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How To Start An Amazon Business In 2020 🛒

how to start an amazon business

$250k in the past 30 days. Not too shabby!

In this post I’m going to share how to start an Amazon business. These are the exact same steps I followed when creating my own million dollar Amazon FBA business. Settle in as it’s a lot of info but I promise after reading this post you’ll be armed with loads of actionable info to help you start your own successful Amazon business. 

Our comprehensive guide to starting an Amazon FBA business includes:

  • Amazon FBA… what the heck is it?
  • How much money you need to get started (and how much can you make) with Amazon FBA
  • Ways to perform effective product research
  • Where to source products
  • How I created my logo for $5
  • Tips for building a great listing on Amazon
  • And lots more

Why listen to me about how to start an Amazon business?

The short version is that I started my Amazon business with $5,000 and my $300 Chromebook. Along the way I never hired a single employee or took investor money. In just two years the business grew to over $2 million in annual sales. And in year three I sold the business for a 7 figure exit. It was a wild ride (🎧 listen to my story on the My First Million podcast here or read the longer version of my story here 🖥️)!

If you too are interested in learning how to start an Amazon business you’ve come to the right place. An Amazon FBA business can be a small side hustle that provides a few hundred dollars of extra income per month or it can be something that results in you seeing 7 figures in your bank account. Your hustle, smarts, and luck will largely determine your success with Amazon FBA. 

Why I Started My Amazon FBA Business | What’s Your Why? 

It’s obviously important to learn how to start an Amazon business. But before starting any new endeavor it’s a worthwhile exercise to first think about the why. If you don’t have a why behind what you are doing it’s easy to lose steam and stop when you face obstacles.

My why was all about freedom. I was in a corporate job with a long commute, long hours, and work that I didn’t enjoy. After doing this work for a number of years I got pretty freaked out I’d be sitting in that same desk doing the same type of work for another 20+ years and would majorly regret it. It felt like life was passing me by.

For me it was freedom that I was after. I wanted to choose what I worked on as well as where and when I did the work. To be honest I didn’t even give all that much thought to the financial part or have any big goals. Funny enough in the end I was lucky enough find that freedom and, as an added bonus, I also ended up making way more money that I ever did at my normal job.

Here are some common reasons why you might want to start an Amazon business.

Why start an Amazon FBA business? 

  • Significant & asymmetric financial upside: I had a 7 figure exit and I’ve seen many other sellers have 6 and 7 figure exits. And you don’t need an exit to make great money; loads of sellers are making six figures in income per year with FBA. There is this amazing asymmetrical upside that exists with a FBA business; a $5k investment can result in a 7 figure company
  • Freedom and flexibility: You can run an Amazon business with virtually anywhere in the world with nothing more than a laptop
  • You can start small & grow over time: I started selling on Amazon when I was still employed at my day job. I used nights and weekends to get it up and running. It’s certainly possible to start small while you have another job
  • The rush!: It’s hard to describe what it feels like on a day like Black Friday or Cyber Monday. I remember refreshing the Amazon Seller app every few minutes and watching the sales just pile up. It is a serious adrenaline rush and checking the app becomes very addictive

What is your why? Why do you want to start a business? Understanding your own why can help to light your path and fuel you on the days when the going gets tough. 

Amazon FBA Business | What Actually Is It?

Let’s first make sure we’re on the same page about the meaning of an Amazon business.

There are various types of Amazon business

  • Amazon Associates: Amazon’s affiliate program
  • Merch By Amazon: Amazon’s print on demand business
  • Fulfillment by Amazon (aka FBA): Amazon’s fulfillment program that makes up over half of all sales on Amazon

In this post, covering how to start an Amazon business, we’ll focus on FBA as that is the most popular and lucrative Amazon business.

Amazon FBA allows entrepreneurs to sell physical products accessing two very powerful forces:

  1. Amazon’s fulfillment network
  2. Amazon’s customers

These two forces can create incredible leverage for a bootstrapped entrepreneur allowing him to scale large business with just a single person. It’s amazing how many huge businesses have been built on the back of Amazon’s massive customer base and world-class fulfillment network.

Amazon FBA enables millions of small businesses and billions of dollars in sales

Did you know that about 60% of sales on Amazon are from third-party Amazon sellers? That means that instead of consumers purchasing directly from Amazon they are actually purchasing from another business or individual that is selling on the Amazon platform. Said differently, an Amazon FBA business means you are selling on Amazon instead of to Amazon. Let me explain further.

  • Unlike a traditional retailer, in FBA, Amazon doesn’t buy anything from you and resell it
  • Instead you selling to Amazon, you list your products for sale on Amazon
  • When a customer purchases your items, Amazon fulfills them (hence the Fulfillment by Amazon name) and pays you
  • Fulfillment simply means you as a seller don’t have to box anything up and send it out
  • Amazon handles what’s called the pick, pack, and ship on your behalf. This allows you to focus on growing your business instead of focusing on fulfillment
  • FBA is a game changer as fulfillment takes a lot of time and money. Amazon does it really well for a relatively low cost

FBA is what allowed me alone to fully run a million dollar business. The FBA program has millions of sellers and results in billions of dollars of sales on Amazon. It gives entrepreneurs the ability to scale a big business with only a person or two. It’s really powerful and a big reason why I love recommending Amazon businesses to aspiring entrepreneurs.

Amazon FBA Listing Example

How can we tell if something is sold FBA? Easy. You can just look at the listing and see who it’s sold by.

Check out this image… do you see how it says Sold by AnkerDirect and Fulfilled by Amazon?

how to start an amazon fba business | amazon buy box

This means AnkerDirect is actually selling this item. When a customer purchases this Anker product Amazon ships it to the buyer and then pays Anker.

Private labeling your own product to sell on Amazon FBA

The majority of Amazon sellers are also what we call ‘private labelers’. What does this mean?

Private Labeling Definition

A private label product is a product manufactured by a third-party manufacturer and sold under your brand name.

As the seller, you specify everything about the product including:

  • Components / overall product offering
  • Color
  • Size
  • Logo
  • Packaging

Private labeling is different than wholesale or flipping. In wholesaling or flipping a seller buys already branded products from another company to resell. Private label is your dreaming up a brand.

Private Labeling on Amazon FBA

Here’s the simplified version of what private labeling looks like on Amazon FBA:

  • Research: Select a product you want to sell on Amazon
  • Select: Determine all relevant details about product offering (color, size, quantity per package, etc)
  • Build: Create a brand name and develop a logo
  • Buy: Source your branded product from China or elsewhere
  • Sell: List your branded or ‘private labeled’ product on Amazon FBA, sell it, and earn profits

Why Private Label?

