In this day and age, more and more people are getting tired of the 9-5 grind. All the gurus on YouTube preach about multiple income sources and passive income. And they’re not wrong. Spending your entire life away at a 9-5 just doesn’t cut it anymore. So how do you start becoming your boss?
Setting up an Amazon business plan seems to be one of the best ways to get some passive income going, whether you’re doing a side hustle or considering it full-time.
But you’re not the only one trying to do so. With thousands of people going into the FBA business, has it become too hard? Let’s find out.
Is Amazon FBA Hard to do?
Truth be told, yes Amazon FBA is pretty difficult to do, at least at the beginning. But that goes for any business. Regardless of what you want to do, if you’re planning on being successful, you have to put in the hard work.
But that shouldn’t discourage you from starting at all. Once you get your business on the ground and build up a good foundation, it gets easier and easier down the line.
Years down the line, you can enjoy the perks without having to put in as much effort. But it’s the first hurdle that a lot of people never end up getting over.
So even if it’s hard, we suggest you stick to it. With the right techniques and strategies, over time you will find it very worth it to be a FBA seller.
How long does it take to break even on Amazon FBA?
Considering the investments required to start your business on Amazon FBA are a little high, it can take a little time to break even. Most sellers take about 4-6 weeks before they start to break even and see any revenue come in.
But after that, expect to see your profits increase little by little. The more you invest, the more your profits will eventually rise. You can choose to take the FBA profit to yourself, but it’s wiser to invest a portion of it back into the inventory.
Amazon FBA Requirements: What it Takes To Start
By now, you’re probably convinced that this hustle is worth dabbling in. Let’s go over a beginner’s guide to the Amazon fulfillment center and how you can get started with your seller account.
Here’s what you will need to start your FBA business.
Seller Account
The first thing you’re gonna need is a seller account. This is different from your regular Amazon account that you might use to order things. For seller registration, Amazon will ask you for the following:
- Bank account details
- Chargeable credit card number
- National ID details
- Tax Information
- Contact number
So keep this information ready, before you start registering. You’ll also need to select your selling plan.
If you’re just starting and don’t have a lot to sell, then you can start with the Individual plan which will cost you 0.99 USD per sale. But if you can sell more than 40 items per month, you can pay 39.99 USD per month with the Professional plan, regardless of how many items you list.
Selecting a Niche
Your niche market can make or break your business. Especially for beginners, Amazon product research is vital.
You have to find the right balance between a product that has demand, but at the same time isn’t already so available that you have no chance of making a sale.
Most products that do well are already out there. You don’t necessarily have to come out with a completely new and unique product that there is no market for.
Instead, what you can focus on is a specific feature or presentation that will make your product stand out from the crowd. Amazing quality is always a good way to rank at the top of the thousands of product searches on Amazon every day.
Sourcing Inventory
There are several different ways to find things to sell on Amazon FBA. Once you’ve done sufficient product research into the market and have decided on what you want to focus on, you can start contacting other wholesalers, or B2B marketplaces like Alibaba.
You can sell private-label items or thrift items as well.
From Alibaba to eBay, there’s a whole world of options out there. You can even make items yourself.
Whatever the case, this is the part where you will need the highest investment. You have to ensure that your products are of good quality.
And that’s pretty much all you need to get started. You can now start listing items from Seller Central and be on your way to making money.
Pros of Doing Amazon FBA
Let’s compare the pros and cons of Amazon FBA before you can think of investing. Here are some of the advantages of Amazon FBA
- Increased Reach and Exposure:
Amazon is one of the largest online marketplaces globally, providing sellers with access to millions of potential customers. By using FBA, your products become eligible for Amazon Prime, which can attract more customers and increase your sales.
- Prime Eligibility and Trust:
When you opt for FBA, your products are fulfilled by Amazon. This means they are eligible for Prime’s fast and free shipping, which is highly valued by Amazon customers. Prime eligibility can enhance customer trust, leading to increased sales and higher conversion rates.
- Efficient Order Fulfillment:
With FBA, Amazon takes care of order fulfillment, including picking, packing, and shipping. This allows you to focus on other aspects of your business, such as product sourcing, marketing, and customer service. It saves you time and effort, especially during peak periods or when dealing with a large volume of orders.
