Amazon FBA Program: Make Money With Fulfillment by Amazon
Most internet marketers have long been familiar with the e-commerce giant Amazon. Usually, anyone with a website receiving a half decent volume of traffic will have various articles peppered with affiliate links to high value items on Amazon. The affiliate model, was, and still is to some extent, a fantastic revenue generator.
However, as Google continues to rip up and re-write the rule book on establishing and ranking niche sites, it’s taking longer to see a return on investment using this model. Sites are becoming harder to rank and when they do finally hit page 1 and establish a decent amount of traffic, a minor (or major) tweak of big G’s algorithm can send them hurtling back to page 10 or lower. It’s not fun when this happens, that’s for sure.
A number of established internet marketers appear to be focusing an increasing amount of time and resources into producing physical products and selling them through Amazon. Examples of $10,000 + a month revenues are commonplace and entirely achievable for people with little to no product development background or experience.
Recent high profile converts to the Fulfillment By Amazon model are Spencer Haws of Niche Pursuits, who has documented his first product launch here and Chris Guthrie who has also had some fantastic results.
What is the Amazon FBA model?
Simply put, the Fulfilment by Amazon model revolves around getting a product produced, usually by a manufacturer in China, then sold via Amazon’s online sales portal. Amazon take care of the storage and distribution of the product, leaving you free to kick back and watch the money pile up.
Is it really that easy?
No, of course not. The one major hurdle to this model is that is requires a capital investment at the start of the project. One thing that attracts a lot of wantrepeneurs to the world of Internet Marketing is the minimal start up costs involved in getting established. You are going to need a lot more than a hosting account and a copy of WordPress to get started on Amazon if you wish to manufacture and sell a physical product.
Real money needs to be spent ($1,000 absolute minimum, more like $2,000 -$3,000) in order to get started. $1,000 will buy you a small batch of a basic, non customized product (think weightlifting straps or protein shaker bottles) air freighted to you home country which you can use to test the market on Amazon.
I’ve got some capital to invest but I don’t have a product.
In general, if you are just starting out you want to avoid certain categories, in particular, Books, EBooks, Magazines and Software. You might also consider steering clear of Amazon’s list of “restricted categories” which require additional approval to sell in.
Have a browse around the bestseller lists of any other category that you like the look of, there are tons of examples of products selling well in the beauty, fitness, health and kitchen & dining categories which appear to be Private Label products which have been manufactured by one company and then branded and sold by another.
I’ve shortlisted a number of products, how do I pick a winner?
This is a whole different blog post in its own right.
Your ability to sell well on Amazon will be determined by how quickly (and cheaply) you can rank on page 1 for any given search term.
Each product on Amazon has a Sales Rank. This is a measure of how well it sells in a particular category. This information can be found on the product page. A sales rank of 500 or below (1-500) in a products main category will be very competitive.
A product with a sales rank of 1,000 – 2,000 will be selling a reasonable amount of units each day. For your first time, you would be wise to look at emulating a product in this range, where the top 5 products on the first page each have under 200 reviews.
If the first page for your given product / keyword is full of products with 1,000 + reviews and a Top 500 sales rank, its going to be very expensive for you to reach page 1. You will have to heavily discount and give away a lot of product in order to generate enough reviews to start competing with those already established.
In addition, you will need to spend a hefty amount on Amazons own advertising platform to raise the profile of your product and generate additional sales.
Just one final note of caution…
The Amazon platform can be extremely lucrative for those willing to invest the time in research and the money in product development.
Be warned though, Amazon take their rules and regulations exceptionally seriously. If you decide to use the platform you must follow their policies to the letter. If you breach any one of their guidelines your seller account may be irrevocably suspended. The same goes if your seller performance is not kept to an extremely high standard.
In Amazon’s world, the customer is always right.
Before dropping any money on product, familiarize yourself with the selling platform and the rules surrounding its use, they will help you navigate what can be a frustrating but also an insanely profitable selling platform.