How to Start an Amazon FBA Business with Wholesale

Amazon FBA or Dropshipping. Which is better?

Welcome to the first post in our 95 Days of Summer Side Hustles series! In this series, we’ll guide you step-by-step on how to kickstart various side hustles, both through detailed blog posts and engaging videos. Today, we’ll be diving into the world of Amazon FBA with wholesale.

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Introduction to Amazon FBA

Amazon FBA (Fulfilment by Amazon) is a service provided by Amazon that allows you to store your products in Amazon’s fulfilment centres. Amazon takes care of storage, packaging, and shipping, making it a convenient option for anyone looking to start an e-commerce business. By using wholesale as your sourcing method, you will be purchasing brands that people are already buying! You can purchase items in bulk at a lower cost and resell them for a profit on Amazon.

Why Choose Amazon FBA?

  • Scalability: Easily scale your business without worrying about logistics.
  • Customer Trust: Leverage Amazon’s reputation and customer base.
  • Prime Eligibility: Your products become eligible for Amazon Prime’s fast shipping.

Setting Up an Account on Seller Central

Step-by-Step Guide

  1. Create an Amazon Seller Account: Go to Amazon Seller Central and click “Sign up” and go through the setup wizard. You will need a valid email address and a credit card.
  2. Choose Your Plan: Amazon offers two plans – Individual (for those selling fewer than 40 items per month) and Professional (for those selling more than 40 items per month). We recommend starting with the Individual plan if you are new, and switching to Professional when you get your first shipment in.
  3. Provide Business Information: Enter your business details, such as your name, address. Depending on the route you want to go, you will likely need to setup a Ltd Co. or register as self-employed.
  4. Verify Your Identity: Amazon may require you to submit identification documents and verify your bank account.

Finding Products and Wholesalers

How to Source Products

Finding the right products and reliable wholesalers is a crucial step in setting up your Amazon FBA business. Here’s how you can do it effectively:

  1. Identify Your Niche: Start by choosing a category that interests you, this could be  anything from electronics to home goods. Although you will be likely to sell anything (I have personally sold Computer Pastes all the ways to washing line pegs), but it’s better to start narrower to find something. You can start going through Amazon’s Best Seller Ranks (BSR) and start looking at the brands on show. You can also use something like Junglescout to give you some product ideas!
  2. Research Wholesalers/brands: Once you have identified your niche, the next step is to find reputable wholesalers. There are several ways to do this:
    • Google: Literally just google it. Using terms like manufacturers, wholesalers, suppliers or distributors will be a great way to find a product you are after. You can search wide in a category such as: Homewares Wholesaler, or you niche down to a brand such as: Addis wholesalers, or you can even go one step further and search for specific product wholesalers like: Addis Washing Line Peg wholesalers. Also worth considering going directly to brands and see if you can get a trade account!
    • LinkedIn: Might seem like a strange one, but LinkedIn can be a great way to find brands/wholesalers. It will recommend companies similar to ones you search, so if you start with searching for pound wholesale on LinkedIn, it will now recommend another couple of suppliers.linkedin sourcing
  3. Evaluate Suppliers: After identifying potential brands/suppliers, it’s essential to check if they have any profitable products:
    • Trade Accounts: Setup a trade account to ensure you get the best discount from a supplier, some accounts will be listed as a trade account at sign-up, but you might not actually get bulk discounts until you contact them!
    • Price Lists: Request a excel/csv price list, and go through each and every single product on Amazon. Note down the ones that look interesting in your own personal tracker – you can use our free one if you like 😉

Tips for Product Sourcing

  1. Attend Trade Shows: Trade shows are an excellent way to meet suppliers in person and open trade accounts. There are a bunch of trade shows/fairs in the UK that some great wholesalers/brands attend!
  2. Leverage Technology: Utilize software tools like JungleScout and BuyBot Pro to streamline your product sourcing process. These tools can help you analyse market trends, estimate sales, and determine profitability, making it easier to identify winning products.

Finding the Right Products

  1. Use Data: Tools like JungleScout and Helium 10 can provide comprehensive data on product demand, competition, and sales estimates. These insights are crucial for making informed decisions about which products to source.
  2. Consider Product Size and Weight: When selecting products, consider their size and weight, as these factors directly affect shipping costs and storage fees. Lightweight and compact products generally incur lower FBA fees, increasing your profit margins. Also worth thinking about the return rate – usually clothes get returned a lot! And also if it is likely to break i.e. glass
  3. Evaluate Profit Margins: Use the Amazon FBA calculator to estimate your profit margins after accounting for all costs, including product costs, shipping & FBA fees. Aim for products with a healthy profit margin to ensure your business remains sustainable.

Validating If a Product Is Good

Criteria for Product Validation

  1. Demand: Use tools like BuyBot Pro to analyse the listing for you.
  2. Competition: Are there some FBA sellers? Is Amazon selling on the listing?
  3. Hazardous Goods: If it is a hazardous goods product, you need to join a specific program with Amazon, and also manage your own shipping to Amazon (not UPS). Recommend steering clear if a new seller!
  4. Profitability: Calculate potential profits using the Amazon FBA calculator.
  5. Reviews: Look for products with positive & recent reviews and ratings.

Useful Software for Amazon FBA

JungleScout

  • Features: Product research, sales estimates, and competition analysis.
  • Benefits: Helps you make data-driven decisions about which products to sell.
  • Sign up and get a discount here

BuyBot Pro

  • Features: Automated deal analysis, profitability calculations, and sales velocity tracking.
  • Benefits: Saves time by quickly analysing potential products.
  • Sign up and get a discount here

Recommended Budget to Start

Initial Investment

  • Product Inventory: £500+ (depends on the product and quantity)
  • Amazon Seller Account: £25/month for the Professional plan
  • Software Tools: £50 – £100/month

Pros and Cons of Amazon FBA with Wholesale

Pros

  • Scalability: Easy to scale with minimal effort.
  • Automation: Amazon handles shipping and customer service.
  • Wide Reach: Access to Amazon’s extensive customer base.

Cons

  • Fees: Amazon charges various fees, which can eat into your profits.
  • Competition: High competition, especially in popular niches.
  • Dependency: Reliance on Amazon’s platform and policies.

Frequently Asked Questions (FAQs)

  1. What is Amazon FBA?

Amazon FBA is a service that allows sellers to store their products in Amazon’s fulfilment centres. Amazon takes care of storage, packaging, and shipping.

  1. How do I find good products to sell?

Use product research tools like JungleScout and BuyBot Pro to identify high-demand, low-competition products.

  1. What are the fees associated with Amazon FBA?

Amazon charges fees for storage, fulfilment, and referral fees based on the category of the product.

  1. How much money do I need to start?

You can start with as little as £300, but having a budget of around £500+ is recommended for better flexibility and inventory options.

  1. How do I manage customer returns?

Amazon handles returns and customer service, making it hassle-free for sellers.

Join Our Free Side Hustle Community: HustleHub

Ready to dive into the world of Amazon FBA? Join our free community, HustleHub, where you can connect with like-minded individuals, share experiences, and get advice from experts. At MentorME, we are committed to helping you succeed in your side hustle journey. We run free calls every single week, helping you start your side hustle and making your first £1k online!