- Warehousing and Inventory Management:
FBA provides storage space for your inventory in Amazon’s fulfillment centers. This eliminates the need for your warehouse and reduces inventory management complexities. Amazon handles inventory tracking, restocking, and even customer returns, streamlining your operations.
- Customer Service and Returns:
Amazon’s customer service team manages inquiries, feedback, and returns on your behalf. This ensures professional and reliable customer support, which contributes to a positive buying experience for your customers.
- International Expansion:
FBA offers opportunities to sell your products in various Amazon marketplaces worldwide. You can easily expand your business to new countries and tap into international customer bases, leveraging Amazon’s infrastructure and logistics capabilities.
Cons of Doing Amazon FBA
While Amazon FBA offers several benefits, there are also some potential drawbacks to consider:
- Costs:
Utilizing this feature involves FBA fees for warehousing, picking, packing, and shipping, which can eat into your profit margins. It’s important to carefully calculate these costs and assess their impact on your business’s financial health.
- Increased Competition:
FBA is a popular choice for many sellers, resulting in increased competition within the marketplace. With numerous sellers utilizing similar fulfillment services, it can be challenging to stand out and differentiate your products from competitors.
- Amazon’s Policies and Algorithm Changes:
Amazon frequently updates its policies, algorithms, and ranking systems, which can have an impact on your business. These changes might require adjustments to your strategy, product listings, or advertising campaigns, and it can take time and effort to adapt to the evolving Amazon ecosystem.
How Much Can You Earn With Amazon FBA?
How much you can make with Amazon FBA is dependent on how you run your business. With the right tactics, however, you can make a lot of profit. Most sellers see at least 1000 USD/month if not more. About 45% of them make 1000 to 25000 USD per month, and 25% make 25K- 250K USD per month.
As you can see the range is quite wide. This just proves how important it is to stand out in this market and put in hard work to make the business grow. If you want to just use this as a side hustle and don’t have a lot of time to invest in this, you might never see these numbers.
But the more time and effort and most importantly knowledge you sow into Amazon, the more profits you can expect to reap.
So, Is Amazon FBA still profitable in 2023?
Yes, even in 2023 Amazon FBA is still profitable. Despite the competition growing exponentially, you have to realize that the business itself is growing just as rapidly. Even if you can make a small percentage of profits, you’re doing pretty well off.
However, don’t expect to become a millionaire overnight. You will face plenty of obstacles in starting your business. Just like with any other business, it can be difficult to start but it gets easier down the line.
Experiment and invest wisely to see what works for you.
FAQs
Can you make a living off FBA?
Yes, it is possible to make a living off of Amazon FBA. Many people have built successful businesses using the Amazon FBA platform. However, the level of success and income you can generate will depend on several factors, such as your product selection, marketing strategies, competition, and overall business acumen.
What is a good net profit for Amazon FBA?
If you’re making anywhere from 15 to 25% net profit from Amazon selling, then you’re good. If you go over 25%, then it’s amazing, but being under 8% can be a sign of concern. If you’re doing badly, consider changing your business tactics.
Can I become a millionaire with Amazon FBA?
While on paper, it is possible for you to become a millionaire through FBA alone, you need to be a little more realistic when setting your business goals. There’s a lot of competition out there, and it can take ages for you to make that much profit. But it’s not impossible.
How often does Amazon FBA pay you?
Depending on how much you’re making, Amazon will usually pay you every two weeks. This can however vary if you’re not making any profits and don’t have any revenue in the very beginning.
Who pays for shipping to FBA?
FBA shipment fees are handled by Amazon or the customer. You don’t have to pay for it. That’s the best part about FBA. Amazon handles all the FBA shipping, packing, and delivery for you. You will however have to pay seller fees.
Final Thoughts
Amazon FBA is very hard to start, especially if you’re not already in a great position financially. A lot of people give up at the stage of just managing the funds, to begin with.
But if you can push through and build a strong business model, you will most likely start to see profits soon enough.
Any business is hard, and Amazon FBA is no different. So instead of getting discouraged by it, you should take this up as a challenge and consider building something of your own. We hope this guide helps you in your journey!
