How To Win at Amazon on a Budget

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Thousands of success stories about entrepreneurs have made it big, creating or marketing a product fill magazines worldwide. Inc. even mentions a business that makes millions selling random stuff on Amazon. Many of these entrepreneurs start off registering an LLC for Amazon FBA and moving on from there to ship thousands of items a month. It’s not impossible, but success is the exception rather than the rule.

The Benefits and Drawbacks of Amazon FBA

Amazon FBA businesses number in the tens of thousands. Yet, as Forcastly notes, a large volume of them never see success. The FBA system is a useful method for entrepreneurs to try their hand at selling products. They don’t need to produce anything, market it, and advertise to others. Many beginner entrepreneurs get their start here, then sell this business and move on to new endeavors. The reason why Amazon FBA is such a good business idea is that it is accessible to a broad cross-section of society. However, it would be best if you still had a ton of startup money to work with. Or do you? Here we explore how an entrepreneur with a shoestring budget can get started as an FBA business.

Step 1: Acquire Research Samples

Before you start selling, you’re going to have to figure out what sells. Market research is the core part of any business, and that’s true for all retail fulfillment services as well. This step will cost you, but the investment shouldn’t be more than $100 – $200. Your research will start with Amazon. Check out the Best Sellers Rank between 100 and 6000 and see which ones are selling well but aren’t competitive in their particular market. That’ll give you a target to aim for.

The supplier marketplace is going to be your next stop. Alibaba supplies tons of low-cost items in bulk for cheap, and that’s precisely what you’re looking for. You’ll need to shell out for a few samples to test the product. No good marketer will sell a product they don’t know anything about, so those samples are for you and a few close friends to test and offer feedback. Many Alibaba stores provide customization services for their manufacturing, allowing you to make your product more unique as a selling point. Once you come up with a final design, and you’re okay with how the product works, you can look at stocking up.

Step 2: Ordering Inventory

Amazon FBA stores require you to have an inventory present, unlike other marketing firms (like dropshipping). Your highest startup cost is going to be from ordering inventory. Luckily, Alibaba’s prices are more than reasonable, offering you bulk buys for cheap. You’ll still be spending anywhere from $500 to $2500 in initial inventory costs. The ROI that you get from an Amazon FBA is far more substantial than from dropshipping since buying bulk saves you money.

You don’t even need to stockpile this inventory yourself. No one wants to have five hundred ladles lying around their home waiting for buyers, and luckily Amazon FBA has warehouses that they’ll deal with your inventory for you. They’ll manage the shipping, packing, customer service and returns, for a small percentage of your sales. When you look at the amount you pay to deal with these things, it isn’t essential than the amount you make on each sale.

Step 3: Set Up Your Branding

You might have heard about “white label” products. Investopedia defines a white label product as an item manufactured by a third party that allows for original branding from the seller. White-label products are what you should be looking at developing since they will enable you to brand your inventory and make a name for yourself. In this case, what you’re selling isn’t just the product that you have in your inventory. It’s the brand name and its reputation as well. Brand marketing is how you’ll start getting more customers to buy your products.

For proper brand marketing, you’ll need a logo. These can go anywhere from $5 to $800, depending on the complexity and professional level you hire to handle your production. High-quality logo designs start from $300. Manufacturers typically have generic branding on their products. White-label products allow you to replace or customize that existing branding into something that’s ultimately your own.

Step 4: Marketing

Your marketing budget will typically run between $200 and $500. The more aggressive marketing campaigns take more money. Amazon ads are the most profitable ROI for smaller businesses since they direct buyers who are already looking for a particular class of products. They manage between 20% and 30% conversion rates. Facebook ads can net you a lot higher conversion rates, using a coupon for discounts, but might also cost you more. Once income starts coming in, you’ll see what you can recoup from your initial costs and use the rest towards marketing and fulfilling business necessities.

Consistency Is Crucial

One of the reasons so many Amazon FBAs fail over and over is because their owners make it work for a short period. However, to make this a regular cash-cow, you’ll need to be consistent in your marketing and product placement. You don’t have to a workaholic that spends eighteen to twenty hours a day on their Amazon store to get a certain level of success. However, the effort you put into it will show up in your returns. Being consistent and willing to experiment will help you succeed more effectively than throwing everything in one basket and hoping.

You’re likely to face a few hurdles as a business owner. Suppliers might make an error in orders, or customers may start sending in returns. Even though all these shortfalls, you need to stick with it. Creating an Amazon FBA is playing the long game. But the long game only matters if you manage to stick with it over the whole course of the project. When the store becomes successful and makes a name for itself, you can sell it to someone else and repeat the process all over again.

How To Win at Amazon on a Budget

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