If you've been thinking about becoming an Amazon FBA seller, read this first.
Inside this blog, Tatiana and I talk about what it ACTUALLY costs to start selling on Amazon in 2022.
Tatiana and I have both built successful Amazon businesses. On top of that, we've worked with thousands of people to help them build their own Amazon businesses.
We want to help you avoid unexpected Amazon costs and set you up for success from the onset.
Keep reading to get a detailed breakdown of the expenses involved in setting up an Amazon FBA business!
Watch the video below:
(Click here to watch on YouTube)
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Do you want to know what the criteria are for finding profitable products to sell on Amazon FBA? CLICK HERE to get instant access to my FREE 4-part Amazon FBA training series!
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Let's talk about the cost of selling on Amazon FBA.
Oftentimes, cost is the one thing that holds a lot of people back from selling on Amazon. When you're first building an Amazon business, there are a lot of unknowns. Tatiana and I have been in the Amazon game for a long time now. Based on our experiences, we know what works and what doesn't.
We want to help accelerate your success as an entrepreneur so that you don't have to make the same mistakes that we made. Tatiana and I have a good grasp of how much money it will cost you, on average, to build an Amazon business. However, keep in mind that there are variables that come into play.
Thus, we can't give you an exact amount. How much it will cost will be based on the product that you choose, how much inventory that you order, and/or how much money you want to invest into marketing.
That being said, we can still give you a rough estimate of what we would recommend. Let's dive in!
Mandatory costs for Amazon FBA
1. Amazon Membership Fee
The first expense will be your membership fee. If you want to sell on Amazon, that comes at a cost. There are two options when signing up for an account – individual or professional. An individual account means that you're still going to be paying a per-item fee for every product that you sell on Amazon.
A professional account has a recurring monthly fee of $39.99. You have to pay this regardless if you are making sales on Amazon or not. We recommend that you opt for a professional account.
If you do the math, it doesn't make sense to pay the per-unit cost. It ends up costing you more than $39.99 per month. Also, when you sign up as a professional you receive a lot of benefits.
2. Purchase Samples
Once you've decided on the product that you want to sell, you need to contact your suppliers and purchase samples from them. Make sure that you get the samples. It's not enough to just view the product online, even if you see a video of the product.
You need to inspect the product to ensure that it is high-quality. If you're planning on selling a low-quality product on Amazon because it costs less you're not going to be around for long. There is a lot of competition on Amazon. Successful Amazon sellers have the best quality products.
We recommend getting samples from three different suppliers.
Once you've narrowed down your list to the top 3 suppliers, request one sample from each supplier. Sometimes suppliers will give you a sample for free. However, you will still have to pay for shipping. Conversely, some suppliers may charge you for a sample, and you will also have to pay for shipping.
If suppliers charge you, you can expect to pay roughly $150 for 3 samples. However, you can negotiate with the suppliers. In addition to this, we suggest that you buy your competitors' products on Amazon. Choose the best sellers for the product that you wish to sell.
This will allow you to inspect their products, which you can then compare to the samples you receive from suppliers. Ultimately, the goal is to compare your samples to what is already selling well on Amazon.
3. Purchase Inventory
When it comes to purchasing inventory, it's hard to give you an accurate estimate of how much that will cost. It all depends on the product that you choose to sell. If you source a product for $25 per unit, your inventory will cost you more than a product that sources for $2 per unit.
With our experience, on average, we have found that $5 per unit is what you can expect to pay. With every supplier, they will have something called an MOQ, which stands for Minimum Order Quantity. This is the minimum inventory order that you can make. It ranges from 100 to 500 to 1,000 units. This is something that you can negotiate with your suppliers.
As a beginner, you don't want to order a lot of inventory. You haven't yet proven your concept. It's risky to spend thousands of dollars on inventory when you have yet to make a sale on Amazon. Typically, you want to order a smaller quantity of units.