  • Control: By creating your own brand and private label product you have much more control than if you were just flipping another brands products on Amazon
  • Sustainable Supply: Sellers that private label are not reliant on another brand for supply. They can virtually always get supply from their manufacturers.
  • Margin: Creating your own product gives you more margin and profit dollars. There is no intermediary or wholesaler taking a cut of the profits. You are taking product direct from a supplier and selling it to the consumer allowing your to maximize margin dollars in your pocket
  • Ability to sell & make big money: When you create your own brand you are creating an asset. If your brand has success you can sell it and for a potentially lucerative payday. If you’re just re-selling someone else’s branded product you don’t have an asset you can sell.

Amazon FBA Recap

To review, this post will explain how to start an Amazon business using Amazon FBA.

  • Using FBA simply means an entrepreneur can leverage Amazon for fulfillment while reaching the millions of Amazon customers
  • Because fulfillment takes so much time outsourcing this step to Amazon is a game changer
  • A seller can create a valuable asset by creating a brand and private labeling ones own branded product from a third-party manufacturer

Most everyone already understands the size and reach of Amazon. It is reported that roughly half of US households have Amazon Prime. Selling on Amazon with FBA allows sellers to reach millions of customers who shop regularly on Amazon. This combo of letting Amazon do fulfillment while reaching millions of potential customers with your own branded product is what makes Amazon FBA so enticing. Okay let’s get onto the important business of explaining how to start an Amazon business!

How To Start An Amazon Business | The 19 Essential Steps

Now that we understand what FBA is, let’s get into the details of how to start an Amazon business. These are the exact steps I used when starting my business. In the span of three years I started and sold my million dollar Amazon business. And remember I started with $5k and a $300 Chromebook. My business allowed me to leave my 9-5 job, spend more time with our baby, and ultimately achieve financial independence. It was hard work but with the knowledge and persistence I firmly believe huge opportunities remain to crush it on Amazon.

Here are the 10 big steps a new seller will follow when launching an Amazon FBA business. For each step I’ll highlight what I recommend now and what I did at the time. Without further ado here is my guide explaining how to start an Amazon business.

Step #1: Do Your Homework 📝

“The key is not the will to win… everybody has that. It is the will to prepare to win that is important.” Bobby Knight

Do you really want to know cold hard truth on how to start an Amazon business that does millions in sales? Boring answer but it’s true… study up! Step one is simply doing your homework.

Starting, growing, and selling an Amazon business isn’t rocket science but you absolutely must invest the time to learn and prepare. Learning and preparing is the only way you will strike it big on Amazon. This post will give you a great start on how to start an Amazon business but you need to dig deeper. Below I’ve listed a few resources that I strongly suggest checking out after you read this post.

My Favorite Amazon FBA Learning Resources

  • Podcast: AM/PM Podcast with Manny Coats. This is a great first episode to get started with. I’d highly suggest listening to as many episodes as you possibly can. Unlike many of the people offering Amazon advice, Manny actually has walked the walk and built some massive Amazon businesses. Listening to his podcast will help get you inspired and will teach you a ton about selling on Amazon. Manny’s podcast is a big reason why I’ve had so much success on Amazon.
  • Facebook Groups: These groups are a good place to learn what is on other sellers’ minds, ask questions, etc. Two popular ones are Amazon FBA High Rollers and The Amazing Seller. I’ve found it very helpful to use the ‘search’ function in the groups to learn about any particular issue I’m facing. Chances are other sellers have faced it too.
  • Reddit: The FBA subreddit is worth checking out for lots of good nuggets about selling on Amazon.
  • Jungle Scout Million Dollar Case Study: Greg and team walk through everything from A-Z in a series of episodes here.
  • Courses: While some people have had great luck with courses I never took one. Instead I just used free resources like podcasts. I know Freedom Ticket is now free if you sign up for Helium 10 (great tool by the way) so if you were to do a course I’d check that out. You don’t need much in terms of software to get started with Amazon but you do need either Helium 10 or Jungle Scout. Getting Freedom Ticket free with Helium 10 is a nice perk.

finding products with helium 10

Step #2: Save up $3,000+ so you have enough money to get started 💰

While you’re doing your homework you should also work to save some money. It takes money to make money on Amazon.

Inventory will be where you spend the bulk of your cash. You’ll have to outflow the cash to your supplier upon completion of production. That cash will be tied up in your inventory while you ship in your product and then wait for it to sell. The cycle goes something like this:

  • Buy inventory from supplier (cash out)
  • Sell inventory on Amazon (cash in)
  • Buy inventory from supplier (cash out)
  • And on and on

Here is how I spent my first $5,000 when I launched my Amazon FBA business:

  • Inventory: $3,600
  • Shipping: $900
  • Misc Expenses: $500 (photography, logo, legal, etc)

Can you start an Amazon FBA business with no money? How about $1,000?

Sadly no, probably not. You need capital to buy inventory, import your product, and have photos taken.

I personally wouldn’t advise getting started with an Amazon FBA business until you have at least $3k banked to launch the business. I started with $5k and even that was a bit low as I had some early stock outs. If you have success but no more capital, you’ll run into a cash crunch which will slow you down. So your best bet is to start with at least $3k and ideally more like $5k.

P.S. If you don’t see a path to having $3k+ in the next few months consider starting a blog in the interim. A content site or blog can be very lucrative and requires less start up capital. To learn how to start a blog check out this post. What to blog about? Blog about your journey saving and starting an Amazon FBA business. You’ll have lots of people interested and soon will be making money on your blog and your Amazon biz!

Step #3: Set up your legal entity & bank account (optional but recommended) ⚖️

Most people set up a legal entity and use a separate bank account for their Amazon business. Why?

  • Legal Protection: Having your business in the name of an LLC provides you some legal protection in the event something goes wrong (hence the name limited liability company)
  • Easier to Sell: You may one day wish to sell the business. If the business in your personal name and the finances are all co-mingled with your personal bank account it will make that process much more difficult and potentially cost you a lot of money

When to set up your LLC?

I’m not a lawyer so this is not legal advice. I personally set up my LLC at the very start. It cost about $95 with my state’s Secretary of State. I found it pretty easy to do and didn’t use Legal Zoom or an attorney. Other sellers do not set up their legal entity until they start to see some traction. And some people hire an attorney from the outset to get everything set up.

Personally I think it’s smarter to play it safe and start with a LLC but again I’ve heard of many sellers waiting to go this route.

Disclaimer: I am not a lawyer so this is not legal advice. Use your judgement and when in doubt consult with an attorney. Many people start very scrappy and only set up the LLC and separate bank account after they get some momentum. You have to decide your risk tolerance and proceed accordingly.

