence set up and ready to go as soon as your product launches. If you are doing any type of promotion for your launch you will want to make sure that every customer falls into your follow up sequence to give you the best chance of getting reviews. Amazon allows buyers to opt out of emails from third-party sellers, so unfortunately your emails won’t reach everyone. But all can do is focus on what you are able to control. If you have a good quality product and you follow up with a polite email asking for a review, some people will go ahead and leave a review for you.
We used Salesbacker and had very good results. It’s really user-friendly and easy to set up. They have a free trial, and you won’t need to upgrade to a paid plan until you are making enough sales to exceed the limits of their free plan.
Building a Brand
After your first product starts to make some sales and you get more comfortable with the process of selling on Amazon, it’s time to start thinking about potential products that you could add to build out your brand.
Some people will ask how you should know when it is time to add a second product. In my opinion there is no specific milestone that you should hit before adding a second. Your first product could be a complete dud and if you are waiting to hit a certain level of sales, you may never get there. As long as working on a second product won’t take away valuable time from things you need to do on your first product, I think it is good to at least start researching and sourcing your next product. Adding more products is one of the biggest keys to growing your business and increasing sales.
When you’re deciding what product to add, take a look at leading brands in your industry. What types of products do they sell? What types of products would be complimentary to your first product and would be a logical next step?
If you are building this business for the long-term you’ll want to focus on building a strong brand that resonates with your target audience. Focus on having several different products that appeal to the same audience rather than several different random products that don’t have much in common.
Decreasing Dependence on Amazon
Another good long-term approach is to work towards reducing your dependency on Amazon. If you’re only selling on Amazon you are really at their mercy. They could suspend your account, change their policies, increase FBA fees, or do any number of things that will have a huge impact on your business.
You can reduce your dependency on Amazon by selling on your own website and slowly working to build up that part of your business. Of course, it will take time. But over the long run you can add stability and reduce risk by selling on your own site. You can use a platform like Shopify to easily set up your own e-commerce site.
In addition to selling on your own site you can also look to sell on other platforms, like Wal-Mart, eBay, Jet.com, and others.
These aren’t things that you need to do right away. First, I would suggest focusing on Amazon and having success there. But once you’ve had some success it pays to think about the long-term plan for your business.
To end this article I want to also mention a few topics that often get overlooked. Many courses totally ignore these subjects as if they won’t exist if we simply don’t talk about them. But since I’m writing about the subject of selling on Amazon I feel the need to mention them so you are aware of the issues. The two issues are sales tax and liability insurance. I am not an expert in either area and not qualified to give advice, so I won’t attempt to, but I will give you a few facts.
When it comes to sales tax, Amazon collects sales tax on products that it sells, when relevant (according to the laws of the state where the buyer lives). The key here is that this applies to products where Amazon is listed as the seller. When a product is sold by a third-party seller Amazon will not collect sales tax unless the seller instructs them to. When you set up your seller account you can go to the tax settings and tell Amazon which states they should collect sales tax for. By default, Amazon will not collect sales tax for products sold by you, so you’ll need to tell them if you want them to collect.
As a business owner you are responsible to collect and file sales tax for whatever states you have a business nexus in. If you’re located in the U.S. you’ll have a nexus in your home state. States generally consider you to have a nexus if you have inventory stored in their state, and Amazon now has warehouses just about everywhere. This means that as an FBA seller you could have nexus in many different states.
Sales tax laws are also changing quickly. Some states have forced Amazon to start collecting sales taxes on items sold by thrid-party sellers, but the sellers are still responsible for filing and paying the taxes.
My only advice when it comes to sales tax is to seek the advice of a tax professional, ideally one that specializes in sales tax.
There are also some resources and tools that can make your life a whole lot easier when it comes to sales tax. We used TaxJar to help with organizing and filing sales taxes.
The other issue here is liability insurance. As a private label brand, you are assuming some risk and liability for your product. You can protect your personal assets (mostly) by operating your business as an LLC, but having insurance is still recommended. The tricky thing can be finding a policy that will cover an e-commerce business. Many insurance companies don’t have policies that will cover businesses selling on Amazon. After contacting many different companies we were able to get coverage through a local agent.
If you have a US-based supplier you can also check with them to see if your business can be covered under their existing policy. One of our products was made by a US-based manufacturer and we got a document that listed our business as additionally insured under their policy. We still had our own policy, but it seemed like the extra protection couldn’t hurt.
As I mentioned earlier in this article, my wife and I talked about selling on Amazon for a long time before we actually got started. We didn’t make progress until we committed to moving forward. Selling on Amazon is a learning process, and the best thing you can do to learn is to get started. If you’re interested in this opportunity, I would encourage you to get started.