I’ve debated for a while about doing a post on this subject of what you need to get started selling via Amazon FBA part time. Its not that I didn’t want to go back to the beginning but rather I know there are many other similarly intended posts by other talented FBA gurus that have been selling much longer than us. However, what I failed to recognize in my shortsightedness was that everyone’s starting point ideas were different so I do feel like going back to our beginning stages will be helpful to those in our shoes of doing FBA on a part time basis.
Amazon Pre-Signup Stage
The first step in the FBA process is to set up a professional business. Amazon requires you to be an actual business with a real identity and a federal business EIN. Setting up some form of official business entity (ie. LLC, S-Corp, C-Corp) is the smart move to protect your assets. In Pennsylvania where we reside it is very easy to set up an LLC using the state’s own website portal or you can use a service like LegalZoom to set up your business. Of course I am not an attorney or accountant so take this advice with that being stated and contact a local professional if need be. Make sure to file for your Federal EIN as well as Amazon requires this to get set up selling via their Fulfillment Services.
During this pre-signup stage I would also do a couple of other things that I did not do. First, once your business is established you need to set up a UPS shipping account. Make sure to use their free shipping label service under the ‘Order Supplies’ area. Second, start to gather large boxes for shipping. Its never too early to begin doing this as you will need plenty of them. See my blog post on where to find free boxes as a good starting point.
Amazon Signup Stage
Once your actual business is established, you can now apply to sell on Amazon and go through their steps which are very straightforward. The one decision you will need to make is whether to be an Individual or Professional Seller. Individual Sellers pay $.99 for each listing while Professional Sellers pay a flat $39.99/month with unlimited listings allowed. If you are at all serious in your FBA venture you need to set up the Professional account. Beyond the cost efficiency of the flat fee for Professional accounts, many of the apps and software that I will mention soon require you to have a Professional account including Profit Bandit and Inventory Lab. Don’t skimp out here and think you’re saving yourself money going Individual because you’d actually be doing the opposite.
You will be required to pick a store name for your account. Of course many store names are already taken but its still early in the game so never fear. I would highly suggest that you choose this name wisely. If you aren’t sure if you are going to be specializing in a certain category you should certainly choose a more generic name. However, if you are 100% sure that a majority of your products for sale will be Sports related then by all means make your store name reflect this. Unfortunately I don’t recall how long it took for this signup process to be completed but I can say it was under a week if not quicker.
Gathering Up the Needed Tools & Accessories
Now its time to get the things that you need to be a real FBAer. It goes without saying that you will at minimum need to have a smartphone at your disposal to do the scanning of barcodes on items you are sourcing. Some more experienced FBA sellers purchase higher end bluetooth scanners not relying on the internet access but that’s for later.
First, lets talk scanning apps. If you don’t understand what this entails, just remember you will be manually scanning barcodes of items to see if you can make $$ selling them on Amazon. Go download the Amazon Seller App. Its free and will come in handy during your sourcing trips as a double-check and occasional backup for items that don’t show up on our favorite app which is Profit Bandit. Profit Bandit (PB) is $9.99 per month and can be added to as many phones as you like under a single Amazon seller account. PB allows you to view the items that you scan in terms of their Amazon sales ranks, competition (both FBA and Merchant Fulfilled) and most importantly what your potential profit per sale of that item will be. There are many other popular scanning apps that are connected to their own paid software systems, Scanpower and Scoutify/Inventory Lab come to mind, but we currently use Profit Bandit and it does the trick. For specific settings on PB do a quick Google search instead of going through that right now here.
Next, lets start thinking ahead a bit and getting prep materials ready. Here’s the bare bones basics that you will need in order to successfully process, pack and ship for FBA (note: some Amazon associates links below)
- Space! Yes, you will need floor space and table space. Get a nice sized table to make things easier on your back.
