Amazon FBA is a great opportunity for those who are looking to make money online. However, there are some things you should know before you get started, like – is Amazon FBA worth it?
After watching countless youtube case studies, we’ve concluded that Amazon FBA is worth it, at least as a side hustle. In this video, I will explain why and how you can start a successful business with Amazon FBA.
Why People Think Amazon FBA isn’t Worth It
People think Amazon FBA is not worth it because they don’t understand the basics. People don’t succeed with Amazon FBA because they give up too soon or they don’t do their research.
The successful people with Amazon FBA know how to find the right products, understand the Amazon algorithms, and have a system to grow their business. While passive income may come after you buy inventory and ship it to Amazon, there are multiple aspects you’ll need to learn as a new business owner.
Amazon sellers earn an estimated $1.6 billion in revenue per year, so it’s safe to say that the people who are making money with Amazon FBA know what they’re doing. But to get that cash flow in your bank account, sellers need to create great product listings that attract customers to sell products.
Profit Margins
The average net profit margin for an Amazon business is around 15%. This means that for every $100 in sales, you can expect to make $15 in profit. Of course, this varies greatly depending on the products you sell and your business expenses. You can lose money selling on Amazon if you’re not careful.
To successfully sell on the Amazon marketplace, you need to find products with high-profit margins. This can be done by finding products with low competition and high demand. You can also look for private label products, which are products that you create and brand yourself. Private-label products often have higher profit margins because you are the only seller.
Business Expenses
The biggest business expense for an Amazon business is inventory. May sellers selling products through an e-commerce business such as Shopify or through a dropshipping business only have to worry about the cost of goods sold (COGS). This means that they only pay for the product when someone buys it.
FBA businesses have to pay for their inventory upfront. This means you have to have enough money to buy your inventory before making a sale. Other business expenses include shipping, Amazon seller, and storage fees.
You must purchase inventory from third-party sellers upfront and then ship the private-label product to Amazon.
FBA Fees
The Amazon FBA program has two types of fees for selling on Amazon: monthly and per-item. The monthly fee is $39.99, and the per-item fee is $0.99. These fees are in addition to the regular Amazon selling fees, which are around 15%.
The monthly costs for FBA sellers cover the cost of storing your inventory at Amazon’s fulfillment centers. The per-item fee is charged each time someone buys one of your products.
New sellers selling on Amazon will also have to pay for shipping costs when they send inventory to Amazon’s fulfillment centers. The shipping cost depends on the size and weight of your products.
Learning FBA Service
There is a learning curve associated with Amazon FBA. You will need to learn how to find profitable products, understand Amazon algorithms, and create a system to run your business.
Many people give up too soon because they don’t see results immediately. It can take months to see a return on your investment when you’re starting out with Amazon FBA.
The key to success is to stick with it and keep learning. Many resources are available to help you, including books, blogs, podcasts, and online courses.
Amazon FBA Case Studies (Real Experience)
I pulled several case studies from Youtube to show you that Amazon FBA is a viable business model and can be profitable.
Case Study #1: $100,000 Per Month Amazon FBA Product
“Just because that one person failed, or the product didn’t work because they didn’t do their research does mean that Amazon FBA is a bad business” – Pat Harris
The first case study is from Pat Harris, who is a full-time FBA Amazon Seller. Pat makes his entire living off of Amazon FBA. He started his Amazon FBA business with less than $1000. He explains that the most important part of the business is ranking products.
In one video, Pat shares how he succeeded with a $ 100,000-per-month product.
The software Pat recommends is Helium10. Helium 10 is a suite of tools that Amazon FBA Sellers use to find profitable products, understand Amazon algorithms, and automate their business.
Pat’s experience is not unique. Other people have made over $ 100,000 monthly with their Amazon FBA products, although no results are “typical.” He’d say yes to the question: Is Amazon FBA worth it?
Case Study #2: $300,000 His First Year on Amazon FBA
“Most people fail on Amazon because they are doing it wrong. They are selling the wrong type of products” – Travis Marziani.
Travis Marziani successfully started an Amazon FBA business and earned $300,000 in his first year. He shares that most Amazon sellers are doing it wrong.
He shares his method with new Amazon sellers.
- Find a product with significant sales volume. (Travis uses Helium 10 for product research)
- Make a new product that is an improvement on the selling item.