Step #4: Perform product research 👓

Determining what to sell on Amazon is perhaps the most important aspect of this whole process. You can’t just choose something willy nilly and expect it to be a winner. There are qualitative and quantitative ways to perform product research to help ensure the product you choose is a winner. Let’s talk through some of the components of product research when starting an Amazon FBA business.

High Demand + Low Competition = 💰

What are we looking for in product research? How do we know a product is ‘good’ and could be a money maker for us?

The main thing we’re looking for in product research is a sufficient level of demand without too much competition.

Let me say that again because it’s so important… we are mining for products that have enough demand (i.e. people already buying similar products on Amazon) without excessive competition (i.e. people already selling similar products on Amazon). Whenever we find products that meet that criteria we want to note them somewhere so we can come back to them in a future step.

Trending Products 📈

Another variable to assess during product selection is what I call trends. By this I mean thinking about things that still might be small but are showing signs they’ll continue to bubble up and become very popular.

How to Spot Trends:
  • Pay attention: True story… my million dollar product was actually an idea I learned about from my parents. The particular item was still relatively small but they mentioned all their friends had recently started talking about this particular product. That conversation sparked me to research the product and ultimately launch a business around it. Opportunities are everywhere so pay attention as you have conversations with friends and family, as you read books, while surfing the web, checking social media, etc. Sometimes there are great ideas hidden in plain site if you are open to receive them.
  • Google Trends: This is a great tool to see search traffic over time. You want to see up and to the right movement for items trending as more popular.
  • Trends.co: Another great resource that is solely dedicated to identifying trending items.

How to perform product research

As I mentioned above, you’re filtering for products with sufficient demand without too much competition. And bonus points if you’ve got some macro tailwinds at your back and the particular product seems to be trending upward.

  • Tools: I used Jungle Scout and then switched over the Helium 10. Either are good for product research but I prefer Helium 10 as it’s a more comprehensive suite of tools and has some phenomenal uses beyond just product research. If there is one tool you buy for Amazon make it Helium 10.
  • Helium 10 X-Ray: Below is a screenshot from Helium 10’s X-Ray tool used via their Chrome Extension. I searched for “poker chips” and captured the results. H10 will show you an estimate of monthly sales which is what you want to review for demand. In a perfect world there are not too many sellers (less than 20) and the top sellers have less than 100 reviews. This doesn’t seem to be the case in the poker chip category!
  • Success Score: Do you see the “success score” below? That is Helium 10’s algorithm to estimate how good of opportunity this category is. It’s not perfect but a good filter to use. As you can see, they only rate poker chips as two stars. I agree. In this category there are lots of established sellers doing big volume with loads of reviews. This would be too tough of category for a new seller to break into.
  • Observe!: Continuously keep your eyes open to product ideas. Virtually all of the products I’ve launched were things I encountered in real life. For example, a few years ago I was visiting family and they had just got a Peloton bike. They purchased a mat to put under the bike. That got the wheels turning. Was this mat marked way up? Was Peloton continuing to grow? What type of competition exists on Amazon? Instead of just brushing little moments like this off always be looking for potential product ideas.

I would highly suggest reviewing Helium 10 or Jungle Scout’s own resources as well on product research. Again, picking the right product is key to this whole venture so you want to spend a good amount of time learning and researching at this step. This is a good video that will walk you though more of how to do product research with Helium 10.

And again, you can sign up for Helium 10 right here.

how to start an amazon fba business | amazon product research example

Step #5: Identify Your Top Three Products 3️⃣

The fifth step in learning how to start an Amazon business is narrowing down your potential product ideas to a top three list.

Product research is crucial so I’d suggest spending a good amount of time in Helium 10 or Jungle Scout assessing a wide variety of potential products. I’m talking one week minimum of scouring Amazon and researching various items. Along the way, make a note of anything you think could be a potential winner. After you feel like you’ve done enough research review your list and narrow down your top three products.

Once you have a short list of potential winners we’ll want to move onto another highly important step… checking unit economics to ensure you can actually make money!

Step #6: Check Unit Economics… can you actually make money?!? 📒

Let’s continue on with our poker chip example and see if this product is economically viable.

Side note: In real life the poker set isn’t a product I’d want to launch given all the competition but for example purposes we’ll carry this one through as if we were launching it.

Now that we’ve identified poker chips as a potential product to launch we need to take the next step which is building a simple P&L (profit and loss statement). Creating a P&L will help estimate if we can actually make any money from our poker chip set.

This step is equally as important as product selection. If we select a great product but can’t make money on it then we have a big problem. We need to find a product we can sell AND make money on.

Here is an example of the P&L’s I used when running my Amazon business. I’ve updated for poker chips.

how to start an amazon business | amazon fba p&l

Example of an Amazon FBA P&L… always check your unit economics!

You’ll see based on my assumptions there is $5.83 of profit left over. That’s a little low but not too bad. How did I get these inputs? Let’s run through each one.

Components of an Amazon FBA P&L

  • Amazon Price: The price we expect to sell our product for on Amazon. Our competition is selling for $37.49 so I’m assuming we’ll undercut him slightly.
    • How to get this input? It’s based on the price of similar products in the category. Test different price points to do a sensitively analysis on your margin. You don’t want assume a best case scenario for price and get burned.
  • Amazon Referral Fee: Amazon’s commission for us selling on the platform. Usually 15% for most categories.
    • How to get this input? Use Amazon’s FBA Revenue Calculator. Input the ASIN of a similar product (you can find the ASIN on any Amazon product page) and then input your price under the ‘Amazon Fulfillment’ section. The ‘Selling on Amazon fees’ will show you Amazon’s referral fee.
  • Amazon Pick/Pack/Ship Fee: The cost Amazon charges us to pick an item at their warehouse, pack it in a box, and ship it to our buyer. This is pretty high in our example because poker sets are relatively large and heavy.
    • How to get this input? Once again, use Amazon’s FBA Revenue Calculator. Input the ASIN of a similar product and then input your price under the ‘Amazon Fulfillment’ section. The ‘Fulfillment by Amazon fees’ will show you Amazon’s pick, pack, and ship fee.
  • Net Sales: Selling Price less Amazon fees
    • How to get this input? This is just math! Price less the Amazon fees.
  • COGS: This stands for “cost of goods sold” and is simply our cost from a supplier.
    • How to get this input? Use Alibaba to find similar products. Input an estimate based on what you see suppliers charging. In this case I found a supplier noting $5.00 per poker set.
  • Shipping – Sea: Freight cost of importing goods from origin (usually China) to your location/port.
    • How to get this input? This is an estimate. Typically my sea freight ran around $0.75/unit and most of my products fit in a shoe box. Because this item is larger I nudged it up to $2.00/unit to give plenty of cushion. You’ll firm this up later when you work with a freight forwarder to help import your goods.
  • Shipping – Amazon: Freight cost to move from your location/port to Amazon’s distribution center.
    • How to get this input? Again this is an estimate. Typically my freight from port to Amazon was about $1.00/unit. I’ve rounded up to $1.50 here for extra coverage.
  • Duties: For most all products we’ll be charged a duty or tariff. Commonly it’ll run between 5% and 20% of COGS. I’ve assumed on the high side here at 20%.
    • How to get this input? Perform a search on the US Government’s Harmonized Tariff Website. You can find it here. It can be a bit tricky searching the site. I did a search for ‘poker’ on the site and turns out there is no tariff on poker chips. Score! You should update your P&L with this info after you’ve looked it up.
  • Other: A buffer to catch other expenses that will invariably pop.
    • How to get this input? It’s just a guess to give your P&L some wiggle room.

