In this post I’m going to cover what I’ve found to be the best advantages of being an Amazon seller, using their Fulfillment by Amazon service. These 7 factors are based upon my experiences as an Amazon seller, plus knowing dozens of Amazon sellers personally.
These benefits aren’t to be taken lightly. Never before has there been such a massive opportunity to create wealth online through becoming an Amazon seller. So much so, that I believe creating an Amazon business to be the best opportunity that’ll arise within the next 10 years.
1. No product handling
You don’t need to ever pack an order again. As an eBay seller (who started selling on eBay AFTER starting his Amazon business), there’s a sheer time cost involved in packing. I take up to 2 hours per day to pack orders, before making the daily pilgrimage to the Post Office. On the other hand, Amazon does my fulfillment for me.
Amazon will pack your product on the shelves when they arrive at the warehouse. Then, when orders come through, they’ll pick and pack those orders into their own boxes and send it out to the customer. There’s a minimal fee that comes with this, and Amazon prefers sellers who use their warehouses with higher product rankings.
2. No warehousing or logistics
When starting a traditional importing business, you’d have to invest into warehousing, forklifts, leases, fitouts, pallet racking, bubble wrap and a host of other expenses. See the photo above, and consider the massive costs involved with traditional logistics. From trucks, to warehouses, forklifts and your biggest cost…staff. With Amazon, that’s taken care of for you for a minimal cost.
3. Customer service management
Amazon handles most of the customer service for you. Most buyers actually believe Amazon is simply the seller of the product, and will contact Amazon themselves. It’s wise to perform some occasional engagement, especially if it’s a specific question regarding the product and its use.
4. No website required
Amazon has the buyer traffic, so there’s no need to spend money and time building your own website. If people are going on to Amazon, they want to buy. It’s not a research tool. That’s Google. People are searching for a product, and you can advertise yours directly on there, whether organically or through PPC marketing.
75% of households in the US have bought on Amazon before. That’s more than 300 million people, and these are often repeat-buyers too. People know, like and trust Amazon’s easy of use as a marketplace.
5. Payment and returns management
Amazon’s payment gateway is the most secure and reliable in the world. Plus, most buyers have their credit card information saved. They are buyers, and they’re ready to go! Plus, any returned products will be handled by Amazon’s warehouse team for you automatically. When customers land on your website, they don’t know you. They don’t trust you. It’s simply harder to convert a stranger to a paying customer through going solo. People trust Amazon.
6. Growth through easy of scale
Never before has the opportunity to scale an online business been so easy. Amazon provides sellers with the perfect platform to create a business that could make $10k per month, $100k per month or even crack the holy grail of 7 figures monthly. Even with minimal staff and minimal start-up capital. It does take time, but it’s certainly possible to scale up easily through reinvesting of start-up capital.
7. Easy expansion into other Amazon marketplace
Amazon has its own platforms in Europe (UK), Australia and Canada, with worldwide domination plans. I highly recommend launching on the US platform, and eventually scaling towards these smaller markets which are growing in size every month.
There’s a misconception that the US marketplace is saturated. Very much far from the truth, and it is the ideal starting place. Amazon literally can’t get enough products in at the moment, and welcome 3rd party sellers like ourselves on their platform. This isn’t hype, just the hard facts from Amazon themselves.
My thoughts as a seller
Selling on Amazon is an excellent choice, even for beginners. To create a business with much lower capital than a traditional importing or logistics business. There’s a range of courses on the marketplace, most are great whilst some really need to lift their game. I highly recommend courses, as opposed to the ‘learn by error’ strategy, given the many steps, plus occasional pitfalls and challenges that lay ahead. You also don’t want to risk the capital you have, on making mistakes a long the way. Use the knowledge of someone that has been down the path before.
There is work involved here, plus you need start-up capital. Yes – you can enjoy most passive income only AFTER doing the upfront work. Just like when researching investment properties. You’ll do hundreds of hours of work, and eventually you’ll enjoy sitting in the shade in a few years from now. Do something today that your future self will thank you for. I’m glad that I did a course and started my Amazon business a few years ago, as today I have the freedom and lifestyle that I otherwise couldn’t have had.
I hope this post featuring the advantages of being an Amazon seller has been of value to you. For those with pending questions, you are most welcome to comment below and I’ll get in touch ASAP with a reply.
