What Is It?
There are several different types of online stores a person could use to make money online. One way is to take care of the store while Amazon takes care of the inventory and shipping. That is called Fulfilled By Amazon or FBA.
How Does It Work?
Traditional online stores are the ones where companies run all three parts of it; selling products, inventory management and shipping. If you don’t want the headache of keeping track of the inventory and shipping individual orders you can look at Fulfilled By Amazon.
Before you quickly jump down this path, be prepared that Amazon’s FBA processes and procedures are quite complex and you should be prepared for it as they never tell people this up front.
To start you will first need an Amazon Seller’s account. That is required to enable Amazon to ship the products. Then you need to choose whether to use your own online store or leverage Amazon’s store. If you are doing this on your own and are not technical then I recommend using Amazon’s store as integrating your system with Amazon’s Marketplace Web Service’sis quite complex.
The next step is the one that is typically glossed over in Amazon’s marketing and for good reason as it snags a lot of people. You need to ensure your products will comply with Amazon’s very detailed inventory requirements and product restrictions before you can list them. Some certain product types will also need special approval to be setup. When starting out, this sometimes can add weeks, if not months, to getting these products listed.
Once everything is approved and setup, then you send your products to an Amazon fulfillment centre. They will charge you based on how much they are storing and for how long. You will just need to make sure to send extra products when they are running low
From here on in, Amazon will be notified whenever anything is ordered and take care of packaging, shipping and customer support.
On a final note, Amazon occasionally changes their rules on what they will or will not ship. Just be prepared that if they do change their mind about what they ship as part of their Fulfilled By Amazon service, it could dramatically impact your business model.
How Much Money Can You Make?
Much like every other online store, this is not a get rich quick gig. If you are leveraging Amazon’s store then you do have access to their marketplace which typically drives a lot more business however at a cost of competing based on cost (unless you have unique products) which drives down margin.
Most stores that are just starting out make less than $200/month profit the first couple months once you factor in all the expenses.
The one big difference between this model and running your own store and dropshipping is that the ability to scale up is extremely large. This is due to Amazon’s existing logistic capacity and (if you use it) their marketplace with millions of customers.
More successful, well advertised ones can eventually make $5,000-$10,000+/month in profit. There are cases of people making $100,000+/month in profit but they are very rare. It takes a lot of hard work and luck to get there but it is possible.
- Make sure you plan in advance and read carefully all of the requirements of FBA before you go down this path. Some shippers ended up buying product in anticipation of selling via FBA and then not getting approved.
Categories: Long Term Payoff