Getting Started with Amazon FBA

AMAZON FBA – A Journey to Financial Freedom

Let me start with the basics of selling…

Most people get stuck on 2 main things when starting their business. One, they can’t come up with a good business idea and two, they aren’t confident that they can succeed.

In fact, one commonality I find interesting is that most would be entrepreneurs are self-deprecating. For instance, some think they are not creative enough to come up with something unique that shall work. Some think that market is too saturated. Some even doubt their skills.

Here’s the thing that most people don’t realize. As long as there is demand in your category and customers with money to spend, what you ultimately decide to sell doesn’t really matter as long as you make your business “remarkable” in some way.

Choose products that you are interested in and put your own unique spin on it. I’ve personally sold many different things in the past either for my own business or for clients and the one thing that I’ve found is that you can sell almost anything if you position it correctly for a specific audience.

Even if your niche is already crowded, the amount of competition doesn’t matter as long as you can stand out.

I also want to emphasize that everyone is creative. Maybe you’ve gotten too used to working a day job where your boss simply tells you what to do and you don’t have to think that much. Or maybe you are simply out of practice. Set aside some time to brainstorm and exercise those muscles instead of complaining about it.

If you often struggle with finding business ideas, the best way to move forward is to simply look at your own everyday problems. Often times, the best products to sell online are the ones that you personally need the most and don’t require any tools to make you realize what you need that could actually sell really well. Just bear in mind the simpler the better.

For instance, during these lockdown times, my wife has now reminded me, for a thousand times now, how long she has been telling me to buy a nice pair of beard scissors for myself. Just like how all the wives are and how all the men are programmed; I have been procrastinating on buying one and she just can’t miss an opportunity to remind me, even if it was for the thousandth time, how lazy I am at doing these tiny bits of personal chores. Can you guess how many husbands and wives would be having same argument out there every single day? Yes, you guessed it right, plenty! Which would all be your potential customers if you just decided to sell Beard Scissors.

Overcoming doubt is huge part of the entrepreneurial process but doing research will only take you so far. Having confidence in your business idea is largely based on knowledge but at some point, you need to just take a chance and go for it.

Why you should start with Online Business?

The good thing about running a business online is that it doesn’t cost very much money at all to begin. So why not just throw something up and see what happens? This isn’t like the old days when you had to take out a business loan or borrow money to start a brick-and-mortar store. We’re talking hundreds of dollars, not tens of thousands. There really is no excuse. If you don’t succeed, tweak your idea or start something else. Starting an online business often involves taking a small risk for the potential of an oversized payout. The expected value calculations are almost always in your favor.

So, I see no reason why anyone should hold back either on account of money needed to startup a business or thinking less of oneself as not being creative enough or thinking marketplace is too saturated.

Your goals and your potential are largely determined by the people you spend the most time with and how you were brought up. In fact, the secret to behavioral change is to hang out with the right people, people who will inspire you to try new things and who will push you harder. Your mindset and your limits are all relative to your environment. If all of your friends work in dead end day jobs, then chances are you will too.

Instead of making excuses and self-deprecating comments, start talking to people who start businesses all the time. I guarantee you that you will get inspired and start believing that what was once an impossible task will now be within your grasp.

Initially, you might feel inferior or uncomfortable but getting over these feelings is the only way to grow.

I want to keep this article as short as possible with the most value so I will be discussing the Amazon basics step by step.

  • Product Research
  • Sourcing of the Product
  • Amazon Budgeting
  • Keywords Research
  • Listing Content & Optimization
  • Different Amazon Launch Models
  • Ranking on Amazon
  • DONTs of Amazon Selling

Let’s start with the most Basic and the most important factor of selling something online.

Product Research

The customer does not need a 1/4-inch drill.

The customer needs a 1/4-inch hole.

….

In other words, the customer does not need a product.

The customer needs a job done.

If you can figure out what that job is and offer a solution, your business has a chance at success.

….


Any individual/business that can;

  • Correctly research the market to find a frequently needed solution (or a product that offers that solution)
  • Cheaply source that solution (or the product that offers that solution)
  • In a generally acceptable Quality
  • Get it cheaply delivered to Amazon FBA with the fastest speed possible
  • List it on Amazon, by creatively embedding the keywords which people are using to find that solution to drive the on-Amazon traffic (cheapest available eyeballs)
  • Write a Copy that can convince them it is the solution they have been looking for
  • At a price, people are willing to pay for that solution
  • To get that solution delivered quickly to them
  • And be satisfied with it
  • Will make the most Profitable Sales.

