10 Key Lessons for the Amazon FBA Beginner – Info Entrepreneurship
When you are just starting out in business or in something that you haven’t done before it is inevitable that you will make mistakes along the way. You can be the biggest genius in your own field and you could argue that you’re fairly intelligent. This applies to any Amazon FBA beginner too.
But trust me when I say you will have some sour pills to swallow and if you are indeed that smart, you will learn from other people’s mistakes.
And if you are an Amazon FBA beginner destined for success, you will find 10 valuable tips on what to learn and make conclusions from. Here they are:
- Business mindset
- Capital requirements
- Product research
- Innovation
- Non-contributing expenditure
- Business entity
- Knowing your numbers
- Vertical vs horizontal expansion
- Set it and forget it attitude
- The Long run
You may or may not be a huge redditer but even if you dip your toe a little bit into the forums, you will find loads of wannabe Amazon FBA sellers whose first step is to buy all sorts of tools without having a great amount of foundation.
Business mindset
The first thing you need to understand that “if you’re serious about business, treat your business seriously”. My mentor and co-founder of one of the best Amazon seller courses out there has got it right.
If you want to do this as a hobby, you are more than likely to fail.
You must replace “buy” with “invest” and “failure” with “lesson”.
And speaking of investing: whilst there are generally speaking two ways you can create a business, either with investing your time or your money, it is your fat piggy bank’s content that will get you off the ground.
Capital requirements
Far too many people out there claim that you don’t need a lot to get started with Amazon FBA. A “lot” may be subjective for many, but it is probably safe to say that you’re not going to be able to do anything with a couple of hundred dollars.
Think about the investment you need to make into your stock, the transportation of it, not to mention some business expenses like founding a company in the first place or getting your product photos taken by a professional etc.
If you’re an accountant who is super good at taking tasteful photos with a knack and loads of experience in international logistics and an excellent multi-tasker who doesn’t sleep, then you may be able to do a few things yourself (just to make sure, I was being sarcastic here)
Otherwise, a lot of processes that just part of operating or setting up a business will carry a fee, something you need starting capital for.
And when you do have the money required to make even more money, you go on a hunt:
Product research
Many “experts” on the internet tell you to use this tool and that tool and you can find products that will sell well really easily. You must not fall for these claims, finding the optimal product rests on many different factors and it can be indeed difficult to find golden opportunities and niches.
Product research may be the sole reason you make it as an Amazon FBA beginner, or if you fail. This is why it is so important to master a process that will teach you to look at “markets” and gauge competition and demand among other things.
Do not take this lightly, focus your efforts in this area and ensure you are regularly filling up your product opportunity pipeline.
And when you find something that is worth a go, don’t be a “just like the rest” kind of seller.
Product innovation
This is where adding something more to the product comes into play. You must remember that products, when boiled down, solve simple problems. Have a good think or apply some research and use your data on how else this product can achieve its purpose better, faster, cheaper, more conveniently and so on.
By improving upon a competitor’s product offering you immediately stand out and achieve a USP or unique selling point, something that is a lot more valuable to focus on than price war.
Sometimes you may find an item where you can only compete on price alone, but you will want to avoid and limit these products in your portfolio. Think about how many people are out there who may be able to undercut you with their prices.
The next thing you will see apart from your dwindling profits on these items is the crack manifesting in your business foundations.
Bottom line: innovate!
And this does not necessarily mean buying “toys” and technologies that don’t contribute directly to your business growth. Far too many a times the enthusiastic Amazon FBA beginner who is more geeky start shopping a number of third-party tools. Unnecessarily.
Non-contributing expenditure
And these tools are not something your customers will buy from you, will they? Besides, do you even need these tools as an Amazon FBA beginner when you don’t even have products in your Amazon account?
Or even if you do have some products can you really make the most out of these tools with 50 pageviews a week?
But you will have to shell out somewhere between $30 to $90 depending on what these “toys” do a month and if you think that you may not really start producing impressive sales and profit results in less than 3 months you could end up paying the price you could have invested in about ten new product samples or even some Amazon PPC where your return is much greater.
The mini-lesson here is that don’t get excited about buying technologies you will not need until at least one of your product is getting a min of 1,000 page views a month with a min of 20% conversion rate at a min profit of $5 a unit.
There are some things that you do need to spend on whether you like it or not and if you are serious about this, this will be one of the first few things to do.
Business entity
Like incorporating your business. Generally, you will need to discuss this with your accountant (and yes, having an accountant you can discuss matters like this or other obligatory tax issues is also crucial to have for your business) to make sure you have the ideal corporate entity that will execute this type of trading and will be liable for you.
Needless to say that you don’t want to happen anything bad concerning your products but having a corporation mean that it will be financially and legally viable for most of the things associated with it.
Most importantly, your personal assets will be protected as it is your Inc or Ltd will work as an official Amazon Seller.
Once again, it is key that you discuss this with your accountant. This is a critical step for any Amazon FBA beginner.
You will share some similarities with your accountant by the way. For example your mutual love for figures.
Knowing your numbers
Imagine you go through all of the above, launch a product, sales are coming in, you sit down with your accountant and you find out that you made hardly any profit after everything. Your heart would sink, wouldn’t it?
It is therefore very important to break down your sale price. Typically you will find that
- ⅓: goes to importing
- ⅓: goes to operating the business
- ⅓: goes to profits
But you need to be a lot more precise than that. Yes, you will find that some factors tend to vary from time to time but you really should make every effort to have an understanding how much are you really making on every unit sold. Even when you’re “just” an Amazon FBA beginner.
And when you do, you will be able to turn this to your advantage.
Vertical vs horizontal expansion
Because if you know that you’re being profitable in one market, you will be able to figure out how you will be able to be profitable in another. And another. And another.
You see, there’s a general fixation about having brands that contain a set. Say if your product is a toothbrush then you should have a bathroom kit with soap holders, a cup, a container for your own dental floss.
The problem with that is that each of these items has their own sub-markets where you may or may not be able to compete or to be profitable.
Why try and force items into your umbrella brand that may take valuable resource and capital away from other items that may not fit into your dental brand but actually make quite a bit of profit for you?
If you’re an aspiring Amazon FBA beginner, you may want to double down on multiple Amazon marketplaces. Unlock the opportunity that resides in Amazon’s European Network.
Another success factor you should always bear in mind is that you should see yourself as a perpetuum mobile. Something like this:
Something that never stops and neither should you.
Set it and forget it attitude
There will be some cases when you’ve done a hell of a job, your listing is performing well and there are no challengers on the market.
It still doesn’t mean that you can sit back and relax. You need to think about your next product or your innovation.
How are you going to increase your profitability? How will you be able to provide better products?
If you’re being serious about this, even if you are a beginner, you will keep improving in areas where it matters the most.
But probably most importantly, you will be PATIENT with yourself.
The Long run
You won’t be a millionaire overnight. You won’t be that in three months. And unless you started off with say $100k with at least 10 products where everything is just perfect from low competition to high demand and no problems, it is unlikely you will be an Amazon FBA baller (if you want to call yourself that way that is)
You must prepare for the work and accept the fact that some things will take time. Production of your goods will take time. Importing will take time. Product discoverability will take time.
Therefore every time you get a bit antsy, remember that “Rome wasn’t built in a day”
You’re building an empire after all, aren’t you?
What key lessons have you learnt so far as an Amazon FBA Beginner?
Article Prepared by Ollala Corp