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Amazon FBA FAQ

MoreThanBargains.com is a resource for sellers using Fulfilled by Amazon (FBA).  This first post answers some of the common questions people have about FBA.

What is FBA and How Does It Compare to  Merchant Fulfilled?

FBA is where sellers find items to sell on Amazon and then ship them to Amazon so they take care of orders and customer service.  The biggest benefit of FBA is that Amazon handles fulfillment and customer service so you don’t need to worry about sending individual items to customers.   Another main benefit is you can sell FBA products at a higher price than merchant fulfilled since the items are coming directly from Amazon and Prime members get free shipping.

What Should You Sell?

You should sell any product which you can list and is profitable.  The basic rule of them is if you buy a product for $10, you should be able to sell it on Amazon for $30.  This way your product cost is $10, Amazon gets $10 in fees and you get $10 in profit.  While not everyone shoots for 100% ROI like in the example above, it’s good to start off with strict thresholds like this when starting out.

How Much Money Do I Need to Get Started?

The more you have to invest, the quicker you can grow your business if you don’t take profits.  But many people start with $100 to test the waters to see if this type of business is a good fit for them.  You could even start with less than $100 if you source products from garage sales, estates sells, or other prices where you are purchasing items for a very low cost.

Where Do You Find Products for Sale?

Start with your own home and see what you are not using.  I recently cleaned out my garage and found many brand new items which had been sitting around for a year or more.  Once you’ve cleaned out your house and garage, ask your family and friends if you don’t have much of a budget for sourcing items.  If you do have a budget, check out garage sales, retailers and online stores.

Does Amazon Have Restrictions on Products You Can Sell?

Yes they do.  While most categories and products are not restricted, some are.  Amazon has gated categories where you need to gain approval before you sell.  Examples of restricted categories includes grocery, health, beauty, jewelry, clothing etc.  Click here for the complete list.

Can You Be Successful On Amazon If You Are An International Seller?

Yes you can.  There are many successful sellers who do not live in the United States or UK.  The key is to source products unique to your country or you can source online and have another company ship the products to Amazon.

Is It Difficult to Prep Items for Shipment to Amazon?

In general, most items do need prep but there are some exceptions.  Fortunately, Amazon provides a handy matrix to help you out.  If you need poly bags, check out these suggestions for where to purchase them.

Is It Expensive To Ship Items to Amazon?

If you are an international seller it can be pricey but for those in the U.S., you can use Amazon’s preferred carrier which is UPS.  The cost for UPS through Amazon is a fraction of what it is if you ship something on your own.

How Do I Know If I Should Purchase a Product?

First determine if the product is profitable.  Amazon has a calculator for sellers to determine if a product is profitable.  Then make sure it has a decent sales rank.  Sales rank is similar to the Top 40 Songs.  The more popular a song, the lower number it has.  Sales Rank on Amazon is the same where a product with a rank of 100 sells faster than a rank of 1000.

Most people purchase products if the sales rank for the product is in the top 10%.  Those with lower risk tolerance often go under 5% or even 1%.  Others use a strategy where they purchase items in the 5-10% range since they have less competition.  Of course, those with a higher sales rank take longer to sell but usually there are fewer offers.  Here’s a great resource to help know the number of products in a category and relevant percentages for sales rank.

What Tools Should I Be Using?

If you are sourcing products in retail stores, you should use a smart phone app to help you determine the sales rank and profitability of products.  While many programs do this, I use FBAScan since it also has a database you can download to your phone so it makes scanning faster.  You will also need a smart phone with a camera or handheld scanner to scan the upc barcodes on products.  Here’s the wireless scanner I use when scanning products in stores.

To make shipping as efficient as possible, I also purchased three other items including a wired scanner, shipping scale (which I’m not linking to because I don’t like the one I purchased), and best of all InventoryLab.  This program helps to make shipping, accounting, and inventory management much easier.

Should I Get An Amazon Professional Sellers Account?

When you first start selling, you don’t really need this but as you grow it provides some very helpful reporting tools.  The cost for the professional account is $40 per month.  Most people will transition to being a professional seller when they are selling 40 products per month because this offsets the .99 fee Amazon charges you each time an item sells if you do not have the pro account.