Now ask yourselves;

  • Are you that individual/business? Or
  • Are you that professional who could help other individuals/businesses find answers to help with successfully achieving the big picture above?

Because if you are one of the two above, you are going to make a lot of money. All you have to do is to keep the eyes on this big picture at all times.

Product Life Cycle
Like every other product, each Amazon product has four stages in its lifecycle:

Introduction – The product is completely new to the market and must establish value and worth. Marketing policies must establish why the product is needed or what it needs to offer to create interest. Here, there is typically little to no competition. The primary challenge is creating a demand and convincing potential consumers that the product is worth their money. These products are high risk, but successfully introducing a product establishes you as the originator, and therefore the primary brand.

Growth – The product is being adopted and possibly duplicated and re-sold by other suppliers. Here, the audience is increasingly aware of the product and their concerns revolve around quality, whether the product will meet their expectations, and which supplier offers the best deal. There is a high demand for the product and it is set to keep growing. Products in the growth phase are low risk and low competition, but offer a high return.

Maturity – The product has saturated the market, there are many retailers selling similar models or options, and the competition is high. The audience is aware of the product and its benefits, and marketing focuses primarily on differentiating from the competition. New features, styles, and colors are often added during this stage. Some products can remain in this stage nearly indefinitely. Mature products are medium risk, depending on your marketing team and ability to compete inside of the price niche you choose.

Decline – The product is either no longer wanted or needed, market demand is shrinking, and sales are dropping. This may be because the product was replaced by a newer, better idea, because of changing cultural perception, or any other factor. Here, product sales will continue to drop, and marketing challenges should revolve around connecting with the remaining consumer base to move product out of the warehouse before it becomes dead stock. These products should not be invested in.

How to do your Product Research for FBA – the right way

There are three basic evaluation pillars of a product idea, Product, Competitors and Competition.

Product Evaluation:

  • Your product research should never be so shallow that you look at simple tools, filters, and numbers only.
  • Instead of starting with a product – start with a need you see as an opportunity to address. This can start with product ideas but those products should make you look deeper as to who is talking about the issues those products solve.
  • On the product side, look at who the top 16-24 sellers are and look into the following:
  • What their units per month sold is averaging?
  • The average time they’ve been selling the items?
  • Price points?
  • Are these items accessories or a main part of their offerings?
  • Are the items part of a single product brand or multiple product brand and how deep is the lineup if it is part of a multi-product brand?
  • What is the estimated average cost from 20 different suppliers?
  • Use the FBA revenue calculator and sort out what the margins are after production, shipping and FBA fees – if it isn’t 30% or better then move on
  • Is the niche dominated by one seller at the top?
  • Can you position your product to be at the top of the market in price and quality?
  • Can you justify at least a 4x retail price over your landed cost?

Also consider these other pillars of product research:

  • Speed of Reviews per month (Monthly review velocity)
  • Quality of Reviews
  • Number of Reviews
  • Age of Listing
  • Market Depth
  • On-Page Listing Quality
  • Sales (At least last 60 Days)
  • Revenue (At least last 60 Days)
  • Who is Selling (AMZ/FBA/FBM)
  • PPC Cost (anticipated)
  • Product Weight & Size
  • Product Selling Price (Floor & Ceiling)
  • Price Consistency
  • BSR (Sales Rank) History
  • Number of Sellers selling on the Listings
  • Seasonal/Evergreen
  • Patents
  • FBM Hazmat Check
  • Restricted?
  • Gated (Important)
  • Cash Budget to compete
  • FBA Calculator / Profit Margins / ROI
  • Keyword Search Terms per month (very important)

Competitor Evaluation:

  • When sizing up the competitors, look at the top 16 or so and answer the following questions:
  • Are they running sponsored product ads?
  • What are their keyword rankings for the product (for KWs of interest)?
  • How many units per day are they selling of said item?
  • Do they have a website?
  • Do they have a social media presence?
  • Are they running and social media ads?
  • If they have a website, does it rank on google?
  • How much traffic does their listing get per day (SERPs search)?
  • How much traffic do their other sites and social media pages get per day?
  • How engaged are their fans?
  • Do they run contests?
  • Message and email all of them and ask questions as a potential buyer and see how customer savvy they are
  • Read through their posts and listing to see if they are telling you what the product does vs what needs it addresses

Sourcing of the Products

The big money is in sourcing – remember that, always. General Criteria of finding a Supplier on Alibaba is listed below.

