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Amazon FBA: A Simple But Complete Guide (2022 Update)

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Updated: May 19

By: Scam Risk - Expert Reviewer

Amazon FBA A Simple But Complete Guide 2022 Update

Amazon FBA Guide – like most Amazon FBA programs – wants you to believe you can build and run a successful e-commerce business that’s automated, profitable, and generates cash around the clock in less than 90 days…

With just a couple hundred dollars in inventory…

Sounds a little too good to be true, huh?

Look, as far as most online businesses go, you could do a lot worse than Amazon. 

But does that mean it’s the best solution for you?

DISCLAIMER:
This Amazon FBA: A Simple (But Complete) Guide review has been thoroughly researched with information and testimonials that are available online to anyone in the public. Any conclusions drawn by myself are opinions.

Table of Contents

That’s what we’ll find out in this review.

The biggest things you have to consider here are:

  • Inventory Management
  • Product Selection
  • Time to Profit

While you can make good money with Amazon, it’s not as easy or simple as most course creators make it sound. Let’s break these 3 down real fast:

1) Inventory Management: If you’re doing an FBA business, the promise is that you don’t need to worry at all about inventory, because Amazon takes care of packing, shipping, customer service, etc.

However, you still need to get products to Amazon. And Amazon has very strict rules all sellers have to follow when preparing products for their warehouses.

This includes packaging, labeling, and registering products in their system. If you’re preparing all products yourself, you’ll spend a TON of time on this step (potentially 4-5 hours a day). So if you’re looking for a passive, automated business that runs itself, this might not be the best fit.

Now, yes, you can hire an Amazon prep center to do all this for you, but that eats into your margins. And remember that Amazon takes around 30-40% in fees for using the FBA program, so your profits are pretty tight to begin with.

2) Product Selection: E-commerce is a cyclical business. “Hot” products are always going in and out of fashion, which means, as an Amazon seller, you constantly need to be on the lookout for the next big thing.

That means monitoring trends, searching for products that might be popular down the line, and constantly in a rat race to – essentially – predict the future.

Sure, you can play in the evergreen market (things people always need and buy), but how much profit margin are you really going to get on meal prep containers, rubber spatulas, and golf umbrellas? Especially when there are hundreds of thousands of other sellers all swimming in that same ocean.

And because you’re constantly hunting for new hot products to sell, that takes up all the valuable time you could be using to travel, explore, read, surf, hike, or whatever else.

3) Time To Profit: Now, this isn’t the slowest turnaround time, but if you think you can put a dollar into inventory today and come out with two tomorrow, you’re sadly mistaken. From the time you first buy products to sell, you could be looking at anywhere from 4-12 weeks before you see a dollar come back.

And it could take twice as long before you break even.

Now, that’s not terrible, but what if you could start building a different (non-Amazon) income stream today, and see your first profits tomorrow?

What if you could build a passive income stream that’s actually passive?

An income stream that doesn’t require:

  • Inventory
  • Low margins
  • Constantly looking for the next hot product

An income stream that brings in consistent revenues every single month (from a couple thousand dollars to well over $10,000)?

An income stream you could actually build in your spare time, and grow as large or as small as you want to, without having to spend hours a day packing, prepping, and researching?

TESTIMONIAL - STILL GETTING PAID

If that sounds like something you’d be interested in, check out Digital Real Estate.

This is nothing like FBA, and that’s probably a good thing.

However, if you’d still like to know more about Amazon FBA Guide, keep reading.

Amazon FBA Guide

Amazon

Amazon sellers can use Fulfillment By Amazon to avoid wasting time on shipping, logistics, and customer service. Amazon sellers can use Fulfillment By Amazon (FBA). By handing the ball over to Amazon, sellers can focus on other aspects of their business.

This program lets brands use the retail giant’s logistics system without doing anything. Among other benefits, FBA frees sellers from inventory management.

Brands using FBA simply pack and ship stock to a warehouse, and Amazon takes over.

This comprehensive guide will learn everything about Amazon’s excellent service.

