It's important to take the time to really think about all the costs of setting up an Amazon account, from a successful social media presence to referral fees, grocery shipping costs, and more.
Since we are introducing the concept of Private Label (PL) for the first time, it is fair to first explain what PL stands for. In short, private label products are products manufactured by one company to be sold under the brand name of another company. From an Amazon FBA perspective, doing a PL business means you will work closely with manufacturing plants (most likely Chinese) to create a "unique" product with your brand logo imprinted on it. There are other ways to profit on Amazon such as retail/online arbitrage or wholesale, but in this guide, we will mainly focus on Amazon's private label FBA model.
Without further ado, let's break down the start-up costs of starting an amazon seller accounting services and give you some basic strategic knowledge:
Mandatory expenses:
- Amazon Pro Account– $40 per month (It is recommended to create a free Amazon Seller account during the product research/development phase and then upgrade to the pro version).
- Total Product Cost- You can definitely start with less, but ~$1500 should be enough for 100-1000 units of what you decide to sell. This includes development, production, delivery and PPC ( Pay Per Click ).
Pro tip
When you launch a new product, always start with relatively small quantities to test the market.
Optional but recommended costs:
- Product Research Tools- Jungle Scout Chrome Extension ( $97 or $197 flat fee ) + Jungle Scout Web App ( $40 a month - use 1 month until you find your product, then cancel your subscription). There are other product research tools like Helium 10 and Viral Launch, do your own research and pick one.
- Brand Logo- You can find a freelance artist to design your brand logo for anywhere in the world. $5 to $100 .
- Photos of your product- Pay a professional photographer to take high quality photos of your product for ~$20-$100 .
- Barcode- $ 5
- Product inspection- $100
- incorporation- preferably an LLC - $50 to $500 depending on the state where you choose to incorporate.
The total cost ranges between a minimum of ~$1500 and a recommended amount of ~$2000 .
This is a relatively small amount of money to start a business. However, as previously stated, Amazon FBA requires very high cash flows and we recommend starting with 2.5x the total cost of the product as you will need a large buffer in case your first product is successful and sells out within the first month or so. Togo.
Leaving the store with your first product is a big no-no, because once you're in stock, your product will plummet or even disappear, and digging yourself out of that hole will cost you tons of money. And even then nothing is guaranteed. Always plan your inventory accordingly.
Starting an Amazon FBA Private Label
Now that you're familiar with the Amazon FBA process, we can move on to the most important part of the guide - and presumably the main reason why you're here - to start your own FBA private label business.
The five steps from zero to hero that you need to complete can be broken down into two meta sections:
- a) Steps to take before your product reaches the Amazon fulfillment center:
- Product / Market Research
- Product search
- Go to Seller Center and list your product
- b) The steps you take to successfully launch your product after it goes to Amazon Fulfillment Center:
- Delivery of your product
- Launching and marketing your product - first sales and reviews
The way to scale your Amazon FBA private label business is simple: go through the same process and add more products. Rinse and repeat.
Launching and marketing your product - first sales and reviews
Sales speed is king. You've found a winning product, you've found your supplier, you've arranged shipping, and you've created a listing - now all you have to do is launch your product properly.
What does it mean? This means you should be getting sales and positive feedback as soon as possible after launch. This will allow you to "notice" the A10 algorithm and Amazon will rate your products higher, resulting in even more sales. The goal is to get you on the first page of Amazon (for your target keyword), which is where most of the sales happen.
The lesson here is that you can't expect your product to sell organically when you first launch it, or heck, even before you get it on the first page. You must do your best to get the product in front of the right customers. You need the right marketing. You have to spend money to make money.
Amazon Advertisements
As you enter into this, you must understand that we need to butter both sides of the bread at the same time. You don't wait for your friends or family to buy your products, or hope that your advertising campaign generates enough sales for you to appreciate your product - you attack it on all fronts at the same time. You optimize your ad, run giveaways, and pay Amazon to show your ad above everything else at the same time.
Finally, one more piece of advice before we end with this: if you don't have a disposable income, don't buy any courses that will teach you how to sell on Amazon FBA. We're not saying good courses don't exist, all we're saying is if you have the time and are willing to put in the effort, you can learn how to sell on Amazon for free. Our guide is more than enough to get you started, and there are many more guides, articles, YouTube videos, podcasts, e-books, and free courses to get you where you want and need to be.
