Selling products online using the Amazon FBA (Fulfilled by Amazon) program can be a fun and lucrative side hustle or full-time business opportunity.
In this tutorial you’ll learn the 7 steps to selling on Amazon FBA. It will also be a helpful guide for current Amazon FBA sellers who are looking for actionable tips and tricks to help grow your business.
1. How does selling on Amazon FBA work in 2023?
Amazon’s FBA program enables everyday people to apply for registration as third-party sellers on the platform. Not only do third-party sellers benefit from the chance to sell products to millions of Amazon customers, but starting an Amazon FBA business can cost as little as a few hundred dollars.
The process of selling on Amazon FBA is straightforward. After applying and being accepted into the Amazon third-party seller program, you research and then purchase products that you can sell for a profit on Amazon.
You list the products for sale on the Amazon marketplace of your choice, such as Amazon.ca in Canada or Amazon.com in the USA. You’ll be required to ship your inventory to a designated Amazon warehouse. If you use Amazon’s deeply discounted partnered shipping program with the couriers UPS or FedEx, you’ll save approximately 75% or more off of their usual shipping rates.
Upon delivery at the warehouse, your products will be received and stored by Amazon. Once your products sell on Amazon’s platform to individual customers, the FBA program will take care of all the packing, shipping, and customer service for you.
Every two weeks, Amazon will deposit your profits into your bank account, minus any Amazon account fees and selling fees. If you’re interested in investing in a helpful course to teach you how to sell on Amazon FBA as a complete beginner, then check out the Beginner FBA Amazon Selling Course.
2. Where do I find profitable products to sell on Amazon FBA?
There are four common strategies for finding products to sell on Amazon FBA. These are known as Private Label, Wholesale, Retail Arbitrage, and Online Arbitrage. You can use one or more of these strategies to find profitable inventory to sell on Amazon FBA.
Here is a brief overview of each business model:
Private Label involves creating and selling your own branded product or product line from inventory that you have purchased directly from a manufacturer, either domestically or overseas. Private label typically involves conducting product research, market research, and establishing relationships with reputable manufacturers. You may want to hire experienced logistics and freight forwarding companies to ensure that any overseas goods are shipped and received accurately. You may also consider employing a third-party Prep and Ship company to receive, inspect, prep, and ship your private label products to Amazon’s warehouses on your behalf. Popular websites for finding products that you can customize or improve upon to create your own private label products include Aliexpress.com, Alibaba.com, and DHgate.com.
Wholesale is the method of sourcing popular, well-known, and brand-name products directly from wholesalers and distributors, typically in bulk. Many wholesale distributors require you to open an account to make purchases. These accounts are typically free, but you may be required to have a business license or other identification. Some wholesalers require you to place minimum orders, ranging anywhere from $100 to $2,000 or more. A good place to start looking for wholesale contacts are trade shows and events, such as those listed on the website tradeshow.io. You can also reverse engineer your search by looking up contact information online for the distributors of your favorite products. You can request the distributor to ship your wholesale products directly to Amazon’s warehouses. You would then pay Amazon an extra fee to prep your inventory for sale. You could also hire a third-party Prep and Ship company to receive, prep, and send the products to Amazon’s warehouses for you.
Retail Arbitrage is the process of going into retail stores, like Walmart, Office Depot, and Marshalls, and physically buying popular products to resell on Amazon for a profit. With Retail Arbitrage, you typically prep the items yourself. This can include packaging them into poly bags, removing price tags, and applying custom Amazon barcodes called FNSKU labels when directed. You would then ship the products into Amazon’s warehouses.
Online Arbitrage works the same way as Retail Arbitrage, except that instead of shopping in-person for your Amazon inventory, you find and purchase the products online. Some popular websites for online arbitrage include Homedepot.com, Costco.com, and Bestbuy.com. You can have the retailers deliver the products to your home, and then prep and ship them into Amazon’s warehouses yourself. You could also have them sent to a third-party Prep and Ship company who can receive, prep, and send the products into Amazon’s warehouses on your behalf for a fee.
3. What is the easiest way to start selling on Amazon FBA?
For many people the easiest way to start selling on Amazon FBA as a complete beginner is by using Retail Arbitrage and/or Online Arbitrage to find profitable inventory.
If you’re having any trouble finding profitable Arbitrage items to sell, joining a trustworthy and profitable lead list group, also called a BOLO group, (BOLO stands for ‘Be On the Look Out’ for) can definitely help. These groups provide leads on profitable Retail Arbitrage and Online Arbitrage products that you can source from local stores in-person and online to sell in your own Amazon FBA shop.