Hi Joshua
First, congratulations on an excellent, informative and valuable blog. You deserve every success! There is nothing like some intelligent research, identifying the skills & resources needed, systematic training, developing and implementing a plan, consistent application, attention to detail, a dash of creative flair, heaps of problem solving ability, patience … and a ton of hard work to succeed in life!
Works every time – and in almost every field, yet so few seem to understand it.
I already have a very successful business but am winding down into retirement. Hence I am VERY interested in pursuing Amazon FBA PL but have some questions about the business model that i am struggling to get my head around and wondered whether you might be able to answer some of those questions.
As i understand it, the basic Amazon FBA model is as follows > Find a “non-brand” product that is selling well but listed poorly & then duplicate that product after some differentiation with “private labeling” & sell on Amazon using FBA.
Q1. But doesn’t that mean, given the almost constant stream of “new” sellers coming into the Amazon market place, that almost anyone with a successful product will eventually have their product copied as almost all new sellers will be looking for successful products to “differentiate & duplicate”. So as soon as you become successful with your “copied, but now differentiated” product you will have new amazon sellers wanting to take over your (now successful) position by copying and selling your new product at a cheaper price than you sell at to gain dominance in rankings hence damaging your listing.
Q2. And isn’t that process almost like a perpetual cycle that is bound to fail as the new guys constantly try to take out the successful guys. And even more dangerous to a successful seller who has perhaps built up many thousands of dollars of inventory only to see his sales collapse because of a “copy cat” seller undermining the successful products sales in a desperate bid to get ahead of the successful seller even at the cost of their own profit margins
Q3. If large numbers of sellers are all using the same software and research tools ie tools like Helium 10, aren’t they all going to get similar results and end up selecting similar products or making similar decisions because they are all looking at the same data? Wouldn’t it be better to have tools that are only used by smaller numbers of ppl (if such tools exist)
Q4. Do you think that the opportunity to develop a medium Amazon business of say 5 or 6 products over a 2 or 3 year period starting in 2019/20 is still possible or is the market place over saturated with new sellers now?
I am reasonably confident that i can learn and implement many of the main processes such as dealing with Chinese factories, product packaging & design, managing capital, cash flow & inventory, handling customs & shipping etc as i already have some experience in these areas having already built a very successful business in a highly competitive market.
I also think that i can learn the process of keyword research and writing up product listings as i have some limited experience in these fields and am reasonably creative as well as being a very applied & hard worker with good attention to detail. I also understand the value of a good mentor and coach and think that some coaching in this area would be essential.
For me, i think that the pressure points in the Amazon process are most likely to be selecting a niche, product selection, product differentiation and possibly managing the PPC part of the launch process.
Q5. What do you think is the best course to cover these areas in depth? And do you think that a budget in the region of AUD $5k -10K (not including course costs) is adequate to start your first product?
Q6. Do you know of any courses that will assist with personal coaching & guidance specifically in the identification & selection of the first niche and first product?
Sorry that the post is so long! I greatly appreciate your time in responding to those questions and points if you can. And good luck with your continued success. You know what they used to say about Qld. Beautiful one day and perfect the next!
Cheers
Skip
Skip! Cheers mate for the biggest comment / question list I’ve had in 8 years. Some great questions here that I hope to answer.
1. I believe in trademarks and patents to stop the copycats. I have patents lodged in the US, UK and even China. Also, most people are quite lazy and their copycat products will be cheap and nasty, and the customer is becoming smart. I also choose not to sell cheap crap that you’ll find at the $2 shops. I’ll let everyone else compete for those tight margins.
2. I always say that Amazon isn’t a place for cheap people. You do need some starting capital to launch a product and protect your position. It’s also a game for those with the early-mover advantage – get your product reviews in, excellent photos and a spot on Page 1. Personally, I only go for competitive products. You wouldn’t ever launch a product that hasn’t got a competitor on Amazon yet. You simply strive to be better than anyone else.
3. Correct! All that data is from Amazon’s API and every software package pulls the same data. I don’t rely on software much these days, and base my decisions also on Google Trends, marketplace saturation, supplier pricing, my margin potential, product differentiation potential and product retail price-point. Software is only showing you a small window of potential.
4. 5 to 6 products over 2 to 3 years is what most people go for. I think anyone who thinks that Amazon is too saturated is looking for the ‘next big thing’ to jump on instead…which personally I believe is 10 years away. I don’t even know what the next big thing would be?? Amazon FBA the #1 opportunity right now. I’m launching another Amazon business next year, as Amazon is saturated with piss poor sellers selling cheap crap, and customers are becoming wiser and looking for high quality.