FBA Through the Years

FBA Through the Years. Start Selling

FBA is the preferred Amazon business model for millions of sellers. That was the goal of the program when it began in 2006.

Amazon realized it could help hundreds of small businesses grow. How? By offering third-party logistics services.

Amazon created a program to access its own logistics system. Storage, suppliers, and seller customer service are included.

Adopting the “Amazon Way” could help small businesses deliver products on time and nationwide.

Selling without storing or hiring allowed sellers to focus on growing their brands. So was born Amazon Fulfillment.

Amazon has expended a lot of money on FBA. Customers are unaware they are buying from third-party sellers using FBA.

Enrolling in FBA has become a no-brainer for online retailers.

How Amazon FBA Works

How Amazon FBA Works. Amazon Seller

As stated previously, Fulfillment by Amazon has become a standard for sellers. By 2023, few online stores will be absent from Amazon.

Moreover, many sellers now use FBA to fulfill orders from non-Amazon channels. And thousands of merchants still use FBA.

FBA Model

FBA Model. AMazon's Fulfillment Centers

The program has a simple process.

First, sellers must do the following:

  • Find high-demand products with low competition. Finding (or creating) the most profitable items to sell is the goal.
  • Find the items from a reliable supplier or manufacturer at a fair price. In some cases, the supplier ships to Amazon as well.
  • Create product listings to market and sell your items. Engage customers with high-quality images, keywords, and descriptions.

Amazon’s FBA handles this:

  • Stock products in their warehouses. Amazon will split the items between warehouses to reduce shipping times.
  • Process orders for each item. Then Amazon picks, packs, and ships it.
  • Provide customer service tasks like tracking information and review requests.

It’s critical to constantly track sales in Seller Central to assess each item’s success. Also, it will alert sellers when stock levels are low.

We’ll go over the program’s benefits and drawbacks later in this guide. But, in brief:

The Benefits of FBA

The Benefits of FBA. Amazon Business

Fulfillment By Amazon is about more than just speed. Signing up for FBA unlocks many other Amazon benefits.

Consider this:

  • Brand association – Customers expect fast delivery from Amazon. So most customers will appreciate it when a third-party store handles FBA delivery.
  • Better search rankings – Amazon’s algorithm favors FBA products. The buy box odds are improved as well.
  • Complete customer service management – FBA provides 24/7 customer service. Sellers handle all inquiries, refunds, and returns through Amazon.
  • Multichannel fulfillment – Keeping stock in Amazon’s warehouses doesn’t mean only selling on Amazon. Amazon can ship products from multiple online stores.

Products sold by FBA are eligible for Amazon Prime. This comes with three benefits: free delivery, increased chances of winning the Buy Box and the Amazon Prime badge.

The Drawbacks of FBA

FBA is clearly simple to use and has many benefits. No stock management, packaging, or shipping.

The program also allows Amazon to handle brand refunds and returns. Profit and sales increase as a result.

For some sellers, FBA may not be the best option.

Consider these points before signing up for FBA.

  • Competition – FBA is used by thousands of global sellers. This includes Amazon’s private label brand.
  • Stickerless commingling – The warehouse groups similar products from each manufacturer together. That leads to confusion. Failure to deliver may result.
  • Increased returns – Amazon’s return policy makes returning items simple. Because Amazon FBA handles returns and refunds for brands, some sellers see high returns.
  • Product Guidelines – The Amazon FBA inventory warehousing guideline specifies how products must be packaged, labeled, and shipped to the warehouse. Items and products that do not comply will be rejected for storage.
  • Long-Term Storage Fees – Slow sales hurt sellers. Product turnover is expected to save Amazon storage space. Amazon will charge long-term storage fees after 180 days.

FBA Costs

FBA Costs. Seller account. Shipping Fees

By using FBA, sellers must pay specific Amazon FBA fees for storage and fulfillment. The primary rates are monthly, fulfillment, and fees.

How to Calculate FBA Costs

The cost of Amazon FBA is a major deciding factor. Because you’re paying for Amazon’s storage space, the more goods you have, the more you’ll be charged.