  • Verified Supplier
  • Trade Assurance
  • 2+ Years in Business
  • 3+ Gems
  • Good Transaction rate
  • Good Reviews

ALSO, NEVER MAKE THE FIRST OFFER!

This is the first and foremost rule of any negotiation you need to learn.

Lay out the numbers and ask your supplier what is he willing to do to retain the customer, doing the quantities that you do.

Amazon Budgeting

It’s absolutely possible for your Amazon business to make tens and even hundreds of thousands of dollars in revenue and yet, still, lose money, due to poor understanding of your financials.

The key to success on Amazon is to understand your unit economics, i.e., average profitability on a per-unit-basis.

To avoid this, you’ve got to know your numbers. Here are the key metrics to keep in mind:

  • Daily Unit Sales — the number of units you sell per day, on average.
  • AOV — Average order value. You calculate this metric by dividing your total revenue by Daily Unit Sales.
  • ACoS — Advertising cost of sales.
  • FBA Fee — this includes both referral as well as pick/pack & shipping fee.
  • Unit Landed Cost — this is your total cost of making, packaging and sending your product to the Amazon fulfillment center.
  • Profit Per Unit — once you understand your costs, including Unit Landed Cost, FBA fees and advertising, you can subtract it all from AOV and calculate the profit you receive per unit sold.

Keyword Research for your Amazon Product

Mostly Helium-10 is used to perform keyword research. The first thing to know is that there are three main types of keywords:

1) Head keywords: these are 1-2 words only, and have the highest search volume. For example, “sneakers”.

2) Body keywords: these are generally phrases of 2-3 words, are more specific than head keywords, and have a lower search volume. For example, “women’s lightweight sneakers”.

3) Long-tail keywords: these are longer phrases which have the lowest search volume but are very specific to your product.

This means that although head keywords will generate the highest number of search results, and therefore reach the highest number of potential customers, they might not necessarily be right for your target customers.

Long-tail keywords, on the other hand, will reach less people, are much more likely to target the right people.

Listing Content & Photography

For listing content, Today, I am going to give up one of the biggest sales copywriting secrets that I have used,

But first, let me tell you this short story about the 1st world war.

At the end of 1914, the British came up with a new plan to defeat Germany: starve the German people into submission through a blockade strategy.

By 1917, only Sweden and a handful of other minor sources on the European continent were selling goods to Germany.

As a result, German soldiers at the front lines weren’t getting the food, clothing, and equipment they needed. Hundreds of thousands of German soldiers didn’t have boots, socks, or jackets.

That’s when the Allies employed Harry Reichenbach, at that time the greatest American advertiser in history. His mission was to figure out a way to persuade German soldiers to surrender.

How do you persuade someone to become a prisoner of war?

After interviewing hundreds of German soldiers in prison camps, Reichenbach made a list of what their biggest desires were. He then wrote a short sales letter based on those big “pain points.”

Their direct mail strategy was to drop 45 million of those letters over Germany’s lines. The result? German soldiers started surrendering in masses. So much so that it became a capital offense to pick up any pieces of paper on the ground.

Here’s what that sales letter offered:

If they surrendered, all German prisoners would be given officer rank. As “prisoners with officer rank,” every day they would get bread and meat to eat, cigarettes to smoke, a comb, and 24 sheets of toilet paper (German soldiers had none in the trenches).

This letter worked because it immediately answered the question “what’s in it for me?”

Now, whenever you are writing your Product listing, always tell the customer “what’s in it for him” in the Listing Bullets.

“What is in it for me” is exactly why an AIDA (Awareness, Interest, Desire, Action) model works best on an Amazon listing better than anything else. It will blow away conversions on the listing and it would start converting like never before.

Moving on to the Photography Part,

What I am going to talk about now, will potentially save you 1000s of dollars, in all of your Amazon Selling years. So please pay attention.

