This post marks the start of my Amazon FBA UK business. I am making 2018 the year for getting things done, and building multiple streams of income. For the past few months, I have been researching how to start selling on Amazon, and now have a solid understanding of what I need to do in order to begin selling, and how to go about my product research in order to find a profitable, unsaturated product. This post will outline the steps I have taken so far, to find a product I would like to sell, and what I will have to do in the near future.
What is Amazon FBA
Amazon FBA (Fulfilment by Amazon) is a business that anyone can start from home, and depending on what product you decide to sell, it doesn’t require that much of a startup cost. The way it works is, you find a product that you want to sell, then source a Chinese supplier, order the product and have it shipped to the Amazon warehouse, then list it on Amazon, and when you make a sale, Amazon deal with the shipping.
There are a number of different business models around Amazon FBA, you have private labelling, which is what I will be focusing on to start with, retail arbitrage and then you have brand building, which is my end goal with Amazon FBA UK.
To begin with, this is the Amazon business model I want to take on. I find a gap in the market, then find a supplier to manufacture the product with my own private label on it. I don’t care what the product is, as long as it is within my guidelines, and there is not too much competition.
I have not found a product as of yet, but I will explain below how I am searching for the ideal product, and what specifications I want my Amazon FBA UK product to have.
Once I find my first profitable product, I plan on adding more products to my line and expanding the business further, possibly reaching out to Amazon in the USA and Europe.
Brand building is my end goal with Amazon FBA. I would like to establish a brand in a niche that I know very well, I already have an idea in mind what this niche is, but I would like to get my feet wet, and build some cash flow with the private labelling business model before I try building a brand.
Margins with brand building are much higher than that of private labelling, but it is also a lot harder to find a profitable niche. The niche I have in mind may not be profitable, which is why I plan on private labelling a few products first to see how things go.
If I manage to build my own brand, I can then branch out, and build a website for the brand, and begin selling from it, so I will be safe if anything happens to Amazon. I will also have a far higher chance of getting multiple sales from the same buyer, and if he/she is interested in one product, chances are, they will be interested in more of the items in my brand. This will lead to more sales in the long term, and a long lasting business.
Starting an Amazon FBA UK Business
Finding my Product – Product Research
The first step to starting an Amazon FBA UK business is finding a profitable product. There are a number of different qualities that I am looking for in my first product which are outlined below. Whilst doing my product research, it is very important to find a product with the below criteria, as if I don’t, I could risk going bust, or risk selling nothing at all, so, product research is a vital part of starting an Amazon FBA business.
- Non Breakable
- Light weight
- Non Electronic
- Bulk Price < £3/item
- Sale Price on Amazon £12 or greater
- Can be Private Labelled
- No magnets
- No knives, aerosols or dangerous goods
I have specifically chosen to have these as properties of my product for various reasons. Non breakable, thats pretty obvious, I don’t want to be selling glass jars or anything like that, breakable things can get damaged in the post easily, and I don’t want to have to deal with returns due to items arriving broken, this may also damage my seller reputation, and I want to have as high of a quality of a business as possible.
I want my products to be small as this makes them easier to handle and ship. Ideally, I want to try and keep my products below 30cm x 30cm x 30cm.
This is related to the above, being light weight makes shipping easier and less expensive.
I do not want to be selling electronic goods to start with, I would rather not have problems with items not functioning. I have sold electronics on eBay before and have problems with items not working, people not knowing how to use them, and so on, so, for now it just makes life easier.
Bulk Price Less than £3 per Item
I want my bulk price to be less than £3 per item to allow me to make enough profit to make doing this worth while.
Sale Price Greater than £12
Again, related to above, I need the selling price to be above £12, but this all depends on the item I decide to sell. Once I find my product, I will know more about my selling price on Amazon.
The reason I would like my price to be above £12 is I would like to have a budget to run some PPC ads on Amazon to help my product get in front of potential buyers. If the price is below £12, the chances of having money left after my profit are slim.
Can be Private Labelled
This is very important, I need to make sure that whatever product I buy, can be private labelled, so there needs to be a place on the product which I can insert my private label, and also need to make sure the supplier is willing to do this.
No Dangerous Goods
I will not be selling knives, aerosols, sprays, liquids, anything dangerous, sharp, or can cause damage to a person. I don’t want to have to deal with claims.
Finding the Product on Amazon
This is the hardest part of the Amazon FBA UK business, finding a product. In order to find a product with the qualities that I have outlined above, I will be making use of a website called Jungle Scout.
Jungle Scout is a web app and chrome extension that allows me to do product research on items listed on Amazon, it displays details such as sales volume, competition, and so, having at least the Chrome extension is a must. For now, I will just be buying the Chrome extension until I get further into the business, so, finding the product will be a little harder without the web app, but, I don’t mind a challenge, plus it leaves me with a little extra cash for buying products.
Assessing the Competition
When searching for my product to sell on Amazon FBA UK, I do not want to enter a market that is very competitive. I will be looking for products that match my criteria above, but also some other conditions which will determine how profitable and competitive the market will be. Ideally, I am looking for an item with a high number of sales, but a low number of sellers and reviews.
I can then make my listing better than the current sellers, and also make my product imaging better in order to make my product stand out from the others, and hopefully generate sales.
The conditions I am looking for in order to assess the competition are outlined below.
- Average Monthly Sales: 300+
- Best Seller < 350 Reviews
- Number of sellers with > 200 = 3 or less
- Number of sellers with 300 reviews in top 14 listings = 1 or less
Average Monthly Sales
When doing product research, I would like to find something that has at least 300+ monthly sales. This will ensure that I will actually be able to sell my product over the course of a month or 2, depending on how many products I order to begin with. At present, I am looking to start small, so I will begin by ordering around 300 products, but, again, this all depends on the price I am buying them from China at.
Best Seller Reviews
As I am not looking to enter a very competitive market in the Amazon FBA UK marketplace, I will be looking for products where the best seller on Amazon has less than 350 reviews. I do not want to be competing with someone with 1000 reviews, as this will be very hard work to actually get any volume of sales.
It is not impossible to do, but I think it is wise to stay away from these products to begin with.
Number of Reviews in Top 14 Listings
When using the Jungle Scout Chrome extension to do my product research, I will be looking for a product that, within the top 14 sellers, a maximum of 3 of them have no more than 200 reviews, and no more than 1 of the sellers has more than 300 reviews, ideally, the seller with the most reviews will be the best selling item.
Hopefully this all makes sense to you, and helps you out on your way to starting a profitable Amazon FBA UK business.
I will now be going to do some more product research, and I will come back when I find my product, and outline how I went about finding it, the pricing, and what I am going to do next.