Amazon FBA is one of the hottest internet businesses out there. But it’s kind of confusing. Especially if you don’t have any experience in ecommerce. So here’s Amazon FBA expert Tom Wang to break it all down for you. You’ve probably shopped on Amazon before, he says. But did you know, every time you purchase something, you’re buying it from someone like him? Say you go on Amazon and search for drink coasters. You click on some of the results.
You look at the pictures, the product description, the price, the reviews. And you start narrowing it down to the ones you want. You click buy. A day later, the coasters are outside your door. Well guess what: someone else besides Amazon probably made money on that transaction. Someone like Tom. A third party seller. And yet, Tom didn’t make these coasters in this hypothetical example. He simply contacted a manufacturer who was already making them and ordered a bunch of them for cheap.
He would have the coasters shipped from the factory straight to one of Amazon’s warehouses. Tom would not have to see or touch or store any product, ever. He would then list them on Amazon for more than what he paid. And, when someone buys, Amazon would take their fee, and Tom would pocket the remaining margin. Best of all, Amazon would now handle all fulfillment, shipping, and customer support. That’s basically the thirty thousand foot view of how it works.
But of course, the devil’s in the details. You can’t just pick any ole product and expect it to crush. You have to do your research. You have to understand demand, market size, competition, how much you stand to profit per unit sold, how to get to the first page of Amazon’s search results. All sorts of stuff. You also want a product that is easy to use so that customers are happy and leave good reviews. Plus, it should be small and lightweight so you save on shipping costs.
You also have to be careful not to launch something that’s seasonal, like snowboarding gear. If you do that, you won’t be able to make money year round. Stay away from fads too. Sure you can make some quick cash if you time it just right but, by definition, it’s not going to last. Fidget spinners, for example. If you have kids you know all about those stupid things. Tom picks products that are stable; items people will use almost every single day for the rest of their lives.
For sourcing, think China. Cheap labor, decent product quality. Alibaba is the go-to website for finding a manufacturer over there. You can use an inspection agency to ensure you’ll be happy with the batch of product you’re about to order. Once you do, again, the product will go straight to Amazon’s warehouse. You’ll create your own Amazon store, then a listing for your coasters (or whatever), and then you add some nice pictures and bullet points and the perfect title, and boom, you’re live.
Now what? Sit back and watch the passive income roll in? Oh don’t you wish. Now you have to bulldoze your listing to the top of the search results when someone looks for it on Amazon. Typically this is done by paying for sponsored ads on Amazon. Then, as you get sales and reviews, you’ll naturally start to climb towards that front page. In a perfect world, you can eventually stop paying for ads and just get “free sales” by ranking and banking. Amazon FBA is a proven way to make money. But it’s expensive, finicky, and takes patience.