Amazon Selling is a business. And like any other business, among many other small fragments, it needs a lot of thinking, strategy and systems – to be successful.

We need to either start “buying” systems or start “building” systems from day one – to eliminate the risk of failure or to curtail down the business costs.

Do you know what is a business’s “first impression” on Amazon?

So, on Amazon, your brand’s “first impression” is your main image which is also called as the “hero image”.

Now what normally sellers do, as newbie sellers, is that they ask randomly on a FB group or hop on a call with an Amazon acquaintance for a photographer recommendation. Someone randomly says “bla bla bla” and we pick up the phone and get on a call with that person. We assign him on the most important single job on which, sometimes, our whole business is relying on. And we make this single most important decision, the most casually!

Now assume, if you were under a life-threatening situation, would you casually ask for recommendation for a doctor, from someone that random on FB, knowing all too well that your life depended on it? No. Absolutely Not!

Please treat your product imagery the same. Especially your main image. Your “first impression” depends on it, so does the “clicks” that you are going to win/loose, and your whole Amazon business!

Different Launch Models

There are three most popular launch models. I will try and list the pros and cons of each.

The 3 models are as follows:

The Giveaways Launch (aka Dollar Store Clearance model)

The Aggressive PPC Launch (aka Buy-In model)

The Audience Building Launch (aka Crowd Pleaser model)

The Giveaways Launch: Use Facebook ads, or a launch service that runs Facebook ads, and give away enough units at either a substantial discount or outright free to get some sales velocity and show up on page 1 for the keyword you’re after. Then you get enough organic traffic to keep you on page 1 of amazon and get enough profitable sales to make your PPC efforts make sense. This will hopefully allow you to push your price up to sustain some profitability and then grow your company.

Pros:

Little marketing expertise required.

Easier to focus on the basics of the amazon platform.

Can get to page 1 quickly.

Cons:

You might not rank or stick to page 1.

Large upfront cost in extra inventory.

Extremely expensive to repeat for multiple keywords.

Lowest quality traffic meaning that anyone you get on your list of customers from this doesn’t really contribute to audience building for later product offerings, monetization or building brand equity.

VERY Hijacker prone.

Cheapens brand image severely.


The Aggressive PPC Launch: Go deep paying for sponsored product ads and lose money up front to by showing up in high converting ad spots to get full price sales. Full price sales rank faster than discounts but without organic traffic to offset the ads, the Cost Per Purchase is expensive up front. Make it to page 1 via paying for those spots, convert those buyers into reviews and offset the upfront marketing expenses with organic traffic because of ranking.

Pros:

No extra inventory needed to give away.

Very little needed in the way of marketing expertise beyond the amazon platform.

Less sales needed to rank your product.

Higher quality buyers mean the list you are growing is more likely to engage with your brand and respond to your asking for reviews without having to give massive incentives.

Gets you good ad account data which will lower your ad costs in the long term.

Cons:

Can be VERY expensive in competitive categories, even for lower volume keywords.

You’ll need extra money to buy more inventory before being profitable.

Can take a little longer to get consistency in your sales to build up enough velocity to rank high and get organic sales.

You’ll definitely need more up-front capital on top of your inventory.

The Audience Building Launch: Build a Facebook group or following via social channels. Build trust and launch your product via an exclusive offer to your group or list. The aim is critical mass awareness. This high velocity push in a short period of time helps to boost rank and you aren’t doing it with deep discounts. You then, farm those purchasers for reviews to boost your listing. They already trust you so the review process is MUCH easier. You then turn on PPC and other paid traffic efforts because you’ve got some reviews and sales behind you. Your ad spend dollars will now go further and you’ll continue to climb via full price sales.

Pros:

You know exactly what your audience wants to buy and can shape your product to their desires BEFORE buying inventory to push to the amazon platform.

This is the HIGHEST quality customer group because you are building brand equity before making the offer AND doing so over a sustained period of time.

You have credibility as a brand and brand ambassador with your prospects before asking them to buy, which ups your conversions when you make your offer.

You have an army of people that you can launch to out of the gate and farm reviews from.

You have a feedback loop in place for customer service and launching future products which drives repeat business and future sales.

Easiest way to be initially profitable without giving away huge amounts of inventory or overpaying for ads.

