In an age of Amazon FBA, labelling services, and rank tracking software like KeyworX, it’s easier than ever to run a successful business or make passive income from the comfort of your own home.
But how does Amazon FBA work, what steps should you take to grow your business, and how can KeyworX give you a leg up on the competition?
We’ll break that all down for you right here and leave you with everything you need to outrank your competitors, boost your conversions, and sell more than you thought possible!
How Does Amazon FBA Work?
Amazon FBA, also known as Fulfilled by Amazon, is a service that allows third party sellers to sell their products via Amazon, the biggest online marketplace in the world.
In other words, you send your products to Amazon, and when a customer orders it, Amazon dispatches it to them, taking care of all logistics, tracking, customer queries, and returns.
For small businesses or sole traders, this is a massive benefit as it allows them to focus on things like product research, product refinement and marketing, while Amazon handle the other end of things, allowing you to scale your business without getting stuck in time sinks like chasing up lost packages and working out shipping quotes.
You can usually tell if a product is sold by Amazon itself or by an Amazon FBA seller through little notes on the product listing like this:
Previously, there was a huge gap between people selling products on eBay from their own home, and large online eCommerce companies. Amazon FBA is a great way of bridging this gap and making a hugely scalable business model that can take you from 5 products per month to 5,000 without the need for making huge changes to your processes and way of doing business.
In fact, selling 5 products on Amazon FBA and selling 5,000 is the same process – it’s only the ranks you achieve and the other marketing techniques you use that differ.
You can even store your products in multiple Amazon storage facilities around the globe and sell on all of the global Amazon marketplaces if you wish.
This, combined with Amazon’s decades of experience and billions invested into improving conversion rates and removing friction from the ordering process, all combines to make this the most easily scalable way to sell products online, period!
How to Set Up an Amazon FBA Business
First, you’ll have to decide whether you’ll invent a new product from scratch, or improve an existing product.
Inventing Your Own Product
This is of course the most difficult route, but if you have an idea for a product that you know has potential for demand and is low in competition, it can be a great way to start your Amazon FBA career.
You will need to order a sample of your product and get your shipment inspected to ensure quality. More on that soon.
Improving on An Existing Product
This is by far the easiest way to get started. First of all, you should find products on Amazon that are selling in decent numbers but that aren’t entirely satisfying their customers.
An easy way to do this is to find a product that’s ranking decently well but has a low amount of reviews or a negative overall review score.
From here you can browse the reviews to read up on what exactly people don’t like about the product or which expectations they had for it that weren’t met. You can then get the products made but make alterations or improvements to account for these expectations and make your product more immediately satisfying to the customer’s desires.
Getting Your Products Made
Once you’ve decided on your products, the next step is to source them from a manufacturer.
The most popular way to do this is via Alibaba, a Chinese wholesaler platform that gives you access to thousands of manufacturers across Asia.
Ideally, you will want to message multiple suppliers to get quotes and check their communication skills, after which you can choose one and go ahead with orders your products.
If you’re improving on an existing product, you may even be able to find the supplier responsible for originally making them. Adding your own improvements to their existing molds is a good way to save money, if the supplier is willing to do it.
Many products on Amazon are white labelled products from Alibaba, and you may find when looking closer that two competitor’s products are actually the exact same things with the only difference being their brand’s logo.
You will also find that more prestigious, successful, household name brands use Alibaba, and even in those cases it’s possible to get the same product with your own branding and immediately compete with the leaders of your niche.
Conducting Market Research for Your Products
The best combination of tools for Amazon market research is KeyworX and JungleScout.
We will be bringing you an in-depth guide to Amazon market research very soon, which will take you through the best ways to make the most of these tools in detail.
There is no need to go into that much detail now, but we will summarise it for you regardless:
JungleScout allows you to analyse and compare listings from across Amazon, making it easy to see how many sales a product listing gets or how many reviews it has.
It also lets you analyse competitor’s listings to see what keywords they’ve targeted and which keywords are bringing them the most sales. JungleScout is the easiest way to find products with high sales and low review counts like we discussed earlier.
KeyworX allows you to track your product listing and those of your competitors for your chosen search terms, getting regular alerts when a competitor moves up or down a rank, or a new competitor enters the market.
