How to start Amazon business

How to start Amazon business under $4000

Amazon is a miraculous company no one had expected this growth in very tough industry with more complexities of competition from the likes of Walmart, and other physical super stores giants in the US. Yet, the amazon of the internet comes along and swallows every thing. Although Walmart still holds primary advantages in the industry, like their ability to have storage everywhere because of their physicality makes it suffer less burden on the logistics sides of thing….Ah this is another story for another day. All we have to know is Amazon is there is going to be there probably for hundreds of years to come.

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Anyhow

Getting to the point on how to start an amazon business …..

This is a guide for you to start thinking about Amazon immediately, and take the burden of thinking where to start and stop overthinking the process and may be you can go further and connect the bits and pieces for your own product that you want to sell on the Amazon platform.

Here are some assumptions to be taken care of to achieve the said budget (less than $4000)

  1. Sell on the Amazon US store (assuming you are based outside US)
  2. Retail Cost of the product (i.e. the amount that we will sell it for on Amazon) will be $20
  3. Landed cost of the chosen item (product manufacturing, packaging, plus shipping all the way to Amazon warehouses) is $4.
  4. Fulfillment method is FBA (fulfilled by Amazon).

Let’s assume the FBA fees is around $1. In case, you don’t know what FBA is. FBA is one of the fulfillment methods you can use to deliver your orders to the end consumer. the other one is FBM, we have different blog for this method. For now we can stick with amazon fulfillment method for less complications.

How to start Amazon business under $4000

4. Size – product size is standard – basically if you would have to imagine, the item/product should fit in a shoe box.

How to start Amazon business under $4000

5. Weight

Light enough to ship by air. For simplicity now you can ask your supplier if the product can offer the best prices in air shipping. the general rule of the thumb is that “If you can get your goods to fill or near-fill the standardised Unit Load Devices (ULDs) that fit the front hold, you will get the best rates. Their internal dimensions are (approx.) 307 cm long x 213 cm wide x 193 cm (max) high”.

6. Purchase – 500 units to sell.

You could obviously start with less amount in the beginning for like 300 units which is still save and proper. If you have done your research properly before selecting your products, most probably with the right approach, you are going to stock out soon if the amount is less than 100 lets say. This is will effect your ranking in amazon as one of the criteria in ranking and keeping it high is to always have a ready stock. Another reason, it’s usually cheaper to buy bigger quantity from Aliexpress.

7. Promotions – 50 units to give away for promotions

How to start Amazon business under $4000

As you can see from the page of Amazon Giveaway which Amazon has created to help promoters setup their campaign and deliver prizes to the winners.

Giveaways help you grow your customer base, increases your brand loyalty, promote new products, drive leads and sales, and finally creating fun experience for you target audience.

Interested parties can go to the Amazon Giveaway page or find the eligible items they wish to offer as prizes on Amazon and click “set up a giveaway,” after which they will be prompted to enter information including details, custom content and the number of entrants who will receive the giveaway items.

The initiative will be promoted by Amazon via Twitter, Instagram, Facebook, Pinterest and Snapchat, using the hashtag #AmazonGiveaway.

8.Target ROI – Minimum 100% Return on Investment

Our intention here to acheive 100% ROI at minimum, and so we move forward for our next bootstraping this business.

9. Type of product: Private label products.

Private label products are products which gives the right to put your own brand name on the page and item. It is usually manufactured in China, and while talking to the suppliers you must ensure that sought out products are for private labeling.

 

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Breaking down the cost 

1. Essential to have category

2. Second in priority elements

3. additional items category (Strongly encouraged to have)

Essential elements category consist of 4 parts

1. Samples

2. Inventory

3. Promotions

4. Amazon account

Samples.

Why do we need to have samples in the first place. although it is obvious to have samples before purchasing to determine which quality you should go for. One of the important principles in business is to study the market or the niche you planning to enter. the study will allow you to know your competitors strength and weakness and so on. We can have further explanation of how to conduct your research in later article. however, these weaknesses can be seen on the Amazon listing of the same product. For example, you want to sell yoga mat. first you go to search bar, write the keyword, and then check the listings. Visit every product page and check what customers are complaining about and make sure you fix that in your product. Thus, having the sample here not only just to ensure quality but rather making sure these weaknesses and defects are address properly.