- Create a logo and packaging from Fiverr or 99 Designs
- Find a manufacturer (like Alibaba.com or thomasnet.com)
- Make X amount of units (500, for example) and send them to the Amazon warehouse.
- Create a listing on Amazon (that ranks!)
Amazon will then ship your product and handle the customer’s transaction for you. You don’t have to store inventory or handle shipping.
Pro Tip: Create an outstanding image for your product. Optimize the title with the appropriate search phrase. The #1 product gets most of the clicks, so your goal is to rank #1.
This is the tea that Travis is selling on Amazon.
Travis says that creating a product you are passionate about is not necessary for selling on Amazon. However, it will make the journey more enjoyable. He also suggests that being “first” to market has its advantages.
While Travis’ results are not typical, they show that it is possible to succeed with Amazon FBA. These Amazon sellers’ case studies should inspire you that anything is possible with hard work and a bit of luck.
Case Study 3: $15,000 Per Month
‘Amazon sellers need to find products with good search volume, a lot of sales, and low competition
Farida Bayoumi explains to new Amazon sellers that getting started with Amazon FBA is simple and straightforward. She uses the Jungle Scout chrome extension. She calls it her “X-ray vision”. Like Travis, she suggests picking a passion product. Something in a niche where you are interested, like home decor.
She uses Alibaba.com to find manufacturers for the product she will sell on Amazon. Many sellers use Alibaba. You will then private label the product.
Private labeling is the process of creating a new product with a unique brand name, logo, and packaging. When you private label a product, you are the only person selling that product on Amazon. This gives you a unique advantage over other sellers because your product will have less competition.
You will then send the product to Amazon’s warehouse. Once it arrives, you create a listing on Amazon and wait for the sales to come in.
Amazon will handle customer service, returns, and shipping for you. You don’t have to worry about any of that.
Pro Tip: Farida says to give yourself 6-months to 1 year while you are building multiple products before you have a solid, dependable, livable income.
Case Study 4: Started with $400
“I think Amazon can be a very successful way to make money online, especially if you go to market with an extremely profitable product.”
Julian Adams did a 30-day case study where he launched an Amazon FBA store with a budget of $400.00. That would be a common investment for new Amazon sellers. Once he set up his Amazon account and got his verification call, he watched Youtube videos to learn the process.
Feeling like he couldn’t afford JungleScout, he initially tried to source a product without the tools. He started with baby bath toys. He was a bit concerned that the products he got were smaller than he thought.
Once his first item was for sale, he decided to try retail arbitrage. This is where you find products on clearance at retail stores and sell them on Amazon for a higher price. He didn’t find success with this method.
His other concern was getting products ungated. Gated products are items that Amazon restricts who can sell. You must apply and be approved to sell the product to get ungated.
To get a product ungated, you will need to provide Amazon with an invoice from your supplier and have at least ten units in stock.
Eventually, he did find a product to sell that was ungated and had good sales volume. He went through the process of creating the listing and then waited for the sales to come in.
He also got his lego brand products ungated, which was his 3rd method.
His budget went to buy products from the manufacturer and ship them to the Amazon warehouse. He also had some miscellaneous expenses, like bags that Amazon required his products to be in.
At the end of his case study, he sold 15 units and had a profit of $5.60, which was just under his budget.
While Julian didn’t make much money, his case study did prove that the process is simple and it is possible to get started with Amazon FBA on a small budget. Without the product research tools that the others used, like JungleScout, and Helium 10, he was at a disadvantage when it came to finding a profitable, high-selling, low-competition product.
Is Amazon FBA Worth it?
As a newbie, I knew very little about Amazon FBA. But after watching these case studies, I find myself inspired and under the belief that for some, Amazon FBA could be a viable option for making money online.
These are my takeaways.
- Invest in the tools to help with product research (JungleScout and Helium 10)
- Find a profitable product that you are passionate about, has low competition, high sales volume, and significant products.
- Sell multiple products
- Give it a year for the income to build as you find new products
- Optimize your listing titles, descriptions, and images
Amazon FBA is worth it if you are willing to put in the work. It is not a get-rich-quick scheme but a great way to grow your business. Amazon sellers must find a niche market with little competition and high sales. They also need to be willing to sell multiple products and reinvest their profits back into the business. An Amazon FBA business can be very successful with a bit of effort.
I hope these case studies have inspired you the way they inspired me.
