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Are you dreaming of making boatloads of money selling products on Amazon? You’re not alone. In the last decade alone, the platform has enabled countless sit-at-home moms and 9-to-5 employees to earn money from the comfort of their homes.
But what about today? Can you actually make money from Amazon FBA in 2024?
The answer is yes (and it’s pretty easy).
So, what is FBA, and how does selling on Amazon FBA work?
This blog simplifies the process of FBA selling and explains how to earn your first dollar on Amazon.
Continue reading to know more about:
Fulfillment by Amazon (FBA) is a service that lets third-party sellers outsource product packaging, storage, and delivery to Amazon for a fee. It removes the need to hire staff, rent expensive storage facilities, or pay for transportation, allowing sellers to market and sell their products easily.
The process of how FBA works in US, UK, Canada, Australia, India (or any other global marketplace) is broken down into four stages:
Note: Like any business, Amazon FBA product sales may be subject to tax. We answer the question: how does Amazon FBA work with taxes in this handy guide!
There is no single ‘best’ product to sell on Amazon; what sells well today might be a fad and vanish from Amazon’s ranking pages tomorrow. There are, however, signs that point to a product worth selling via FBA, some of which include the following:
Top tip: Most, if not all, successful sellers rely on seller tools to uncover FBA products worth selling in seconds. A monthly subscription costs a few dollars and saves hundreds of hours of effort. Here’s a well-known product research tool with a 7-day free trial – check it out to see if it’s a worthwhile investment.
Millions of third-party sellers prefer FBA over self-fulfillment (even if it costs extra). The following are a few reasons why:
Forgoing FBA means you’ll have to be responsible for storing products at a warehouse, packaging them according to Amazon’s requirements, and transporting them when orders come in. This requires considerable time, physical and mental effort, and resources. It also includes responding to customer queries on time and handling product returns.
With FBA, you can gain peace of mind and dedicate more time to refining your on-and-off advertising campaigns and brand-building efforts.
Amazon favors sellers who fulfill products via FBA by offering them greater visibility and pushing them higher up its search engine ranking pages (SERP, for short). That’s because the more sellers join FBA, the bigger Amazon’s revenues.
Another advantage of choosing FBA is the increased likelihood of winning the coveted Buy Box, i.e., the area on the right-hand side of a product listing with the Add to Cart and Buy Now options. For sellers, retaining the buy box results in receiving all customer orders, so whoever gets to keep the buy box the longest gets to make the most sales – FBA helps achieve that goal.
Amazon operates a highly sophisticated shipping network that sprawls across every major continent. It also works with some of the world’s largest shipping firms, resulting in super-fast delivery times. In terms of shipping, the benefits of FBA are two-fold:
Amazon is one of the world’s leading online marketplaces. Visitors know that if the product they purchase is faulty or not as advertised, they can claim a refund. As a result, millions of people trust Amazon and readily buy products from third-party sellers.
Starting a web store from scratch, generating traffic, and building trust require learning how eCommerce works and putting knowledge into practice. So why not just leverage Amazon’s name and save yourself months (and maybe even years) worth of effort?
FBA opens the door to omnichannel or multi-channel fulfillment solutions, through which you can leverage Amazon’s shipping network to fulfill orders you receive from outside the platform, e.g., eBay.
The perfect product or service doesn’t exist, and FBA is no exception. Here are a few drawbacks of Fulfillment by Amazon.
FBA isn’t free; you must pay a percentage-based fee on every sale. Now, considering FBA’s benefits, it isn’t a big deal. However, if you’re new to the platform and your sales aren’t picking up, you’ll also incur monthly storage free for inventory in Amazon’s fulfillment centers.
We recommend using a reliable Amazon FBA calculator to determine product profitability before you finalize an FBA product for sale.
Amazon maintains strict product packaging guidelines that all sellers must adhere to, e.g., proper labeling, packaging material, bubble wrapping, etc. Failing to send inventory to fulfillment centers according to these requirements may result in your shipment being returned or Amazon charging extra packaging fees.
You now have a basic understanding of how Amazon FBA works. But how does it fare vs. other fulfillment options?
FBM or Fulfillment by Merchant is when sellers take responsibility for the storage, packaging, and shipping aspects by themselves. The apparent upside is no fulfillment fees, but that can hardly be considered an advantage because if you’re not paying Amazon to handle these aspects of your business, you’re paying someone else. And in most cases, FBA is the cheaper alternative.