Tips on how to get samples from Aliexpress as follows:

Select 10 suppliers and Email them [This is done after product research and finding the right suppliers]

Narrow down to 3 suppliers based on couple of factors like time took them to reply, detailed responses [this shows quality in their parts] and so forth.

Getting samples from each supplier

Each sample estimated cost is $100 to get samples delivered to you.

THE COST

A. Samples

So that is $100/per sample, 3 Samples * $100 = $300

B. Inventory

500 units to purchase

Product cost is $4 per unit, includes product cost and air shipping

you can clearly here reduce the cost by ordering fewer units or cheaper products

This amounts to $4/per unit, for 500 units = $2000

C. Promotional Giveaway

50 products giveaway to get some reviews and improve your organic ranking right  off the bat.

The cost here will include product landed-cost which I have assumed earlier for about $4.

The total cost will be 50 products x $4 = $200

D. Amazon Professional Sellers Account

Individual account cost $1 per item sold, and professional is $40 per month

Profiting is when you sell about 10 items /day, only professional account makes sense here economically.

With Professional account we can do things like; generate promotional codes for promotional giveaways, and more important features which you can’t miss.

This cost is not spent upfront, as it will be deducted directly from your seller’s account.

The monthly cost of being a seller on Amazon is therefore $40 per month.

Second in priority elements

Sponsored Ads budget

It is important to start right off the bat selling. Sponsored ads will help boosting product sales, and more sales will get more reviews especially if you do follow-up email campaigns

Therefore, Helps in increasing organic ranking for your main keywords

$30 per day for 30 days is $900

Additional items category

don’t need to launch, but it thoroughly polish product launch

these items are not must to start your journey in Amazon, but could give an enhanced version of your listings visually

A. Graphic designer

Tremendous asset in adding legitimacy to your brand

Can craft a beautiful logo, package design, touchup your product photography, lifestyle shots, graphics to differentiating features

the cost is here if you using one of these platform like fiverr or Upwork for about  $200 for design on logo, packaging, and photoshop services.

B. Product photography

these products photo could have features like white backgound, good lighting, and at least 1000 pixels on the longest side of the image in order to meet minimum resolution. also if you can include the hover-to-zoom effect.

High Quality product photographs at $25-$50 per image.

lets assume you want 8 images, and negotitate them for $300

$300 for 8 professional quality product images.

In Summary

Essential elements category 

Total Cost:  $2500, below shows in details:

  • Product Samples: $300
  • Inventory: $2000
  • Giveaways: 50 Giveaway products x $4 (landed cost) = $200

The amazon professional account: It will be around $40, but this is not going to be summed here because this amount is deducted from sales income.

Second in priority elements

  • Total: $900, below shown in details:
  • Sponsored Ads (Pay per click Amazon): $900

Additional items category: (very Recommended)

  • Total: $500, below details:
  • Graphic Design: $200

Product Photography: $300 for 8 professional qaulity product images.

S/N

Category 

Cost

1

Essential elements category

$ 2500

2

Second in priority elements

$ 900

3

Additional items category

$ 500

Total

$ 3900

In case, you have lower budget and you want some cost reduction in your planning.

You can, for instance, use Aliexpress to order smaller Quantities. This is clearly has an advantage to allow to test the water before investing into bulk amount.

The downside though is that the cost per unit is higher, and you cannot necessarily get customization that you want (product specifications tweaking,  branding in terms of making your business a private label model, packaging, and more). Remember that Aliexpress sellers are often resellers themselves and won’t have the ability to modify any thing.

Aha Now you don’t have an excuse. I have shared with you a valuable information and try to make use of it and make Mama proud. honestly though, if you have been thinking about starting Amazon use the information for your advantage and share your experience with us here in the comment. We would like to hear from you or drops us an email.

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