Amazon FBA Calculator Example

how to start an amazon business - fba calculator

COGS (Alibaba Photo showing sets for sale costing $5.00)

how to start an amazon business - amazon alibaba research

Tariff Example… poker chips are free to import!

amazon tariff example

Step #7: Select your first Amazon FBA product 🙋‍♂️

Now it’s time to narrow down your short list and select the product you want to launch. This is really part art and part science.

Quick pep talk: Picking a product to launch and then moving forward can be really scary! This whole thing is starting to feel real and money, time, and ego now get involved. I remember how afraid I was to actually act and move forward. I was scared of failing, scared of losing money, scared I didn’t know what I was doing, etc.

How can you get over the fear? The way I look at it is that this $5k investment could lead to a life changing business for you. It certainly did for me. Had I given in to those feelings I’d still be sitting half-awake in a cube in corporate America. So yes it can feel scary but anything worth doing feels scary. Run right into your fear (smartly of course) and keep putting one foot in front of the other.

Here’s the factors I looked at when launching my product:

  • Sufficient market size
  • Not too much competition
  • Healthy margins
  • Trending upward
  • You are excited about the idea of selling the product

If you can check the box on each of those five items you have a very strong chance at success Amazon.

Step #8: Improve common problems with competitor products ⭐

When you launch on Amazon you want some sort of “edge”. Your edge could be as simple as selling a better product. One thing you should always do is comb through your competitors one and two star reviews.

Ask yourself the following two questions when reviewing competitors’ listings:

  • Are there common complaints you see creeping up?
  • If so, how can you address them?

Usually there are a handful of things people complain about. Below are one star reviews from the top selling poker chip listing. You can see two of the three bad reviews complain about a poor case.

In this situation one thing I’d certainly do is look to include a better quality case. This will help prevent my listing from one star reviews and make my product superior to the leading competition. I’d also market my product as having a durable high quality case in a side-by-side checklist graphic in one of the photo slots.

Bottom line on how to start an Amazon business and have a superior product? Take the time to review the issues with your competitive products so you can address the flaws.

amazon fba improving products

Step #9: Look for low costs ways to increase “perceived value” 💎

The concept of perceived value is hugely important when thinking about how to start an Amazon business and launch a winning product.

What is perceived value? It’s easiest to explain with an example.

Perceived Value Example

  • Product A: Soccer Ball
  • Product B: Soccer Ball + Mesh Carrying Bag + E-Book

If the price and reviews on Amazon were equal which product would you buy?

Chances are you said Product B. Why? It appears more valuable. You get more stuff.

The soccer ball might have cost the seller $3.50. Adding a mesh bag may cost about $0.10. An e-book just takes time and is free.

Even if buyers don’t necessarily want either of the two additional items it still impacts purchase behavior. Because buyers perceive they’re getting more value with Product B most buyers will choose it. Anytime you are launching a product you should look for low-cost complementary items that increase the perceived value of your offering.

Step #10: Pick a brand name and create a logo ♣️

One of the most exciting parts of starting an Amazon FBA business is creating your own brand. It’s crazy to think that Amazon shoppers will be buying and using a branded product you dreamed up. It’s exciting and I really enjoyed this part of starting an Amazon FBA business.

On Amazon, branding is important but not something to obsess over. Most purchase behavior is driven by price, value, and reviews. The brand should look professional but you don’t need go overboard. Take it from me; my logo cost $5 on Fiverr!

  • Brand name: Ideally choose brand name that is both memorable and connotes what your product is about.
    • Trademark: Before settling on a brand name you should do a trademark search on the USPTO website. This is important so that 1) you can trademark your brand and 2) so you don’t run into legal issues violating another company’s trademark.
  • Logo: Fiverr or Upwork are great choices to get a logo made. It’s helpful if you sketch out something you want done and/or share logos that you like the look and feel of.

Step #11: Talk to suppliers 🏭

Let’s recap a bit. At this juncture of starting an Amazon FBA business you’ve done the following:

  • Found a good first product with sufficient demand and not too much competition
  • Done a cursory check on unit economics to ensure economic viability

Now you’re ready to begin the process of sourcing your first product. Let’s explain what you need to know about finding a supplier for your product.

Popular Supplier Databases

The first thing you’ll want to do is search the internet for suppliers. There are two popular supplier databases which you should check out:

Ali and Global Sources are far and away the two most popular places to find a supplier. Simply visit the site and type in the name of your product and you’ll see a long list of potential suppliers. I traveled to the Canton Fair which is another cool experience and great way to meet suppliers but that’s a story for another day.

Manufacturers vs Trading Companies

There are two common types of suppliers you’ll find on platforms like Alibaba. It’s important to understand the difference between them and pros/cons of each.

Manufacturers
  • Actually produce the product
  • Tend to quote a lower cost than a trading company
  • May be specialized and not have a breadth of products in your category
Trading Companies
  • Act as a middleman between the manufacturer and buyer
  • Tend to quote a higher cost than a manufacturer (they need to take a cut too)
  • Likely have access to all products in a particular category
Manufacturers vs Trading Companies: Is one “better” than the other?

Not necessarily. I’ve sourced for both manufacturers and trading companies.

Consider our poker chip example. If you wish to expand into other poker accessories or games a true manufacturer may not possess the expertise or capabilities to make items like poker tables, other games, etc. They may just make poker chips.

A trading company may be able to service all of your needs and in turn it may be worth paying a premium for the simplicity.

Contact a supplier

Once you’ve identified a few suppliers on Alibaba the next step is to reach out and contact them. This can seem intimidating to some people but let me assure you it’s nothing to be scared of. Be professional and respectful and you’ll have no issues. Below is an example of an email I’d send to poker chip suppliers.