After you have some experience selling on Amazon FBA and feel comfortable with how the third-party seller program works, you can expand your business to include Wholesale and/or Private Label products. On Amazon, the selling opportunities are almost endless.
4. What should I sell on Amazon FBA?
One of the fastest ways to find success with Amazon FBA is to sell popular products that people already know and trust.
As a new third-party seller you won’t be permitted to list and sell every name brand item right out of the gate. This is because Amazon wants to ensure that you do not sell poor quality, dangerous, or counterfeit products on their platform.
Luckily there are thousands of products that you can source and sell online as a beginner. Many people start selling products from Amazon categories that all third-party sellers are permitted to list in. One of these categories is Home and Kitchen. While you won’t be permitted to sell Kitchen Aid brand mixers on day one, you can find lots of profitable inventory to sell in this niche.
As your Amazon third-party seller account builds history and credibility on the platform over time, Amazon will automatically begin to unlock previously restricted products, brands, and categories for you to sell.
Waiting for Amazon to un-restrict categories their platform automatically can be time consuming though, typically taking several months to a few years.
There are also some mid to high five-figure gross sales numbers that you have to meet (I’ve heard rumors that the number is anywhere from $50,000 and up per year in gross sales).
Unfortunately, Amazon considers all of this information to be proprietary. So this means you will never know exactly when or how you might become automatically unrestricted in different selling categories.
Luckily, you can shortcut this waiting game by applying directly to Amazon Seller Support to sell restricted (known on Amazon as ‘gated’) products, brands, and categories. This application process is called ‘ungating’. You can begin the ungating process as soon as you’d like.
Personally, I applied to become ungated right away. I wanted to make the highest amount of profit from Amazon as quickly as I could, and I knew that getting ungated was the best way to do it.
There are third-party ungating services out there who will help you with the ungating process for a fee. But be advised that not all of these services are trustworthy. They typically charge several hundred to a few thousand dollars to ungate each category for you.
In my opinion, these ungating service fees are exorbitant and unnecessary. What’s even worse is that hiring the wrong ungating service could even put your Amazon seller account at risk. I considered it myself at one point, but ultimately decided to find another way.
If you decide to go forward with this method, do you research and make sure that you hire a reputable company. They should be supportive and answer any questions you might have about the process.
Instead of hiring an ungating service, I successfully ungated my own seller accounts on both Amazon.ca and Amazon.com by following a simple ungating game plan.
If you’d like to do the same thing then I highly suggest purchasing fellow Amazon FBA seller Nikki Kirk’s do-it-yourself ungating guides.
In her ungating guides and bundles, Nikki walks you through the entire Amazon ungating process step-by-step. She gives you all of the information you need to succeed and get ungated. And if you ever have questions, all of her ungating guides also come with free support groups.
To get ungated on Amazon.ca you can purchase Nikki’s Canadian Toys Category & Brands Ungating Guide for Retail Arbitrage. To get ungated on Amazon.com you can purchase Nikki’s US Toys Topical and Grocery Ungating Guide and/or the US Topical and Grocery Ungating Guide.
5. How much profit can I make selling on Amazon FBA?
The potential profit of every Amazon FBA product and listing is different. Potential for earning profit depends on many things including your cost of goods, sourcing method, and the popularity of the product.
Many Amazon sellers have a minimum dollar amount that they strive to earn on each sale, and/or a minimum return on their capital investment (ROI). An example is a goal to earn a minimum of $5 profit and 30% ROI on each sale. Another popular strategy is to list products on Amazon that will sell for a minimum of a three-times price markup. This means that your inventory should be listed on Amazon for at least three times the price you paid for it.
As an example, let’s say that during a Retail Arbitrage sourcing trip, you find skipping ropes on sale at your local Walmart for $5.00 each. Using the free Amazon Seller App (available for download on the Google Play store or the Apple App store) you scan the UPC bar code on the skipping rope.
The Amazon Seller App confirms that the same skipping rope is selling for $15.00 on Amazon and has a good sales rank (on the Amazon Seller App, the lower the sales rank, the more often the product sells).
This means that selling for $15.00 on Amazon, the skipping rope meets the three-times price markup criteria. A rough estimate of the three-times price markup rule works out to be $5.00 to cover the cost of the skipping rope, $5.00 to cover Amazon’s seller fees, and $5.00 left over in profit for you.
