What I Learned From Selling on Amazon FBA for 1 Year
By: Brian Singh
Tags: Ecommerce, Entrepreneurship, Amazon Fba, Amazon, Fba

After a little over a year of selling on Amazon, I made $52,656 in revenue.

This was achieved all while working a full-time software engineering job and working on this business after work and on weekends. In total, I have sourced and sold 3 unique private label products, one of which I have decided to discontinue due to the profit margin decreasing from import tariff increases. I got my first product in stock in December 2019 just in time for Christmas and immediately saw the potential that selling on amazon brings. I started getting sales right off the bat with 0 reviews.

This turned out to be the case again when my next 2 products arrived in stock. Those new products landed in Amazon's warehouse on May 13th 2020 and again started gaining traction immediately.

snapshot of sales from May 13th 2020 — July 31st 2020

The Secret Sauce

I believe the secret to having a successful product boils down to the following:

1) verify the demand for the product and the market is not oversaturated

2) have a USP (unique selling proposition)

3) ensure a high enough profit margin to account for PPC (pay per click — amazons advertising service)

4) invest in your creative content

How do you verify the market is suitable?

There are many SaaS (Software as a Service) companies out there that provide tools for product research. They can give you a fairly accurate estimate of the sales of products listed on amazon. Some that I trust are Junglescout and Viral Launch.

Both services offer mostly the same suite of tools and operate in a similar manner. In the screenshot below I am using the Junglescout chrome extension to help gauge if a product is in a good market to get into.

Searching ‘food storage container’ on Amazon and using the browser extension will show you some useful data that you can use in determining if the market has room for you and estimate the average sales amount. Clearly, in this example, the market is well saturated with an average review count of over 4000.

What is USP?

You need to ask yourself why the customer would buy your product compared to your competitors. If you cannot think of a legitimate reason, it will probably not be a good product to sell. Some tips in figuring out how to improve a product are to look through the negative reviews. Listening to the voice of the customer will be the quickest way to determine improvements you can add that are missing in the current market. Once you find what is lacking, or what you can bundle with the item, that is your USP.

Unless it is clear that my USP will do well with the amazon customers, I usually run a simple market study to gauge real people's opinions and get feedback on my product compared to competitors before making my order to start manufacturing the product.

The tool I use to do this is called PickFu.

PPC and Profit Margin

In my experience, using the Amazon advertisement platform PPC is a must in improving your page rank and getting sales momentum. Unless you already have a large audience off of amazon or are an established brand that is being searched for, it will be hard for people to stumble across your item in the pool of other product listings. There is definitely a learning curve to optimizing your ads, and I would recommend accounting for that when calculating your potential profit margin. In my experience, you can expect a 20–30% profit margin after PPC once you master optimizing your ads.

Finding the Right Freelancers

You will need to have content ready for the following:

1) listing copy

2) product photography (both white background and lifestyle photos)

3) logo design

Sure you can do all of the above yourself, but I think apart from your USP, this is the most important piece to converting well on Amazon.

Jack of all trades, master of none

My recommendation is to hire a professional who is a master at their craft. You only set up your listing once, so all of these fees are one time per product, and it makes sense to make the best impression you can.

I have had success using both Upwork and Fiverr for finding my freelancers.

My Profit Margin

Using the tool ‘Shopkeeper’ I am able to show you a look into my sales while anonymizing the products. This tool is a dashboard that will show you profitability across your listings in all of Amazon's marketplaces (US, UK, etc.).

It also lets you dive deeper and view the breakdown of PPC and other miscellaneous fees that come with selling on amazon and understand your profit.

Going Forward

I plan to continue selling on Amazon in the long run. The increase in online sales is apparent and the potential is endless. The information I have learned from my first year selling has brought many new insights into the types of products I plan to sell in the future and my strategies to be successful with them. I have 3 new products arriving in stock at the beginning of 2021 that I have applied these learnings on.

Thanks for reading, I hope you found this article helpful!

Links to Tools Mentioned

Product Research

JungleScout

Viral Launch

Profitability Dashboard

Shopkeeper

Market Research

PickFu

Freelancers

Upwork

Fiverr