Amazon FBA supplier email example

Here’s a template you can use when reaching out to a supplier.

Dear Sir,

I hope this note finds you well. My name is Paul and I’m contacting you on behalf of my company, Poker Chip Inc. 

Our e-commence company is interested in adding a poker chip set to our lineup. A few questions:

  • Are you a manufacturer or trading company?
  • What is your MOQ on initial orders? With new supplier relationships we always like to start small to ensure good quality 
  • What is your price per unit (FOB) at that MOQ? Of course price and quality and very important to us. 
  • Have you worked with companies selling on Amazon in the past? Do you have expertise in this area? 

Our goal is to form mutually-beneficial long term relationships with our suppliers. We hope to work with you for many years and have great success together. 

Do you use WeChat or Skype? It would be great to message on either platform to explore this matter further. 

We look forward to hearing from you.

Kindly,
Paul
WeChat: pokerchipinc
Skype: 123-456-7890

Typically I first send a message through Alibaba and then quickly try to move the conversation to WeChat. Because of the time difference, trading emails can take a lot of time. Messaging on WeChat makes things move along so much better.

Tip: Remember China is roughly 12 hours ahead of US time. Most all my supplier conversations occurred after 8pm EST. This is helpful for anyone starting an Amazon FBA business on the side as it can be done while not at work.

Step #11: Get a product sample 📦

After talking to a few suppliers you’ll want to narrow down your top two or three and request product samples. Obtaining a product sample of your item is important. Why?

Why request product samples?

  • Assess Quality: This is the number one reason to get a sample mailed to you. When you can touch and feel the item it’s much easier to assess quality and compare a few suppliers.
  • Assess Supplier: Is the supplier responsive to your questions? Did they accurately ship you your sample?

Cost: Typically the sample itself will be free but you’ll be on the hook for shipping. I’ve also paid suppliers via PayPal and never had an issues where they take your money and don’t ship.

It can be tempting to take a short cut and skip product samples but please save yourself headaches and money by getting a sample.

Step #12: Tighten your unit economics 📒

Now that you’ve had more in-depth discussions with suppliers you should have a better handle on cost. Take time here to update your P&L to ensure your unit economics still hold together and you can actually make money!

  • COGS: Once we get a quote from our supplier we can update our COGs. In this case my initial assumption was $5.00/unit. Perhaps after discussing with the supplier the quote is $6.00. Update your P&L with new info after talking to suppliers. I’d suggest requesting a FOB cost from your supplier. In short, this means they’ll pay for the items to get from the factory to the shipping port.
  • Duty: If you recall I initially had a placeholder for tariffs/duty. Now that we have a better handle on COGs and now that we’ve looked up the tariff rate we can tighten this line up too.

Step #13: Sign up for FBA / Amazon Seller Central 🛒

If you haven’t done so already, the next step in how to start an Amazon business is to get signed up for Fulfillment by Amazon. Signing up will allow you to register your business with Amazon, create your product listings, sell your product, and get paid.

FBA Sign Up Overview

  • Cost: $39.99/mo for the professional plan (if you plan to sell more than just a few items this is the way to go). You can start with an individual plan and then covert it to a professional plan once you get fully ramped up to save money
  • Time: It takes less than an hour to sign up
  • How?: Here is the link to sign up

starting a fba business

Step #14: Select a supplier and pay deposit 🏦

Next, officially select a supplier and have them get started with production. This is another big step!

How to select an Amazon FBA supplier

  • Overall Supplier Assessment: Is your supplier responsive and professional? What is your overall sense based on your interactions?
  • Cost: What is the FOB cost and how does it compare to other suppliers?
  • MOQ: What is the minimum order quantity the supplier will run for you?
  • Sample Review: What is your assessment of the quality of samples?

After weighing these criteria you should have a strong sense of which supplier to choose.

How to pay an Amazon FBA supplier

  • Alibaba Escrow: This is an ‘on-platform’ option where you pay through Alibaba. I’ve done this once with a new supplier and it worked out great.
  • PayPal: Most suppliers will accept PayPal but typically they charge you the ~3% fee that comes with sending money.
  • Wire transfer: 90% of all supplier payments I’ve ever made have been via wire transfer.

Other Amazon FBA supplier notes & tips

  • 30%/70%: The norm for paying suppliers is to pay 30% down and 70% when the goods are ready to ship. This is customary and I’ve never had a situation where I made a 30% payment and my supplier disappeared.
  • Negotiate!: Negotiation is customary when dealing with suppliers. You can and should gently push for a lower price. You want to be careful to push too hard. If a supplier gets pushed too hard they may look for shortcuts to cheapen the product. Fortunately you want to find a win-win solution where both parties can sustain over the long term.
  • Check In: You can and should check in from time to time while production is occurring. Ask if there updates on when the goods will be ready to ship, request some photos of production, and kindly remind your supplier that quality is of utmost importance to you.
  • Incoterms: This term describes who pays for shipping from the factory to port and who has risk of loss. It’s important when asking for a price quote you always ask for a FOB quote so you can compare apples to apples. If a factory quoted you a price of $1.50/unit FOB and another factory quoted $1.48/EXW you might initially assume the one that quoted $1.48 was better. But in fact you’ll end up paying more given you are responsible for getting the goods from factory to port. Here are more details on shipping terms:
    • FOB: This acronym means “Free on Board.” In short, it requires the seller of the goods be responsible for costs and risks up until the point that the goods are loaded up at port. I always go with FOB shipping terms when importing from overseas.
    • EXW: This acronym means “Ex Works”.  This means the buyer has to arrange pick up of goods at the factory as well as transport to port at their own expense. It places the minimum level of responsibility on the seller and the maximum responsibility on the buyer.

Once your goods are complete, your factory will message you to request payment of the final 70%. Before making payment I’d highly recommend hiring a quality control company to check your goods.

Step #15: Hire a quality control check 👷

Quality control (QC) is just as it sounds… a check to ensure the quality of your items is satisfactory.

What does QC check for?

  • Breakage or damage
  • Missing pieces or incomplete offering
  • Quality issues like fading, warping, ripping, etc
  • Proper packaging and labeling

What companies can do QC?

There are loads of reputable companies that can perform inspections.

Quality checks will typically run you about $400. I’ve hired QC inspectors for as little as $100 but they were not as reputable as the large outfits like V-Trust or QIMA.

The bottom line is that you’re playing with fire by not having QC inspections done for your Amazon FBA business. This is especially true with a new supplier on your first production run.

Step #16: Import the goods via a freight forwarder 🚢

Now that your goods are ready to ship, it’s time to import them and have them delivered to Amazon’s fulfillment centers. This process occurs with help from what’s called a ‘freight forwarder’.

What is a Freight Forwarder?

  • Freight Forwarder: A freight forwarder is a company that will get your goods shipped into the US, help clear customs, and assist in calculating in duty payments.
  • Flexport: I used Flexport for freight forwarding. They were phenomenal for Amazon sellers. In fact, I never even had to touch the goods. My supplier would affix Amazon FBA labels in China, Flexport would receive the items in Long Beach, and then arrange delivery directly to Amazon. Switching from Expediters International to a company that caters to lots of Amazon FBA sellers like Flexport was a game-changer.

Sea shipping vs air shipping

  • Sea freight: Shipping via container ship at sea is the most common way to import your product. Shipping via sea is much cheaper than shipping via air. On the flip side it takes much longer than an air shipment. Typically it will be ~20 days for a ship to cross the ocean. Then you have time on the front end as the goods get trucked to port and then wait for departure. And upon arriving at port your goods need to be unloaded and trucked to Amazon. All in expect to wait about 40 days from the time goods are ready at the factory to when you are selling them on Amazon.
  • Air freight: With air freight you can have your goods from the factory floor to live on Amazon in about a week. It’s fast but very expensive. For example, on products I brought in via sea I often paid about $0.40/unit. Those same products brought in via air could run $3.00/unit. When you consider you may be importing 5,000 units you can see how much more expensive it is to ship via air. I only went with air when I was out of stock and it was worth it to bite the bullet and get more inventory back online.

Step #17: Create your Amazon listing 📷

It’s now time to build a listing for your Amazon product. This is a key step as it will inform how your product appears to buyers on Amazon. Your goal is to create a phenomenal listing so that buyers who land on your listing are enticed to buy the product.

To get started, login to Seller Central. Highlight ‘Inventory’ on the top menu and click ‘Add a Product’.

You’ll see a screen like this:

how to start an amazon fba business

Click on create a new product listing and following the prompts from there.

Tips for creating a great Amazon listing ✅

  • Photos: Great photos are EVERYTHING on Amazon. Please, whatever your do, don’t skimp on photos. No, you can’t use your iPhone and throw together some halfway decent images if you want to actually go big on Amazon. Pay a professional that knows how to photograph products for Amazon and e-com. I’ve used Upgraded Images in the past and been please with the results.
  • Product Name: The product name field on Amazon is the most important real estate of your listing. You should have your primary keyword show up in the first five words of the product name as it helps with Amazon’s algorithm. Additionally, use Helium 10 to assess search volume for similar keywords. For example, if “poker set” receives 20k searches per month on Amazon and “poker chips” receives 5k searches per month you’ll want to make “poker set” the keyword you use in the first five words.
  • Bullet Points: Amazon gives you five bullet points. Use them all and fill them with engaging copy and lots of keywords. Talk about features, benefits, and appeal to emotions. Use synonyms herein so search picks up name variants for your product. Also highlight key points of difference relative to your competition. Sell through your words!
  • Keywords: It’s important to pepper your listing full of keywords. Use the back end fields to include all relevant keywords again using Helium 10 as a resource. For the headline, bullet points, and description you want to include as many keywords as possible but you also want to ensure readability. Read it aloud to ensure it sounds like the way a normal person would speak and not just a string of words stuffed with keywords.
  • Engaging Copy: This is more art than science. The key is to engage the people on your listing and get them to add your product to their shopping cart. Study some of the big listings on Amazon to get an idea of what top sellers are doing.

Step #18: Sell your first product on Amazon 🎉

It’s the moment you’ve been waiting for…. you refresh the Amazon Seller app and sure enough, your first sale! YES!

Celebrate this small victory but keep hustling to get the Amazon flywheel spinning so you can start selling 10, 100, or even 1,000 units per day.

Step #19: Get the Amazon flywheel spinning

The concept of a flywheel is something you’ll hear many Amazon FBA sellers talk about. Amazon FBA is a momentum game; once you get momentum the power of the platform is mind blowing. When you hear people talk about the flywheel they’re really talking about the interconnected variables that get your business spinning and product flying off the virtual shelves.

Amazon FBA Flywheel

  • Quality Product & Service
    • Good Reviews
      • More Sales
        • Higher Organic Rank on Amazon
          • More Sales

So what is this Amazon flywheel and how does it work? You start with a quality product and excellent customer service. That in turn results in good reviews. Good reviews lead to more sales. More sales makes Amazon’s algorithm happy and leads to a higher organic search rank on Amazon. Higher organic rank leads to more sales. It’s a virtuous circle of sorts.

Momentum: How to get the FBA Flywheel spinning ⚙️

Here are four commonly used tactics to get that all-important initial momentum on Amazon FBA:

  • Giveaways: Sellers will give away free or deeply discounted product (think 90% off) when launching. Why? This will result in sales and Amazon’s algorithm rewards sales by pushing you higher in the algorithm. It also should result in a few reviews.
  • Temporary Price Cut: A price cut has the same impact as a giveaway. If your product is a screaming hot deal buyers will buy and in turn your listing will move up the rank.
  • Heavy PPC: At launch sellers will often allocate large bids and big budgets to Amazon’s advertising. This is also known as pay-per-click advertising. By outbidding and outspending your competition you’ll show up at the top of search (as a sponsored product) and generate sales. This gets the flywheel spinning and pulls up your organic rank.
  • Launch Services: A number of launch services (e.g. Viral Launch) will help you get that initial momentum. I’ve never used any launch service but I know many sellers have found them helpful.

While it can feel painful to lose money on these units you have to think of the tactics as an investment. By getting the momentum going for a week or two you’ll hopefully have years of full price sales that wouldn’t have happened if you didn’t initially get some positive momentum.

Remember though, if you don’t have a quality product any momentum will be short lived. These launch tactics “spike the algorithm” and help get that all important initial momentum. But at the end of the day you’ll fall right back down in search results if you don’t have a good product and treat your buyers well.

Winning on Amazon FBA in 2020 and Beyond

I recently wrote up another article on some of the current challenges of selling on Amazon as well as how to overcome them. Selling on Amazon today isn’t as easy as it was five years ago but there are still incredible opportunities to build wealth and create a big business. Amazon’s marketplace is so vast and ever-changing. In spite of any challenges there is still massive opportunity to crush it on Amazon. Here’s a few tips to consider to help you win big with Amazon FBA.

5 Tips to Winning on Amazon in 2020

  1. Consider sourcing from other countries besides China (e.g. Vietnam, domestically, etc)
  2. Develop a durable edge
  3. Decrease Amazon platform risk by building out other channels (e.g. Shopify) from day one
  4. Continue innovating and adding value to your products
  5. Become operationally excellent

How To Start An Amazon Business | Wrap Up & Golden Rules

In our comprehensive guide we’ve walked through how to start an Amazon FBA business. Hopefully this guide provides you a strong foundation for staring your business.

How to start an Amazon FBA Business | Key Points

  • Understand the Asymmetric Opportunity: It’s very possible to build a million dollar Amazon FBA business without starting out with lots of money. I started my business with $5k and used proceeds from sales to grow it into a million dollar business. Amazon is so vast and so dynamic. Placing a bet on your Amazon business can have huge asymmetric upside. There are opportunities out there for future Amazon entrepreneurs to run the same play and build significant wealth. Remember by putting your blood sweat and tears into this business you are potentially creating an opportunity to create life changing wealth. Learn, apply, and keep grinding day after day.
  • Perform Product Research: Without using tools like Helium 10 or Jungle Scout to assess the market for your product you are flying blind. You must take time learning these tools and performing product research. It’s hard to make a loser product into a winner even if you do everything else right. Therefore it’s wise to invest the time up front to perform product research.
  • Check Unit Economics: Understanding your profitability is essential. If you find a great product but can’t make money on it then it is really a great product? No! At the end of the day you have to make money so please build a simple P&L and estimate how much money you can make from each unit.
  • Find Your Edge: While Amazon still represents a huge opportunity for small entrepreneurs, it is harder to win if you’re just offering a “me too” product. Look for ways to make your product better by adding more features, bundling with a complementary product, or finding a supply that is hard to replicate. Look to develop an edge that is hard for other sellers to copy.
  • Build a Beautiful Listing: Your listing needs to shine. Photos and copy should work hand in hand to help buyers add your product to their cart. This is now table stakes for winning big on Amazon.
  • Remember Your “Why”: One underappreciated aspect of how to start an Amazon business is the fact that there will be hard days. To keep going, remember why you started this venture in the first place. Whether it’s just a bit of extra money on the side so you can take a nice vacation or it’s a desire for financial independence; whatever your “why” is remember it on the hard days.

Let’s now review some common frequently asked questions about starting an Amazon business.

How To Start An Amazon Business | FAQs

Q: What is an Amazon FBA Business?

  • FBA stands for fulfilled by Amazon
  • ~60% of all product sales on Amazon are from third-party sellers via Amazon’s FBA program
  • A third-party Amazon seller can private label her own product and access Amazon’s incredible distribution network and customer base
  • Most third-party sellers utilize FBA. This means the individual seller doesn’t need to worry about picking inventory, packing it up in a box, and shipping it out. Amazon does all this for you. It allows sellers to focus on providing great products and customer service without having to get into the time consuming world of fulfillment. 

Q: How much money do you need to get started?

I started my Amazon FBA business with $5,000. If you don’t have at least $3,000 I’d probably recommend saving up until you hit that mark. If I were to do it all over again I’d want to have around $10,000 so i have some cushion and readily available funds to purchase more inventory if my product takes off. 

Q: How much money can you make from Amazon FBA?

It depends. I was making well into the six figures per year and had a seven figure exit. There are lots of Amazon sellers with equal or more success.

If you can sell 10 products per day that each earn you $10 you’ll be making $100 per day or $36,500 per year. That’s a great side hustle. Going from 10 units a day to 100 units a day doesn’t involve any new skills. 100 units per day at $10 margin per unit is $1,000 day in profit.

Q: There are other sellers selling a similar product? How will I compete with them?

There is room for more than one seller of each product on Amazon. Do a search and you’ll see pages of similar products for most items. Ideally you have an edge. That could mean any of the following:

  • Price: You can profitably sell your product cheaper
  • Value: You offer more value than your competition
  • Bundling: You bundle complementary products together in ways that your competition is not doing
  • Improvements: You address an issue noted in your competitor’s reviews and in turn make your product superior
  • Reviews: You obtain better reviews than your competition due to better quality or better customer service

Q: How can I determine if my product will be profitable?

It is so important to build a pro-forma P&L (profit and loss) for your product. What is this? Basically it’s just a spreadsheet that shows your revenue (money coming in) and expenses (money going out). The difference is your profit or loss. I can’t emphasize enough the importance of doing this relatively simple task. I know everyone has an aversion to accounting but I promise you that putting together a P&L is an easy task and requires no advanced math or accounting skills. And it’s absolutely essential.  

Here is an example of a P&L that I built in Google Sheets for a product that I was researching: 

Q: What should I sell on Amazon?

There are a few absolutely critical choices that will largely make or break your success on Amazon. Selecting the right product to sell is at the very top of the list on important decisions you’ll make. Use tools like Helium 10 to help perform product research.  

Here are my top tips on determining what to sell on Amazon.

  1. Look for products with low competition yet sufficient volume. Unless you’re going to create a new category (this is hard to do), this tip is table stakes for new Amazon sellers. If you enter a space with insane competition you’ll get crushed by the big guys. And if you enter a category with no volume you may have no competition but also no sales.
  2. Find a product that is just starting to emerge or trend upward. All of my product launches had momentum from positive trends.
  3. Consider products with higher barrier to entry (e.g. food, manufactured domestically)

Q: How do you find a manufacturer? 

Alibaba is your best bet.

Q: How do you start a conversation with a manufacturer? Any tips on how to present yourself in these interactions?

Take a look above… I included an email template you can use.

Q: What is a MOQ? 

This stands for minimum order quantity. Most suppliers find it’s not worth the trouble to sell you 50 units at $5 each. They’ll often have a minium order requirement of 500 or 1,000 units. This can be negotiated (especially on initial orders).

Q: What are shipping terms aka Incoterms? 

Ex Works (EXW) and Free on Board (FOB) are both international shipping trade terms. These are more commonly referred to as Incoterms. Basically they are the terms of the shipment. It basically represents seller and buyer responsibilities when it comes to shipping. This means cost to get the goods from the manufacturing location to port, when risk of loss transfers, and more. I’m not going to go to in-depth into Incoterms as there is tons of information on Google if you’re interested. I always shipped all goods FOB. This means the seller was responsible for getting the goods to port. 

Q: How do you receive a product sample? 

Have your supplier ship one via air to you so you can check quality.

Q: What about tariffs? Who pays for them? 

Tariffs are a tax levied by your country’s government that occurs when goods are imported from another country. Despite anything you’ve heard Trump say, tariffs are paid for my the importer (i.e. you). They are not paid for by China. 