You will know what to avoid and what to highlight as it relates to your customers when creating your products, listings and ads.

Expands your brand image to be about the lifestyle your product is a part of vs just about the product itself.

By the time you get to page 1, you are better optimized for conversions and you have reviews to help you better leverage the organic traffic and get more from your ad spend.

Much easier to capitalize on multiple keywords.

Every piece of content you develop is a brand asset that you can leverage for future customers.

Has the ability to be the biggest payoff of the 3 models.

This is also the only model that builds brand equity of the 3 for later use in selling your company.

Cons:

Time Consuming. This is the toughest path to see through but the payoff is also the biggest.

This takes the longest to get things moving from day 1 but your day 1 can start while you are still in the process of production.

You’ll need a bit of off amazon marketing and social media know how.

You need to generate valuable content consistently to give your audience a reason to engage – this is difficult for a lot of people as they are just looking to sell a product vs positioning themselves as the authority to buy from in their niche.

Takes longer to develop as a model and get initial sales velocity.

Must keep it going once you become profitable with your sales – this is a model that requires commitment if you want it to payoff. Once you are the superstar for your audience you have to continue being captain of the ship.

You are going to have to find a way to capture the attention of the audience and bring them to you which requires creative marketing to a degree.

This is an additional piece to worry about beyond the amazon platform.

Amazon Ranking

If your launch strategy (On-Amazon/Off-Amazon) doesn’t cover the buying journey of the all (following) types of prospective customer, you will always keep struggling to become a brand, no matter whatever online business you are in (Amazon is no exception either);

  • unaware
  • problem aware
  • solution aware
  • your brand/product aware
  • most aware

If you are looking to rank products effortlessly beyond 2021, you need to learn these 2 skills on priority.

  • SEO
  • Digital & Social Media Marketing Sales Funnels

Do not start selling until you have your traffic plan in place and ready to go.

No or deficient traffic plan equates the FAILURE – period.

Don’ts of Amazon Selling

I am listing down a few don’t of Amazon Selling.

Product Hunting:

  • Do not select product based on your love for it
  • Do not rely on single tool for product hunting
  • Do not select product without evaluating profit margin and ROI

Supplier:

  • Do not select supplier based on merely price of the product being offered
  • Do not select supplier without checking complete profile, history, response rate, employees, location, feedback, reverse google checking
  • Do not select supplier without checking sample and comparing with competitors
  • Do not pay the supplier until proper contract is emplaced
  • Do not skip the inspection whatever confidence u have on supplier. You order value is much more when comparing to value of order or damage caused by negative review
  • Do not pay inspection company until rejection criteria is defined

Shipment:

  • Do not select FF until all checks r completed against FF as described in supplier section
  • Do not pay FF until your FF have measured the goods or he trust your supplier measurements (through video or photos)
  • Do not pay FF until proper contract is in place.
  • Do not pay FF until either they know correct HS or product detail of competitor
  • Pay attention to each detail and put terms in the contract covering all possibilities.
  • Do not forget entering tracking number is Amazon shipping plan, it will help reducing chances of missing the boxes

Listing:

  • Do not copy text or images from anywhere. Content and images must be original
  • Do not just stuff the keywords in the listing without making any sense for customers
  • Do not enter words like bacteria, battery etc. in your listing
  • Do not underestimate the power of quality images

Launch:

  • Do not miss honeymoon period of a listing
  • Must have backup plan for every element assisting launch
  • Inventory and Cash flow Planning
  • Do not forget calculating reorder point
  • Do not underestimate cashflow and always keep your estimates updated. Cash flow, if not accounted for, can ruin your business.

Lastly, I would like to add Every single day I am blessed with, I wake up and tell myself there is so much that I do not know. There is so much to learn.

Then I vow to learn at least one new thing that day provide value to someone in one way or another. And I try not to go to bed until I have.

This has worked for me to learn new things. Conquer my fears and yield results for the people I work with.

I have found that the key to greater knowledge and wisdom is in knowing/realizing that there is so much that you do not know and then taking action to rectify that – every single day.

KEEP PUSHING, KEEP HUSTLING HAPES…

                                                                           YOUR VERY OWN,
                                                                           hmxa | HAPEBEAST | AMAZON FBA#0467