Sounds like you’ve got a good head on you Skip. A lot of people my age in their 20’s, 30’s and 40’s are distracted massively. They’re crawling their way to becoming Amazon sellers, because they’re glued mostly to social media and gossip and aren’t putting in the real work. Most of the competition is pretty average in their offerings on Amazon. I think fortunes go to those who put in the effort.
5. Best course is either Reliable Education or Amazing Selling Machine. These courses predominantly have former business owners looking to move towards actual freedom and a better work-life balance through selling on Amazon. Most of the other courses are pitching to complete beginners, those “new” sellers you’re talking about, and most of them won’t last long when they realize how much work is involved here. $5k to $10 AUD will get your first product off the ground.
6. Both courses mentioned do provide coaching / guidance as an add-on for finding the right niche and product. One thing I often recommend is walking down the aisles at Bunnings as there’s plenty of product potential there. Feel free to use more of my resources here, and the 101 Products To Sell On Amazon guide if you haven’t already.
Hope that helps mate! And let me know if you have any more questions. – Joshua
Wow…So surprised to get an answer so quickly. Do you ever sleep! 🙂
Thank you so much for your reply. It has been extremely helpful and i appreciate the time & effort taken to reply. I have spent almost all day on your website reading (and doing a copy and paste into my Amazon fact finding library) up on all the questions and your replies. It has been very informative.
If i can stretch a friendship i have 2 more questions.
Q1. Do you know of Seth Kniep’s Amazon program > https://justonedime.com/old-home This is the one that i was going to sign up with until reading your comments about RE. He has a ton of excellent info on his YouTube channel.
Q2. Also, any feedback on Niel Ashers Aussie based course (Roar Local i think its called)
Q3. My issue in regards to the copying thing is based on some feedback from an engineer who had done Amazon Secrets course.
His comment to me was >
“If you find something on Ali Baba and start making a good profit, your listing will be attacked and soon your listing is dead. If you just bought another round of inventory, you could lose a lot of money. The best way to use Amazon is for products that are not easily copied. If there is a low barrier of entry, your business will not last”
His initial order sold well but he states that by the time his second order was ready to be shipped his original listing had got a lot of bad fake reviews that were not enough to offset the good reviews so his ranking started to slip causing him to lower his price significantly and eventually walk away from the product.
Imagine if this happened when you had built sales up at very high levels, requiring high amounts of stock.
In your experience, is this something that happens often and is there a process to stop these fake bad reviews (from competitor listings i presume) Does this suggest that he simply did not “differentiate” his “alibaba product” enough – or is there a deeper issue?
He also states that he monitored a FB group of approx 100 sellers (I presume from the same seminar that he attended) and 3 months after launch over 50% were not selling the product any longer, of those that were still selling more than 80% were not profitable and after 1 year only 2 ppl were still selling.
This is some scary data if its accurate. Or maybe it just highlights the opportunities in front of those sellers who go in with good training, adequate capital and the right plan?
But the 2 issues raised by this guy are the main things stopping me from jumping in boots and all at the moment as I think that i have resolved all other issues in my mind.
As you have had quite some experience in the area over several years can you provide some insight to those comments and whether they might be very accurate, somewhat accurate or just the gripe of someone who feels that the course that he paid a lot of money for seemed quite fake to him.
Ok, that was 3 questions! I promise no more questions after this 🙂
Cheers
Skip
Hey Skip, I work up to 14 hours per day between projects and always happy to help people out on the blog. 🙂
1. I reviewed Seth’s course back in June. It’s good, but there’s very few Australians in this course. You might feel a bit lonely. Plus quite expensive to fly over.
https://www.workwithjoshua.com/full-review-seth-knieps-just-one-dime-amazon-fba-program/
2. I also reviewed Neil’s course which is the worst one of them all. A good reminder of getting what you pay for, which I’m sure you’ve experienced in business.
https://www.workwithjoshua.com/aussie-online-entrepreneurs-by-neil-asher-an-existing-amazon-seller-takes-the-course/
I did list Neil’s course but forgot to add Seth’s course to my full list of Amazon courses available in 2019 which is maybe why you didn’t find it earlier. I’ll add it now.
