How to Make Money Selling Products on Amazon FBA
What To Sell
Just like Business Model #5, just about any common product can be private labeled. These are typically generic products without patents or intellectual property that would prevent you from making products just like it.
I generally look for product categories where consumers don’t care about brand names too much. These are often functional products that solve a problem or specific need that you customers couldn’t name the leading brand. Like garden hoses, binoculars, hand towels, door stops, etc. If you’ve seen it in an informercial or “as seen on TV” then it’s probably something that can be private labeled.
Still not sure what products to sell? I use a tool called JungleScout which will give you the top selling products on Amazon in any category or search term, and you can see exactly what types of products sell well and for what price. It gives you a sense of how many other people are selling similar products so you can find a product that isn’t so crowded that no one will find your product. JungleScout costs $50 per month to do your research but is worth it. Another similar tool is called Unicorn Smasher.
How to Get the Products
Entrepreneurs, like myself, who use this business model often get products from Alibaba.com. These are suppliers in China who make all sorts of products. I initially buy just a few products (like 10 or so, whatever fits in one case and doesn’t cost me too much money to try). Then if they sell well, I do larger orders and sometimes the price even drops with higher quantities.
How to Get Customers
As you probably already know, Amazon is one of the largest online shopping platforms in the world. So, there are plenty of customers on Amazon right now buying items like the ones you want to sell right now. Then why is this rated as an “Expert” difficulty level? Well the reason is whatever you want to sell on Amazon, there may be tens of thousands of other sellers selling items very similar to yours. In fact, the biggest risk on Amazon is when you list your items no one finds them! Here are two ways to try to make sure your products get traffic on Amazon.
The first is to DO YOUR HOMEWORK! If you want to sell a fidget spinner on Amazon, good luck! There are just too many listings to compete with. That is why I use tools like JungleScout to recommend products people are looking for but aren’t too crowded with competition.
The second way to get traffic to your products is to run “Paid Ads” to your products. Amazon lets you advertise your product, and you just promise Amazon a cost per click (CPC) and people will visit your product page. But watch out! At $0.50 – $1.00 per click for many popular search terms, you could easily spend a lot of money and not make any sales. You want to make sure your product images and listing page does a good job selling your product, otherwise you could be wasting your money!
Since you are private labeling your own products, you can register your brand with Amazon and prevent anyone else from selling on your listing, so you can essentially have a monopoly of your own products on Amazon, assuming customers want what it is you have to sell at the price you are selling it. When you get this right, selling your own private label products on Amazon is like an automated cash machine. But it isn’t easy to get every step right.
The main disadvantages of selling your own private label products on Amazon is the complexity of juts selling on Amazon. You need to get your own UPC or bar codes for your new products (since no one has ever sold your new private label branded products before), and you will need to register your brand with Amazon which requires you file a trademark for your brand name with the US government. This process usually takes about 6-9 months and you could benefit by having a lawyer help you with the steps.
Other disadvantages are that you are relying on Amazon as the platform, and they could easily close your account or ban your products if you get too many complaints from customers, especially about your product quality.
The biggest risks I see with this business model is that when you are private labeling, you are buying product inventory upfront with the hope you can sell them. With proper research and small test quantities you can reduce this risk, but you could always end up with a bunch of products no one wants to buy.
Money Needed to Get Started
$500 – $1,000+ to get started with a test order of products, UPC and Barcode fees, and filing a trademark. It can all add up fast. On the low end of the range you could try to start selling products without a trademark, but watch out other sellers may start to try and sell their own version of the product on your listing.
Expected Profit (% of sale price)
~25% profit when you figure out products that work, otherwise you can lose money.
Resources and Examples
Third-party links and resources. Commissioned links below.
This article is an excerpt from our eBook which is available on Amazon Kindle.
IMPORTANT NOTE ABOUT THE AUTHOR: Earnings and Legal Disclaimers: The author is a professional 20 year entrepreneur and his results are not typical. His experiences and those of his examples and students are not typical and not a guarantee you will make money. You may make more, less, or the same. There is risk of losing money in every new business. Individual results will always vary and yours will depend entirely on your individual capacity, work ethic, business skills and experience, level of motivation, diligence in applying information, the economy, the normal and unforeseen risks of doing business, and other factors. Additionally, the author is not a lawyer, CPA, or CFP and does NOT offer legal or financial advice. The author is not responsible for your actions. You are solely responsible for your own moves and decisions and the evaluation and use of information should be based on your own due diligence. Unless otherwise noted, all photos courtesy of Pexels attribution free license.