In this hypothetical scenario, you will be paid out $10.00 for each skipping rope you sell on Amazon after fees.
Out of this $10.00 payment, you not only get back the initial $5.00 you paid for the skipping rope, but you also get another $5.00 in profit.
For this product, you would be earning a 100% ROI (return on investment). Considering that investing in the stock market returns an average of 10% in interest year over year, you can see that finding winning products to sell on Amazon can be quite lucrative.
In addition to creating the website you’re reading, Simply Smart Finance, I’ve also been selling on Amazon FBA for the past three years myself. So, I speak from personal experience when I tell you that while a $5.00 profit per item may not sound like much, your Amazon sales volume could become very high if you list the right products at the right price. And the higher your sales volume, the more profit you should earn. Lather, rinse, repeat with hundreds (or thousands!) of products every month.
Once you determine that a product meets certain buying criteria (for example, it is selling well enough on Amazon at a high enough price to make an acceptable profit after paying for your cost of goods and fees), you might purchase 4-6 units to send into Amazon as a test buy. There are many apps and services that you can use to help ensure you are buying profitable inventory as well.
Continuing with the current example, you would buy and send 4-6 skipping ropes into the Amazon FBA warehouse, along with another 4-6 individual units of another 10 or 15 different products that meet your buying criteria, and you will start to see your Amazon FBA inventory and profits grow.
6. What supplies do I need to sell on Amazon FBA?
Starting an Amazon FBA shop doesn’t have to be expensive. When you’re first starting out it’s best to purchase only the items you’ll use regularly. Then, once your profits begin to grow and you start selling more products and at a higher volume, you can invest in optional tools that will make things easier and help your business to grow faster.
If you’re interested in learning about all of the Amazon FBA tools and supplies that I personally recommend, check out my detailed tutorial Best Tools & Supplies for Amazon Retail Arbitrage and Online Arbitrage.
I order all of my small business supplies from Amazon. To help you get started, here is a list of all of the essential Amazon FBA supplies that I personally use and trust. Note: There are two supply lists. One for Canada and one for the USA.
CANADA: Supplies for Selling Arbitrage items on Amazon FBA (links to Amazon.ca)
- Assorted stationary supplies including markers, highlighters, pens, scissors
- Bubble Wrap
- Box Resizer
- Printer, or
- Thermal Printer
- Postage Scale
- Poly Bags with suffocation warning and permanent seal in assorted sizes
- Medium Shipping/Moving Boxes
- Small Shipping/Moving Boxes
- Shipping Labels – Half Sheet Style
- 30-Up Address Labels to use as Amazon FNK SKU labels
- Scotty Peelers
- Shipping tape
- Stretch Wrap
- Tape Applicator
USA: Supplies for selling Arbitrage items on Amazon FBA (links to Amazon.com)
- Assorted stationary supplies including markers, highlighters, pens, scissors
- Bubble Wrap
- Box Resizer
- Printer, or
- Thermal Printer
- Postage Scale
- Poly Bags with suffocation warning and permanent seal in assorted sizes
- Medium Shipping/Moving Boxes
- Small Shipping/Moving Boxes
- Shipping Labels – Half Sheet Style
- 30-Up Address Labels to use as Amazon FNK SKU labels
- Scotty Peelers
- Shipping tape
- Stretch Wrap
- Tape Applicator
7. What are the non-monetary benefits of selling on Amazon FBA?
As an Amazon seller, you are able to earn an income while working when and where it’s convenient for you. You can choose to work days, evenings, nights, or weekends—whatever fits your schedule.
Personally, I enjoy selling on Amazon FBA as a side hustle. I’m employed full-time as a social worker, and I enjoy the benefits of being a small business owner too. I operate my Amazon business on my own time when it’s convenient. With an Amazon side hustle, I have no scheduling conflicts, no caregiving costs, and no direct supervisor to report to. I can shop for inventory online in my pajamas, and prep it to send into Amazon’s warehouses from the comfort of my own home.
Whether you decide to sell on Amazon full-time or part-time, the satisfaction of owning your own business is a reward in itself, especially if you are an entrepreneurial person by nature.
As an Amazon seller, your profits are yours to use as you see fit. Whether that’s purchasing more inventory and scaling your FBA business, investing in the stock market, or paying off high-interest credit card debt and loans, or other financial obligations.
As long as you are willing to take chances, learn new things, and even make a few mistakes along the way, starting your own Amazon FBA business could be right for you too.
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