FBM has some situational advantages over FBA like:
Third-party logistics (3PL) or third-party fulfillment is when sellers hire a shipping company to handle product packaging, storage, and fulfillment on their behalf. The 3PL option rose in popularity when Amazon started imposing inventory storage limitations, and sellers with high sales needed extra logistics support.
Although storage limitations still exist (the exact amount varies from one seller to another), FBA remains the superior fulfillment method. That said, many sellers use 3PL service providers for extra storage after hitting their Amazon inventory storage caps.
This hybrid approach allows sellers to via FBA while maintaining large amounts of inventory, avoiding out-of-stock (OOS) situations, and maintaining steady sales all year round.
Dropshipping isn’t a fulfillment model like FBM or Seller Fulfilled Prime (SFP) but is considered a viable alternative or eCommerce business model to Amazon FBA.
Dropshipping on Amazon involves listing products for sale without purchasing inventory in bulk. Instead, when sellers receive an order, they forward the customer details to the supplier or manufacturer, who then handles shipping and customer service.
Amazon dropshipping involves low startup costs and attracts new sellers each year. However, dropshippers don’t:
Based on these reasons, dropshippers do not own an online business.
Amazon FBA lets you earn money from your online business without spending endless hours in front of a screen.
You should have $3,500 - $10,000 in hand to start an Amazon FBA business. The figure varies due to the product price and the cost of procurement. Other factors contributing to this number include the cost of a professional seller plan, advertising, trademark & registration, branding, product samples, and giveaways.
At this point, you’re probably wondering: how does Amazon FBA fees work? Unfortunately, there’s no straight answer, as it depends on factors like your product’s size tier, dimensions, shipping weight, apparel or non-apparel status, and the time of year.
Here’s a breakdown of Amazon fulfillment fees in 2022 and 2023:
Want to know what percentage does Amazon take aside from the FBA Amazon fees? Visit Amazon’s pricing page for an in-depth answer.
FBA sellers can store large inventories within Amazon fulfillment centers without looking for warehouse storage space elsewhere. However, this perk results in monthly storage fees calculated based on the product volume and tier size.
Dangerous goods have higher storage costs because they require special care, handling, transportation, and storage facilities. Also, monthly storage fees get bumped up during the holiday season, which starts in October and ends in January next year.
If your products remain within a fulfillment center for too long, Amazon will start charging long-term storage fees.
A helpful tip to prevent long-term storage fees is to ramp up your advertising efforts or consider giving away products for free, increasing brand awareness.
Amazon FBA is suitable for most businesses. If the product you’re selling falls into one of the roughly 36 product categories, you should consider listing and selling via FBA. That’s because millions of buyers visit Amazon daily, and with readily available advertising tools, you can substantially increase your business revenues.
If you don’t have an existing business and want to make a living off Amazon FBA, consider researching a viable product to sell using a reputable product and keyword research tool.
Let’s wrap things up by addressing some commonly asked questions.
Yes. Anyone looking to increase their monthly income and chances of gaining financial freedom should try their hand at Amazon FBA. With an abundance of online resources and how-to guides, help is readily available on how to set up an online Amazon business in 2024.
There are two aspects to FBA shipping. The first involves shipping products from the manufacturer’s hub to an Amazon fulfillment center (usually from Alibaba to Amazon FBA) – this is your responsibility. The second is where Amazon picks, packs, stores, and ships orders to customers on your behalf – that’s Amazon’s responsibility.
In both instances, you pay for shipping costs, but with FBA, shipping expenses are included within the fulfillment fees charges.
It depends on your Amazon FBA knowledge and the time and effort you put into creating your FBA store. But generally speaking, you can expect to make anywhere from $1,000 - $2,500 in sales selling FBA products. Most sellers' FBA earnings increase as they learn more about advertising and listing optimization
You can start Amazon FBA as a side hustle today. Start by implementing the tips in this blog and continue reading up on how FBA works to create a passive income stream. Then, as your earnings increase, you can take Amazon selling as your primary means of income and work towards creating a solid digital asset.
Every journey starts with a single step. However, with so much to learn about product research, product sourcing, listing optimization, Amazon PPC strategy, and other aspects of FBA, it’s easy to feel overwhelmed.
That’s why here at ZonGuru, we’ve created an extensive resource center for new Amazon sellers – think of it as a free Amazon FBA course filled with insights and guides taught by successful FBA business owners.
Feel free to browse through all the content and learn all there is to know about launching successful FBA products!
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