- Large Boxes (We source these for free from local stores) – Ones that can hold 50 lbs of inventory or more to minimize shipping costs are to your benefit
- Box Cutters/Scissors
- Black Permanent Markers – Dollar Tree has good ones
- Printer – We used the Brother Laser Printer Model here. It works well for us so far but other sellers use single label thermal printers such as the Dymo
- 30 Up Printer Labels – If using a laser printer you will need plenty of these puppies, one for each of your items shipped into Amazon. Here are the ones we use and use and use…
- Box Shipping Labels – Get these for free from your UPS account
- Polybags with Suffocation Warning – Many small or medium sized items will require polybags with suffocation warnings on them in order for Amazon to ship them to your customers. You will need 3-4 different sizes depending upon your item sizes. We like to use the self-sealing varieties of polybags but other sellers I know like the ones you seal with a special heat press that will cost extra.
- Box Packaging Tape – I use both dollar store box tape and have used Duck Brand tape in the past as well.
- Scale – We use the Weighmax 2822 which is relatively cheap and works great
- Stretch Wrap – Duck Brand 5 inch wrap is what we use and it works just fine. Comes in very handy for multi-packs and items with openings that are not allowed via Amazon
- Box Resizer – If you do anything, make sure to get one of these. It places uniform score marks on the box to allow easy resizing and helps immensely with reducing the need for filler in your shipments.
- Bubble Wrap – Duck Brand once again.
- Filler Paper – We’ve gotten away from using this lately but when we first began we used a lot of filler paper for shipping purposes. Duck Brand once again to the rescue.
Those items listed above are truly what you need to get started doing FBA. Right now you might be thinking “I can handle those things” and you’re right. Relative to other ways to make extra income online FBA is without question the most straightforward method to do so and get started quick. You don’t need a website. You don’t need a college degree. All you need is some desire, hustle and a little bit of planning to start your path.
FBA Newbie Common Mistakes to Avoid
Ok, you’re ready to get out and hit the stores to find some good items to profit on. Let’s step back a bit and discuss some mistakes that newbies (including us when we got started) often make when going out and sourcing their products.
- Forgetting The 3X rule. In general, you want to item you buy in store to sell for at least 3x that of your purchase price. For example, if you buy an item for $10 in store you’ll want to be able to sell it on Amazon for $30 minimum. That’s not always easy to find and thus the roadblock many have doing FBA successfully. Amazon’s fees plus shipping costs plus potential returns is the reason for this rule of thumb. Always keep this in the back of your mind as you’re looking at items to scan.
- Not Double Checking Competition- Profit Bandit is not foolproof. By that I mean every time you find a great deal using PB you need to double check via the Amazon seller app just to be sure the competition and pricing are correct. There are plenty of times where it appears there are 2 FBA sellers when in reality there are 15+. Talk about a kick in the ___.
- Hazmat and Gated Categories – Make sure you are approved in the categories of products you’re sourcing. Believe me, we purchased plenty of health and beauty items before realizing we weren’t allowed to sell them yet. Also, make sure the items are not considered hazmat by Amazon. Common hazmat items include aerosol sprays and some chemical based items. Live and learn.
- Buying/Selling Less Expensive Items – Amazon’s fee structure for FBA is set up in favor of higher priced items. A big mistake many make is finding items for $2 and selling them for $10. Amazon takes a minimum cut regardless of the item being sold so you’re better off aiming for higher sales prices.
- Oversized Items – Don’t get me wrong, we sell plenty of oversized items but if you’re doing so make sure you factor in not only the additional storage fees but also increased shipping costs and difficulty of handling of those items. Just know what you’re getting into.
- Amazon As Competition – Too many FBA sellers completely avoid items being sold by Amazon. Sure, if the margins are low I would avoid competing against the big dog as well but if there’s room to work with in the margins, don’t let that stop you. Just set your price slightly below Amazon’s and yours will sell too unless Amazon sees you as a longer term competition and undercuts you.
- Don’t Ignore the Rankings! – Amazon GIVES you their sales rankings. It doesn’t get much easier than that! Use FBA Mastery’s rankings data and make sure you follow their rankings % advice to a T. Don’t go buying items ranked 1,000,o00 in Pet Supplies and expect to sell them…ever.
Ready to Start Making Money?
Slow down there, partner! The money will come if you just stick to the plan. Go out and start finding those clearance aisles getting rid of items someone somewhere wants at full price. Check out your local thrift stores for brand new, unused goods you can sell for 5X the purchase price. Don’t forget about garage sales or local discount stores as well. There are many sources to find great deals so try them all and get going on your FBA adventure.