What Is Amazon FBA? How Does It Work? Fully Explained!
What Is Amazon FBA? How Does It Work? Fully Explained!
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📦 Free Amazon FBA Product Course
So if you've been trying to figure out how does Amazon FBA work, then this video is for you. I'm gonna explain how Amazon FBA works, how you can sell products on Amazon, what the process looks like, the pros and the cons, but also how you can actually get started and find your first product to sell on Amazon this year.
Real quick, my name is Mark Kelly, and this is a brand new channel. If you could do me a huge favor, hit the like button and subscribe, and I'll continue to post about how to help you make more money on Amazon. Every week if you subscribe, let's dive in. Also, if you want a little bit more help with how to find your first product to sell on Amazon, I have a free guide down below.
It is my product research guide completely for free, and it'll give you a few more tips on how to find the best product to sell on Amazon. Now, the term FBA stands for Fulfilled by Amazon because essentially what you're doing is you're selling products on Amazon's platform, the platform. That has over a billion visitors every month, and also for every dollar spent online in the us, 50 cents goes through Amazon.
So you're leveraging their platform and you're selling products on their website, and also you are sending products to their warehouses. And so whenever someone buys the product, Amazon will actually pick it out. They'll put it in a package and they will ship it to their door, and here's why you need that.
It's because they offer Prime, which is one or two day delivery, and right now people want their stuff very, very fast. And so with fulfilling by Amazon. They actually have the ability to ship it to people's houses immediately. And also it takes the weight off of your shoulders. So the only thing that you really need to focus on is finding the right product to sell product research, essentially.
And so that's really why it's so magical, is because you're leveraging what you can do the best, which is product research. You don't have to deal with any, like the packaging, the shipping. Um, any of that headaches, returns, whatever the case may be. All you have to do is focus on finding the right product to sell.
And so, for example, let's say I am selling this RFID wallet. It's one of those wallets that prevents you from getting your card information stolen or scan or whatever the case may be. And this is selling on Amazon by many sellers, okay? Not just one person. There's not a patent on this office. Anyone can sell it.
Really for you to be able to do that, you have to find this product essentially, usually on Alibaba or somewhere, and you're gonna be able to buy a bulk of these items and ship it to Amazon's warehouse, and so that whenever someone buys the product, after you create your own listing and your shipping plan and all that stuff.
Amazon will actually ship this wallet out to the customer and you'll get paid, and they will take a percentage proceeds of that overall product sale price. Now, this is a lot different from FBM, which is fulfilled by merchant because you can take on the shipping process yourself, but essentially if you don't want to store products at your house or anything like that, that's why FBA is the best route to go.
And so essentially, let's say if I sell this product for $10, okay? Usually a good product price is about. 30%. And so you want to use the 33 33 33 rule, which is typically about 33% of the product price will go towards the cost of the product and also the cost to ship it out essentially. And then the other 33%.
The cost to maybe advertise or promote the product, and that leaves you with a 33% margin. Now, if you can do this correctly, you actually do not need to pay much in advertising. If you know how to rank a product organically on Amazon, by it being just a quality product by keyword, research, keyword optimization, images, bullet points, et cetera, then that's how you can earn even more by not having to pay money with Amazon ads or PPC or anything like that.
The reality is, is you don't have to create a product from scratch. You can do a private label product, you can do wholesaling, you can do online arbitrage, retail arbitrage, but essentially there's so many different ways that you could start selling. But all really you need to focus on, it's just what product you wanna sell.
What product is in high demand, what product is in low demand? What product has high competition, low competition. There's so many factors. And also I just created a different video, Ali, linked up above, which goes into the product research. Process. So if you wanna start there, I recommend watching that and you'll get a little bit more help on how to actually find these products.
Now, there are pros and cons to FBA. I would say one of the biggest pros is you can do this all from home. As long as you have a computer, you don't have to worry about storing the product, anything like that. And also the con maybe is the fact that you have to really focus in on product research because it all is dependent on that.
And also you are selling on Amazon's platform, so you are gonna get an instant. Boost in demand because there's gonna be a huge audience of people that could potentially buy your product. Now with that being said, you are, um, operating under Amazon's like rules and guidelines and so you are kind of subject to, uh, their policies and things like that.
But this is really a great start if you wanna start selling on your own website. Amazon is actually a great place to test product ideas and to see if it sells, sells well on there. Then it's gonna sell really, really well on your website as well. And eventually you can drive traffic off Amazon onto your website and essentially earn more through there because you're gonna be owning that traffic.
And that's really how Amazon FBA works. And like I said, if you wanna get started, I will leave a link down below to my guide and I'll see you in the next bit.