When somebody’s rank changes, you can analyse their listings to see what has caused this change, and implement them yourself if necessary. It also makes it easy for you to see which of your own updates and optimizations lead to rank increases and which don’t.
Learn more about how to use KeyworX to dominate your category here.
The combination of both KeyworX and JungleScout gives you a complete picture of the Amazon A9 algorithm and how it works, and using both of them correctly will make it virtually impossible for your competitors to outrank you, which means you will get the lion’s share of the sales (and the profits).
Of course, this is what you should be aiming for, and as soon as you’re one of the top ranking products in your niche and have a better product than the competitors, you can focus on keeping that inventory stocked and let the passive income roll in.
To learn more about product research, check out our full guide on the topic.
Sending Stock from Your Supplier to Amazon FBA
This may seem like the most complicated part of the whole process, but since you can send products directly from your manufacturer to Amazon without ever touching yourself, it can be pretty hands-off as long as you don’t do anything wrong.
There are even companies like Flexport that are able to handle this for you if you prefer.
You’ll also have to decide who applies any barcodes and labels to your products since you won’t be going near them yourself – Amazon and most Alibaba suppliers are both willing to do it, but the supplier will usually be cheaper.
That’s the basics of getting your product ready to sell on Amazon FBA – now we get into the marketing side of things, and making sure people actually buy them!
How to Market Your Amazon FBA Products
If your product listing is well optimised, and your product is high quality, your rank should slowly improve over time due to the organic sales and positive reviews you naturally generate over time.
However, this is only possible if people see you in the first place – if you launch on page 53 of the search results, you stand no chance.
As a result, you need a boost of momentum at the start to get your product to a good rank and allow it to begin to organically build rank by making sales.
A few ways to do this include:
- Asking all of your friends and family to purchase your product and leave a good review. You can even pay them if you wish, or find a company that offers Keyword Focused Sales – which is essentially paying strangers to do the same thing
- Sending free samples to influencers and product reviewers
- PPC ads are fairly low cost on Amazon and can drive people towards your product
Building Reviews on Amazon
People rely heavily on social proof when purchasing items online, and as such reviews are a crucial part of getting good sales volume on Amazon.
The first way to ensure you get positive reviews is of course, to ensure your products are high quality.
Beyond that, the most effective way to encourage positive reviews is through follow up emails.
You can set these up so that customers receive specific emails a certain amount of time after purchasing from you. A good way to go about this is:
- Provide one followup email on delivery that provides tips and advice on how to best use your product, thanks the customer for their business, and invites them to contact you to resolve any issues if they aren’t happy. This helps to prevent negative reviews and also creates a positive image of your company
- A second email a few days or 1-2 weeks later can say something along the lines of ” we hope you’re enjoying your product, we are always trying to improve so we would really appreciate it if you could leave us some feedback”
This has been found to increase positive review by quite a decent amount and can lead to repeat orders too due to the enforcement of your company’s positive image.
What Are the Pros and Cons of Amazon FBA?
Now that you know how to get started with Amazon FBA, conduct product research and get reviews, what are the pros and cons of selling on Amazon FBA compared to selling through other channels?
Let’s take a look:
- Some of the most fiddly parts of selling online become a complete non-issue (shipping times, tracking, logistics, customer service, returns, refunds etc)
- Amazon prioritises FBA sales since they make a profit off them, so you can expect better rankings than if you fulfil your products yourself
- Customer’s trust Amazon more than they would ever trust your small start-up brand, and they’ve spent billions on fostering this trust
- Your products benefit from Prime bonuses such as 1-day delivery
- Between all the labelling fees and storage charges, it can get quite a bit more pricey than fulfilling things yourself
- You lose out in things like product package branding as all products are sent in standard Amazon materials
- You also lose out on building a large email marketing database as you would on your own website, as Amazon doesn’t share customer email addresses with sellers.
That’s it for the basics of selling on Amazon FBA!
We highly recommend you read our guide on How to Use KeyworX for Long Term Tracking & Improvements next, as this breaks down exactly how to use KeyworX to make it extremely difficult for other product listings to outrank you.
If the Pros outweigh the Cons for you, it’s time to get started!
We will be bringing regular guides to selling on Amazon and further tips for using KeyworX too, keep your eyes right here!
To learn more about what exactly KeyworX is and how it works, check out our Tutorial page or watch the video below: