You may have heard that many people are making 6+ figures a year selling on Amazon. It certainly does seem like a promising business opportunity.
So, how do you get started and what do you need to do to join that 6-figure club?
We turned to Dan Rogers, a successful Amazon seller, to learn his secrets and find out exactly how people are making money with this business model.
About Dan Rogers
Dan started selling on Amazon four years ago. At that time he was living in South Africa and had to sell his car just to pay for his inventory. Today, he regularly earns five figures a month through his Amazon business.
In addition to selling, Dan also acts as a consultant. He’s worked with over 1,000 sellers to help them reach their financial goals. Some of his students are now making over a million dollars a year thanks to his expertise.
In this article, Dan walks us through how he got started on Amazon and provides beginners with some valuable tips.
Is Selling on Amazon Worth It?
My answer is definitely yes, but let’s have a look at an example to explain why I’m so certain:
Let’s say you order some inventory to sell on Amazon. After your price to purchase all the items, and the shipping charges to send them to Amazon, your cost is $10 per product.
You decide to sell your items for $32.99.
Now, selling on Amazon isn’t free. They’ll charge you a commission on every sale, and then there are costs involved in fulfilling your orders as well (whether you’re fulfilling orders yourself or using Deliverr or other 3PLs to fulfill your orders). That means each time you make a sale it costs you an additional $10.
And in order to drive sales you’ll likely have to run ads. Let’s say that costs you $2 per item.
But even after all those expenses, you’ll make $10.99 with each sale ($32.99 – $10 – $10 – $2 = $10.99). So, if you generate 500 sales a month (which is a realistic goal) you’re making a profit of $5,495.
And that’s just one product. You can easily add other products to your business and start scaling that way. Some might sell more and others might sell less, but you can see how it’s pretty easy to grow your business quickly.
What are the Steps You Need to Take to Start Selling?
Going from a complete beginner to an Amazon seller doesn’t happen overnight, but it’s also not that difficult. Here are the steps you need to take to get started:
- Choose a Marketplace: Amazon sells in countries all over the world. I usually recommend selling in the US, as that’s the biggest market, but it may be cheaper and easier for you to sell somewhere else depending on where you’re located.
- Create an Amazon Account: Go here to sign up. You’ll need an ID, a credit card, and your tax information to complete the application.
- Do Product Research: I recommend using product research tools designed for Amazon sellers, as they maximize your chance to pick a product that will sell really well. Personally, I like to use AMZScout’s tools for their simplicity and accurate sales data.
- Create Your Product: Come up with an idea for a product and then find a supplier that can bring it to life.
- Create Your Listing: Make sure to include relevant keywords throughout your listing to ensure that you show up in Amazon searches. It’s easier than you might think. There are many keyword tools available that can provide you with a long list of relevant keywords for any product.
- Advertise Your Products: Amazon ads are one of the best ways to drive traffic to new product listings.
What Do You Need in Order to Run Your Amazon Business?
Running an Amazon business isn’t overly complicated, but there are a few things you’ll need in order to do it effectively:
- An Amazon seller account. I recommend signing up as a Professional Seller. This comes with a monthly fee, but if you sell more than 40 items a month you’ll actually end up saving money.
- An Alibaba account. This is where you’ll find and contact suppliers.
- Product research tools to find a product worth investing in.
- A way to talk and negotiate with suppliers. I usually use either Skype or WeChat.
- A good amount of creativity and a willingness to innovate.
- A brand name and logo.
- UPC codes if you’re selling in the US and EAN codes if you’re selling in Europe. Each of your products will need a code in order to be sold on Amazon.
- Photography and copywriting skills for your listing. If you don’t know how to edit photos or write a compelling listing, hire professionals to help you.
- Capital. You don’t need a massive investment, I’d say somewhere in the neighborhood of $3,000 – $6,000 depending on what you’re buying. Take your product costs and then add 30% (this covers other expenses like ads) to determine your budget.
- Time to spend on your business. Selling on Amazon isn’t super time-intensive, but it does take work. Make sure you have the time to properly run your business.
- A registered business. It’s not required to register a business in order to sell on Amazon, but I do recommend it since it comes with a number of tax benefits.
What are the Best Products to Sell on Amazon?
This all comes back to product research. The key to finding items that sell well is doing your homework and looking for some key characteristics that generally lead to more profits.
Here are my five main requirements when researching products:
- High Sales Price: The more you sell a product for the more you can make. It’s hard to make a profit when you’re selling something for $10, even if your costs are super low.
- Potential Upgrades: I like to look for products that I can tweak and improve upon. This helps me set myself apart from other sellers.
- Low Competition: This applies to both the number of sellers offering the product and the number of reviews a product has. Fewer sellers mean less competition to overcome. And if those sellers don’t have many reviews it will be easier to overtake them in searches.
- Lightweight: I look for products under 5 lbs, as this reduces shipping costs.
- Small: I want products that are under 18” x 14” x 8”, as this means less fulfillment storage fees.
How Did I Start Selling My First Product?
So, now that we have our criteria let’s go over how I found my first profitable product to sell on Amazon
1. I Narrowed My Search: I used product research tools with different search filters, such as sales, price, and reviews that allow you to find products that meet your specific criteria. I looked for items with over 300 sales, under 100 reviews, and a price over $40.
Above is an example of one of the products I found using this method. I reviewed all the results and made note of a few that I was most interested in.
2. Researched the Products: Once I found a few potential products I took a closer look at them. In particular, I looked at each item’s price, sales, and reviews. I also tried to find products that didn’t have a lot of competition.
Here’s a look at the inflatable lounger from the last example. We see it has high monthly sales and a price between $30 – $70, which are both signs that this niche could be profitable.
3. Found Keywords: Next, I used keyword research tools to discover related keywords for my products. Not only are these tools useful when creating your listings, but they also help you to find related items that could be worth selling as well.
4. Checked Prices on Alibaba: I searched for the products I was interested in on Alibaba to see what suppliers were selling them for. So, using our inflatable lounger example, you would simply go to Alibaba and type in “inflatable lounger” to get a list of products and prices.
5. Calculated My Sales Margins: Before I settled on a product I wanted to make sure it would be profitable. To find this out I used an FBA calculator. There are plenty of these tools available, like Deliverr’s Cost Calculator. I found the item I was interested in on Amazon, opened the calculator, and entered the price I found on Alibaba. The tool then calculated my fees and showed me how much profit I’d make on each sale.
When using an FBA-alternative like Deliverr, you can use their cost calculator as well!
How Did You Design Your Products?
I wanted to choose products that could be improved upon. When I was researching a product I looked at its Amazon reviews to see if there were any negative comments about it. I made note of any common issues and when I designed my product I made sure to fix those issues.
I also made sure to read the positive reviews as well to learn what people love about it. I didn’t want to change something that would remove one of the most popular features.
How Did You Find Suppliers?
I searched for suppliers on Alibaba. I looked for ones that were verified and listed their business type as “Manufacturer,” since those types of suppliers provide lower prices and can customize products for you.
I reached out to multiple companies in order to find the right one and shared my ideas to see which ones were willing to give me what I want. If they said they could do it I ordered a sample.
Once the sample arrived I checked it for performance, looks, and quality. I needed to make sure that any product I was going to sell met my high standards.
After I spoke with several different suppliers and reviewed their samples I chose the one I felt met my needs the best.
I negotiated terms of 30% upfront and 70% paid upon completion of the order. This helped limit my risk in case something went wrong with the manufacturing of my products.
How Did You Ship Your Products to Amazon?
First I downloaded the FNSKU from Amazon and sent it to my supplier. Once the order was nearing completion I created a shipping plan on Amazon, which included info like the shipping date, number of cartons, size of cartons, weight, etc.
When my products were ready I paid the remaining 70% to the supplier and they shipped the items to Amazon. Then I just had to inform Amazon that my inventory was on the way and wait for it to arrive.
How Long Did it Take From the Order to the First Sale?
a) For my first order it took about 10 weeks. On average I’ve found it usually takes anywhere between 8 and 12 weeks.
Manufacturing lead times are between 30 and 60 days and ocean freight often takes 25 to 45 days. Amazon fulfillment centers also take some time to receive your inventory and process it so it’s available to sell, usually between 1 to 3 weeks depending on the season.
So, on the short end, this could take 2 months and on the long end, this could take around 3 months.
b) The time it takes to achieve consistent sales and revenue really depends on the success of your products.
My first product was a success but with lower sales velocity, my second product did not prove successful and I discontinued it, the third product was a solid success but took time to rank as it was more competitive. That meant a portion of profits had to be spent on Amazon PPC ads initially.
For me, I would say it took between 12 and 18 months to reach a significant level of stable sales and steady revenue generation. That said, if I had launched product three first, this would have been shortened drastically.
Important Tips That I Learned From My First Experience
The time between ordering the product and actually selling it is critical. Here’s what I learned about this when creating and selling my first product:
- You should list the product on Amazon before placing the order, but at this stage still triple-check that the listing has no restrictions and clear any hazmat reviews.
- Complete your keyword research and listing copy.
- Plan your listing images based on the product benefits that customers value most. Plan A+ Content if you’re Brand Registered as well.
- Inform the supplier you want two fully completed units sent to you via air express upon completion, as this allows you to receive them well before the main ocean shipment reaches Amazon. Then you can use them to create your listing images or have a professional service do these for you.
- You want to go to MANAGE INVENTORY and navigate to your listing, click the EDIT drop-down and then select PRINT ITEM LABELS. These are your FNSKUs (Fulfilment Network Stock Keeping Units).
Pro Tip: Add “Made in China” (or whichever country) at the bottom of this label as well. You need to send these FNSKUs to your supplier. Every single individual product should have this label affixed to it and remain easily scannable for Amazon’s warehouse staff.
- If you want to complete a CASE PACKED shipping plan to Amazon which has faster receival by the fulfillment center, then all cartons need to contain the same number of the same nature units. For example, a 500 unit single-SKU shipment might have 10 cartons each containing exactly 50 units of 1 SKU. This is something you would need to inform the supplier about. Otherwise, you can also just do an INDIVIDUAL PRODUCTS shipping plan.
- Ask your supplier for the following details so that you can create a shipping plan on Amazon:
- Ship from address (supplier’s address)
- Number of cartons
- Number of units per carton
- Weight of cartons
- Size of cartons
- Estimate shipping date
- You will need to create your shipping plan on Amazon. This informs Amazon that you are sending in your units for this listing. It also provides you with your carton labels. You will want to send these to your supplier to affix to every carton. This shipping plan will also give you the exact Amazon fulfillment center to ship to. Provide this information to your freight forwarder.
- Ready up your international freight. That may mean putting your freight forwarder in contact with your supplier or informing them of the pickup location and date. You may also be using your supplier’s partnered freight forwarder which can be simpler as they already have contact with each other.
- Ask the supplier for images as they manufacture, this way you can catch problems early.
- Ready up the final payment for the supplier. This is often the final 70% of the order value.
- You can also use this time to optimize and send the supplier customized product inserts.
- You can use this time to create lead magnets or plan warranty redemption.
- You can use this time to create landing pages or chatbots or anything like that that you may direct customers to from insert cards or similar.
- You may need to use this time to consecutively order bundle components from secondary suppliers that need to be sent to your main supplier for final assembly.
- You will want to use this time to plan your launch. That may include PPC campaign planning, Facebook ad planning, getting familiar with the Early Reviewer Program, the Amazon Vine Program, and other review garnering tactics. Keep it TOS compliant.
- You could also use this time to establish your brand website and social media accounts.
Potential Problems You Should Know About
If you do all of the above, you should minimize problems but the main issues sellers face are:
- Product and category restrictions or hazmat reviews. Much of these can be cleared simply by listing early and checking for them. When you list a product, Amazon will tell you if you can or cannot sell that item or what requirements there are. You can even create a dummy shipping plan and then delete it just to make sure you can send that product without a problem.
- Inventory limits. Amazon currently has a 200 unit limit for new ASINs. This inventory limit is raised as you sell more. To get around this limit you can always use a service like Deliverr, which doesn’t have any inventory limits.
- Product quality problems. Sometimes suppliers provide excellent samples but lesser quality main production units. It’s a good idea to perform inspections on-site if possible, especially when first working with a supplier.
As you can see from the screenshots above, I’ve sold my fair share of Amazon products. It wasn’t always easy, and there were some bumps along the way, but I’m super proud of how far I’ve come and the results my business is generating now.
If you follow the advice above, and put in the work, there’s no reason why you can’t enjoy this kind of success as well.
A big thanks to Dan for answering our questions and educating us about Amazon. Now that you’ve learned how to start your own Amazon business what are you waiting for? Start doing product research and begin your eCommerce journey.