Let’s talk through a simple example to understand how tariffs work. Say you are importing a container full of baseball gloves. The value of the container is $100,000 (i.e. this is what you paid your supplier in China). If baseball gloves had a 10% tariff you’d need to pay $10,000 before the goods would be released. This would bring you total cost of the goods to $110,000. You can see how adding 25% to the existing tariff would be very painful for importers. Instead of $10,000 you are now required to pay $35,000. Ouch! 

Despite the pain of tariffs I wouldn’t let it be the reason that keeps you from starting your business. Often times all sellers end up raising their price, you can negotiate a lower price from your supplier to both share in the pain, or China’s currency moves so your US dollar goes further. Tariffs are something to build into your P&L and be cognizant of but hopefully are something you can overcome. 

Q: How to ensure your product is good quality?

  • Get samples
  • Do your best to pick a reputable supplier
  • Have a QC check performed (and problems remedied) before wiring the remaining 70%
  • Message you supplier from time to time on WeChat so they know you care and are concerned about quality

Q: How do I get my product from China to the United States?

Use a freight forwarder. I used Flexport and they were awesome and are well versed at dealing with Amazon FBA sellers.

Q: Do I need to store the products at my house or rent a warehouse?

No. You can bring the goods to Flexport’s warehouse and have them ship straight into Amazon. Your supplier and/or Flexport can attach all FNSKU barcodes and FBA labels. You don’t need to lift a finger!

Q: How do I create a great Amazon listing?

There are a few key elements to a high-quality Amazon listing. 

  1. Product Name: The product name is what show ups as the main title in Amazon search results. Product name receives for ‘SEO juice’ than your bullet points, description, or back-end keywords. Therefore it is key to optimize your product name. The first five words of the title are believe to me especially important. Therefore it is a good idea to include the most relevant / highest volume keywords up front while still making the title ‘flow’ nicely. 
  2. Bullets: Use the 5 bullets wisely with good keywords and engagnig copy.
  3. EBC: Get a trademark so you can add videos and pretty up your listing with Enhanced Brand Content.
  4. Photos: They have to be great.  

Q: How to I get product reviews on Amazon? 

  • Include an insert card asking for reviews
  • Send a follow up email from a service like Salesbacker
  • Participate in Amazon’s Early Reviewer program

Q: How does advertising work on Amazon? 

  • Bids and budgets: Amazon ads are a marketplace. You bid on keywords and allocate a budget to your advertising campaigns
  • Sponsored Product Ads: These are the ads that show up at the to of search with a small ‘sponsored’ text nearby. Effective as they can bring you to the top of Amazon’s search for any keyword.
  • Sponsored Brand Ads: These adds show up before search results. They give a brand headline and show three products from the brand.

Q: What is the typical day-in-the-life of an Amazon seller?

  • Wake up and check yesterdays sales and profits
  • Respond to any customer inquiries
  • Check new reviews; respond to poor reviews
  • Track organic rank for primary keywords
  • Ping supply to ask how production is coming along
  • Review PPC campaigns to ensure they’re performing well

Q: What are you some pitfalls you see Amazon sellers encounter?

  • Failing to build a P&L and understand unit economics
  • Plugging in overly optimistic assumptions for various inputs on their P&L
  • Failing to add perceived or real value to their product
  • Having a mediocre listing with poor photos and sub-par copy
  • Not spending enough time on product selection up front

Q: Should I get my brand trademarked? How much does it cost?

Yes! You should 100% get your product trademarked. You can either hire a lawyer which will likely run you about $1,000 or you can do it yourself which is what I did. It was actually quite easy. How did I do it? I watched THIS YouTube video which I found to be super helpful. It took less than an hour and cost around $175. 

Why should you go through the trouble to get a trademark? There are a couple reasons. First, having a trademark will offer protection from other sellers. It also allows you to access Amazon’s Enhanced Brand Registry which gives you access to tools that help create much more beautiful listings. 

Q: How to do accounting for your FBA business?

To start I would suggest you start with a simple tool that will show you profitability. I used HelloProfit and absolutely loved it. It interfaces with Amazon and is very intuitive to use. It will show you sales and profitability data. This is important to monitor each day to see how much money you’re making and how sales are trending. 

Understanding your profitability is so important; I can’t stress enough the importance of purchasing something like HelloProfit to closely monitor your profitability.

As you get more serious I’d transition to Xero and A2X.

Q: You are making good money and have an incredible amount of freedom. Why sell an Amazon business?

Selling an Amazon FBA business is a hard decision. There’s a risk/reward aspect to it as well as a personal aspect of it.

Our family had a baby at home and a 7 figure exit obviously would go a long way in helping our family financially. If I was single and with no kids maybe I would have kept going and tried to grow my business into an 8 figure business. But given where I was in life it made sense to take chips off the table and sell.

And don’t forget an Amazon business can be highly volatile. Amazon can suspend you, you can have issues with your supplier, tariffs can hit your profitability, and other fun pitfalls can and will come your way. At a certain point of scale it may make sense to cash in your chips rather than trying to get bigger and bigger.

Q: How to sell an Amazon FBA business? How much can I sell the business for? 

Amazon FBA businesses trade at a multiple of EBITDA. This is an accounting acronym and means “earnings before interest, taxes, and depreciation”. Typically an Amazon business trades at a 3 multiple of EBITDA. So say your business produces $500k in revenue and $100k in income for the year. That means your Amazon business is worth about $300k ($100k x 3).

There are many ways to sell an Amazon business. I sold my FBA business through QuietLight Brokerage and had a great experience with them. For smaller Amazon stores you can use Flippa or Empire Flippers. No matter who you sell through it will only help you to keep accurate books and records.

Q: What to do after you sell your business? 

Good question! I’m still figuring that out myself. If you’ve done well enough to build an Amazon business you’ll have a number of options in front of you.

  • Do it all over again
  • Consult for companies that want to win on Amazon
  • Start a new venture. Given I’m a personal finance nerd that loves talking about online business and wealth building I decided a site like this would be a lot of fun to build

Q: This is a long article. I feel overwhelmed. What if I don’t know everything when I start? 

I totally get the above feels overwhelming. So many steps and things to think about. Trust me when I tell you I only knew a fraction of this information when I started. You don’t want to be naive and do things recklessly but you also don’t need to have everything figured out. It is easy to fall into the analysis-paralysis trap and end up accomplishing nothing. 

If you’ve made it through this post you already are well ahead of where I was when I started. I would encourage you to start. Take it step by step and learn as you go.

My first product was a flop. The upside was a learned a ton and kept going. My second product was the one that ultimately ended up growing to be a million dollar business. Had I quit after my initial flop I wouldn’t have had any success. 

Start small and always be learning and trying to get better. If this Amazon path lines up with your values and desires you’ll stay motivated and hungry. That will carry you far. Good luck and I’m pulling for you!