How to Start Selling on Amazon with a Small Budget
Are you interested in starting your own business on Amazon but worried about the cost? You're not alone. Many people believe that starting an Amazon business requires a large amount of capital, but that's not necessarily true. In this article, we'll take you through the exact steps you can take to start selling on Amazon with not a lot of money.
Understanding Amazon FBA
Amazon FBA (Fulfillment by Amazon) is a great business model for anyone looking to start selling on Amazon. It's a system where you buy products, send them to Amazon's warehouse, and they take care of everything else. When a customer buys your product, Amazon will send it out to them, deal with all customer service and returns, and even handle the packaging. It's a hands-off business model that can be very profitable.
However, like any business where you have to buy stock, you're going to need capital to get started. You'll need equipment to send your items into Amazon's warehouse and package them up. So, how can you possibly do this without spending vast sums of money? The key is the type of Amazon FBA you actually do.
Types of Amazon FBA
There are three main types of Amazon FBA: Arbitrage, Wholesale, and Private Label.
1. Arbitrage
Arbitrage is where you buy items from retailers' websites, such as Walmart in the US or B&M in the UK. You're looking for items that are cheaper on the retailer's website and selling for more on Amazon. This is a great way to start selling on Amazon with a small budget because you don't need to spend loads of money on stock. You could easily start by just buying 10 units, learning the ropes, and then taking it from there.
2. Wholesale
Wholesale is where you buy from a wholesaler, manufacturer, or supplier. You'll be buying items from someone who is actually selling products to business customers, and you'll be buying them in bulk. This is a great way to scale your Amazon business, but it does require more capital to get started.
3. Private Label
Private label is where you find a product that already exists on a website like Alibaba, get your brand on it, and start selling it under your own brand. This is the most lucrative type of Amazon FBA, but it's also the most risky and cost-heavy. We recommend having a good grasp of Amazon FBA before exploring this option.
Starting with Arbitrage
If you're new to Amazon FBA and don't want to spend loads of money on stock, your best choice is Arbitrage. You can start with retail or online Arbitrage, or a mixture of both. The key is to find items that are cheaper on the retailer's website and selling for more on Amazon.
For example, you could buy a Disney Junior Mickey Fire Rescue figure from The Entertainer or thetoyshop.com for £6.66. On Amazon, the exact same product sells for $6.99. With the help of a profitable Chrome extension, you can analyze the data and see that this product sells 18 to 28 units a month, making £4.53 profit after fees and a 66% return on investment.
If you were to buy 10 of these products, it would cost you just under £70. But from those 10 products, you could bring in revenue of £170, resulting in a profit of about £45. That means from your £70 investment, you could get back around £115. Reinvest your profits, and your pot will only get larger and larger.
Costs to Consider
While starting an Amazon FBA business with a small budget is possible, there are still costs to consider. You'll need an Amazon Seller subscription, which costs £30 or $40 every month. You'll also need software like Profitable Deal Analyzer to analyze your deals correctly, which will cost another £30 to $40 a month. Additionally, you'll need equipment like a printer and packaging equipment, which could cost between £50 to £100.
Pros and Cons
Pros:
- You can start an Amazon FBA business with a small budget.
- Arbitrage is a great way to start selling on Amazon without spending loads of money on stock.
- Amazon FBA is a hands-off business model that can be very profitable.
Cons:
- Starting an Amazon FBA business still requires some capital.
- Wholesale and private label require more capital to get started.
- There are still costs to consider, such as an Amazon Seller subscription and software.
Highlights
- Amazon FBA is a great business model for anyone looking to start selling on Amazon.
- There are three main types of Amazon FBA: Arbitrage, Wholesale, and Private Label.
- Arbitrage is the best choice for those starting with a small budget.
- While there are still costs to consider, starting an Amazon FBA business with a small budget is possible.
FAQ
Q: Do I need a lot of money to start selling on Amazon?
A: No, you can start with a small budget using Arbitrage.
Q: What is Arbitrage?
A: Arbitrage is where you buy items from retailers' websites that are cheaper than what they're selling for on Amazon.
Q: What are the costs to consider when starting an Amazon FBA business?
A: You'll need an Amazon Seller subscription, software like Profitable Deal Analyzer, and equipment like a printer and packaging equipment.
Q: What are the pros and cons of starting an Amazon FBA business?
A: Pros include the ability to start with a small budget and a hands-off business model. Cons include the need for some capital and additional costs to consider.
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