However, not so small to the point where you run out of stock on Amazon before you can even get a new inventory order. As an example, if your minimum order is 500 units, at $5 per unit, your inventory would cost $2,500. If you're going to start with less than that, it will be a lot harder to grow your Amazon business.
4. Design Your Product Artwork
Next, you want to think about artwork, in particular, your product packaging and your logo. You can go inexpensive or high-end. It all depends on what your budget is. There is a great website called Fiverr where you can find inexpensive, high-quality designers.
For example, you can get a designer to do your product packing for $25, and that will include revisions. For your logo, you can get 3 logo concepts for $15. Tatiana uses this website for all of her product packaging designs.
The key with Fiverr is that you have to have a clear idea going into it. If you can tell designers exactly what you want, it will help them create a higher quality result. On top of that, it will require fewer revisions.
5. Create Your Amazon Product Photos
Your Amazon photos for your listing are equivalent to the packaging of a retail product. This is why it's so important to have high-quality photos. In retail, people can use their hands and senses to fully experience the product.
However, when people are making a purchase online, they are losing a part of the experience. If you decide to go low end, you can take the photos yourself and send those photos to a graphic designer on Fiverr. You can have the designer photoshop your photos to make them look perfect for Amazon. That will cost you roughly $100 for 5 photos on Amazon.
Conversely, you can go high-end.
This would mean ordering the products from a manufacturer and then sending them to a product photography service. They can create lifestyle photos and hire models to model your product for you. That can cost you roughly $1,200. When it comes to photography, we wouldn't suggest that you cheap out.
Your main image is the first thing that people see when they are scrolling through listings. Make sure you add text to your images. If there is anything that you want to convey to your prospective customers, make sure it's there. A lot of people don't read the description or the bullet points, but they always look at the images.
6. Purchase A Barcode
To set up your Amazon listing, you will need to get a barcode inside Amazon Seller Central. In their terms of service, Amazon only approves barcodes from one platform called GS1. For 1-10 barcodes it costs $250.
7. Ship Your Product
When it comes to shipping your product, the cost will depend on where in the world you are manufacturing your product. If it's local, the shipping cost will be less. You will just have to pay for tracking charges. However, if you're shipping your product from overseas, the cost will be more.
It's less expensive to ship a product by sea (60 cents/kilo or 27 cents/pound). However, it will take you longer to receive the product. Anywhere from 1-3 months.
Conversely, if you ship a product by air, it will be quicker (one week) but more expensive (anywhere between $3.18/pound or $7 per kilo). We would recommend shipping by air because time is money and there are fewer logistics involved.
8. Turn on PPC-Sponsored Ads
Amazon has a built-in advertising platform. We highly recommend that you take advantage of this and turn on the PPC-sponsored ads. When you first launch a product, you will be ranked on page 15 or 20 of the Amazon search. Most people don't browse past the first two pages of results.
Sponsored ads help your product get seen in different ad placements. This will help you gain exposure. How much advertising will cost will depend on what your strategy is. The only way to figure that out is by playing around.
Throw some money at different keywords and figure out which ones work and which ones don't. That can cost you hundreds, if not thousands of dollars. Roughly, $200 is the bare minimum to play around with your ads.
Amazon gives you a boost right of the gate with your first product. This is why you want to take advantage of your product launch and put some money into the marketing of it. You could have the best product in the world, but if nobody sees it, then nobody is going to buy it.
Taking all of the above costs into account, the total mandatory cost would be around $3,680.
Optional costs
1. Purchase A Product Research Tool
There are a lot of tools online to support Amazon sellers. These tools didn't exist when we first started our Amazon journey. Two of the most popular product research tools that we would recommend are Jungle Scout and Helium 10. Their filter system allows you to find very unique products.
If you don't have a tool for this part of the process, you'll have to do it manually. This means that you will be more prone to human error. Furthermore, the process will be more time-consuming and you will be less likely to find the golden nugget products.