3. As you’ve probably seen I’ve said it on my blog time and time again about not selling cheap shit. Most courses teach people to sell cheap trinkets online and somehow expect students to find success. Most Amazon courses set people up for failure. Might as well do drop shipping. When using Alibaba, you want to find a product and improve on it to a significant amount, have it well packaged then trademark and patent it (as I commented earlier) to protect your backside.
As you’ve said, it’s the low barrier to entry. If things are harder, it’s tougher for market saturation. Personally my next Amazon business is likely selling oversized furniture. I’m not kidding. Expensive to order from China, oversized fees and more complexities. Very few people out there (especially beginners) willing to take this risk, but this is where the true profits are found. Doing the work that others won’t.
Everybody is trying to win at the $15 to $25 price-points, and you need to stretch for $40 to $100 if you want a good shot at this. Fake competitors generally don’t go for this higher hanging fruit, but yes, you can get negative reviews removed as I have done a few times…and they were real reviews too. 🙂 Shhh
Hi Joshua
I have thought a LOT about your replies to my previous questions and now understand the process much more clearly. So i really appreciate your generosity in responding.
Here is a very short question, because it’s the weekend and i don’t want to tax the friendship too hard!
I wanted to ask a question about the process of differentiating a product in real terms ie by actually changing the design, shape or form of a specific product to address design errors and weaknesses.
Doesn’t this mean that the supplier / manufacturer would then need to make new molds etc and that would add significant cost to the product? While this would seem to add significant protection from product / listing “copycats” wouldn’t it also adds significant risk to a product that you have not even launched and tested in the Amazon market place as yet.
Could you comment on this aspect of differentiation … and perhaps even give some approx ideas of how this process works … how it is generally received by manufactures (ie usually reluctant or usually open to it) … and or how much it could add to the product cost – without identifying your own products of course.
I presume that if the buyer pays for the molds they then belong to the buyer and the manufacturer can’t use the same molds to then make that same product for others?
Hi Skip, good questions again!
Some are totally open to it, and others aren’t so much. Generally those reluctant are simply agents in disguise, and agents find it harder to stray outside of catalogue product offerings, as they’re merely salespeople and don’t have complete manufacturing knowledge. Amazon courses go into greater detail on dissection between agents and actual factories. I go direct but I also use agents aka middlemen and they’re not all that bad.
In regards to your bigger question here…
Easy: Changing the colour or size. Examples: Pink calculator for teenage girls, unique bed sheet design, longer handle fishing net, esky in camo colours
Medium: Mild changes including the shape to the design itself, or bundling multiple products together. Examples: Bigger handle on a coffee mug, triangle sofa cushions, tougher zips / more pockets on a bag, aquarium starter set, bicycle front light + rear light + high vis vest combo
Hard: Totally new product with mold. Examples: Significantly strong shoe rack that doubles (when needed) as a kitchen step stool, hexagon dinner bowl, blown up elephant pool toy, oversized stainless steel water bottle
Where things are hard, competition is minimal. Most people just want the easy road, hence why they’re all fighting to sell cheap products.
“wouldn’t it also adds significant risk to a product that you have not even launched and tested in the Amazon market place as yet.” Is true. There’s risk in everything you do, but also, you want existing competitors. If you decide to sell hexagon bowls in a sea of square and round bowls, then you’ve got established marketplace traction with a product that stands out. If you were selling a newly designed backpack, then there’s already an established marketplace.
An example of easy variation is pink tools such as hammers and drill sets. Even electrical tools. Women are becoming more independent, and also more willing to get their hands dirty and try new things (especially with YouTube instructional videos) yet 99% of people are still selling tools to men.
I’ve been quoted $3k up to $20k for new molds depending on the product type, size and materials. It really depends and each factory can give you specific quotations. To launch your first product, I would recommend off-the-shelf with slight variation to differentiate enough from the crowd, so you can get some marketplace experience, before taking the bigger leap into molds and your own unique products.
You are correct regarding molds. You can get that design trademarked in China and also a non-disclosure and non-competitive agreement with your supplier, so it’s all yours. Plus patents in China too. The good factories are seeking long-term business relationships (look up Guanxi) with the willingness to work together. I’ve used Upwork to get mock-ups done with impressive visuals so my factories can understand (after signing my paperwork with their company stamp, of course). It’s always great to fly over as well to build rapport and trust between the both of you.
Lastly, the Chinese continue to improve their already strong laws, legislation and regulation to stop copy-cats. I don’t often here of issues for those who do the journey properly, but I imagine those who are eager to cut corners in the rush towards Amazon success are likely to encounter some challenges.