I have a 25% discount if you purchase Jungle Scout. You'll pay roughly $149 for a 3-month Jungle Scout membership. Conversely, you can get 50% off your first month with Helium 10.
To be honest, I wouldn't consider starting an Amazon business without using a product research tool.
2. Purchase An Amazon Training Program
Tatiana and I accelerate our success by investing in ourselves. We would recommend that you find a program that can teach you, step by step, how to sell on Amazon. I can't imagine starting an Amazon business without any kind of direction.
The Amazon business process is simple, but the devil is in the details, so to speak. There's a lot that you don't know. A high-quality Amazon training program can cost anywhere from $1,000-$5,000. Yes, you can build a business without a program.
However, it will be a lot more challenging and time-consuming. Oftentimes, this is the reason why a lot of people give up. When you have guidance, direction, and a blueprint for success, it gives you unwavering confidence.
3. Get An Amazon FBA Inspection
When you are sourcing with a supplier for the very first time you have yet to establish a level of trust with them. It's important to have your products inspected by a third-party inspection company.
This company will go to your manufacturer and inspect the order themselves to ensure that it meets your standards. They can inspect 10%, 50%, or 100% of the order. It's up to you. The order will either pass inspection or it will fail.
If it fails, you will have leverage because the products won't have left the manufacturing facility. On top of that, you won't have paid the remaining balance.
When you're placing your order with the manufacturer, you only want to send a 30% deposit. This is enough for them to get started with the manufacturing. Once they're done manufacturing and they've passed the inspection, you can pay the remaining 70% balance before they ship the products to you.
Keep in mind that you don't have to get an inspection every single time that you place an order. Rather, it's just for the first couple of times. It costs roughly $300 to get your products inspected by a third-party company.
4. Hire a Freight Forwarder
A freight forwarder will help you organize your shipment, from A to B. It will give you peace of mind that your products will arrive safely. Whether you are using them for a sea or an air shipment, they will handle all of the logistics of that process.
This is important because there is paperwork, bonds, and duties that need to be paid. The broker fee is minimal. It's usually around $120.
5. Paying For Additional Product Launch Costs
Once you launch your product on Amazon, there may be additional costs that you will need to take into account. An example of this would be Facebook ads.
Taking advantage of ads is a great way to get additional exposure off of Amazon. You don't just want to rely on your Amazon PPC. Plus, Amazon likes it when you send traffic to them from other platforms. The cost will depend on what you are willing to spend.
6. Trademark Your Product
This is optional. You don't have to trademark your brand, but it could be favorable for you to do so. It protects your brand name so that others can't use it. Moreover, there are benefits on Amazon to trade marketing. In particular, you can apply for a brand registry.
On Amazon, you will notice that some products have beautiful and well-laid-out listings, with photos and videos. Those people have “enhanced brand content.” They get that because they have a brand registry. Not only is it going to give you a nicer-looking listing, but it can also help protect you from highjackers.
If you live in the U.S., you can file a trademark yourself. It costs $225 per official class. However, if you live internationally, you may have to hire an attorney to file it for you.
Keep in mind that you can hire an attorney on Fiverr to create the trademark for you and then submit it on your own! If you want to take things one step further, you can set up an LLC for your Amazon business. Of course, there will be additional costs associated with doing this.
This is how much it ACTUALLY costs to sell on Amazon FBA in 2022.
I hope that the knowledge that we shared inside this blog has helped you determine whether or not an Amazon FBA business is the right fit for you.
Tatiana is an Amazon expert. She specializes in helping people create financial freedom through building epic eCommerce businesses on Amazon & Shopify. If you're serious about building an Amazon business, I highly recommend that you subscribe to her YouTube channel and follow her on Instagram.
Selling on Amazon is the best opportunity to create financial freedom. Don't wait. Make 2021 the year when you take action and start building your dream life.
Do you want to know what the criteria are for finding profitable products to sell on Amazon FBA? CLICK HERE to get instant access to my FREE 4-part Amazon FBA training series!