Consequently, lower-cost items may become less profitable.

The issue is that after 180 days, inventory fees tend to increase.

A stranded inventory report will alert you if any of your products aren’t moving enough.

The good news is that you can exclude products that you don’t think will sell quickly from the Amazon FBA program. The fees also rise during the holidays, so remove any inventory you don’t plan to sell.

FBA service fees include:

FBA Service Fees

amazon sellers

The fee varies depending on the item’s weight and size. FBA storage fees rise during the holiday season to meet demand.

FBA Fees

amazon seller account

In addition to the Fulfillment fee, An item’s shipping, and handling fee, the rate for 1- to 10-ounce items is $2.41.

Similar to storage fees, fulfillment fees for special, oversized items can reach $137.32.

There’s also the Amazon FBA seller fee. After the sale, the marketplace takes 15-18% of the item’s price.

Small and new sellers may struggle to cover these costs. Once a company establishes a solid presence on Amazon, the investment pays off.

Now let’s find the best FBA items.

How to Find Quality Products to Sell on Amazon FBA

How to Find Quality Products to Sell on Amazon FBA. Amazon Seller Account

Product quality control abstract concept vector illustration. Product safety standard, customer feedback, warranty certificate, production line, business success, inspection abstract metaphor.

Sell products in high demand but with low competition. That’s the Amazon secret. The question is where to look.

Finding the most profitable niches is the best way to get great results. These are niche buyers, products, or categories.

Well-known items mean more visibility and competition. Niche products have less competition and more targeted customer engagement.

Here are the best Amazon items to sell:

  • Home & Kitchen
  • Toys & Games
  • Sports & Outdoors
  • Health, Household & Baby Care
  • Kitchen & Dining
  • Beauty & Personal Care
  • Clothing, Shoes & Jewelry
  • Tools & Home Improvement
  • Garden & Outdoor

To increase visibility and profits, find niche products within these categories.

Then it’s time to find the best products to sell. Here are some tips for this quest:

  • The Right Price
  • Narrow your choices
  • Low seasonality
  • Improvement
  • Simple, small, and light are better.

Product Research Best Practices

Product Research Best Practices. Selling on amazon

These methods will significantly aid your product research:

  • Don’t pick a product to sell just because you like it.
  • Don’t rush. Product research is a necessary preparation that takes time and analysis.
  • Use an Amazon data mining tool like Jungle Scout to find a product with high demand, low competition, and positive profitability. Let us show you.

Sourcing Your Amazon FBA Products

Sourcing Your Amazon FBA Products. Sell on Amazon

Finding the correct products is only half the battle. Find a supplier for sellers.

As stated previously, you want low competition and high demand. But it’s also essential to get the best quality.

Thousands of companies make the same product. The trick is to select 5-10 suppliers who meet the following criteria:

  • Quality. Obviously, well-made products sell better, get good reviews, and keep selling.
  • Experience. Check the supplier’s import history to see if they’ve been manufacturing for 3 years.
  • Communication. It increases your FBA brand’s productivity. Examine supplier response times and responses.
  • Fair price. Your final choices should be priced similarly. Price extremes may be a warning sign.

But where to find suppliers?

Online arbitrage is one way to start searching.

Taking Advantage of Retail Arbitrage

Taking Advantage of Retail Arbitrage. Sell on Amazon

This strategy is about searching for goods below retail value online. Then compare Amazon prices to ensure profitability.

In this case, you can order in bulk and ship to Amazon. Finally, upload and sell your listings.

Alibaba is a great place to look for products and suppliers. The world’s largest B2B platform. Many products are sold directly by the manufacturers.

Then there’s retail arbitrage. Select items from retail stores or liquidation centers.

Look for closed-down stores. Get 50-70 percent off products and profit from niche products.

Make a lot of copies and store them on Amazon. Then start listing your products and selling.

The trick is to focus on long-term purchases. Also, when sourcing products, keep in mind Amazon’s fees.

The net profit is the difference between the selling price and the item’s original cost.

How to Get Started on Amazon FBA

How to Get Started on Amazon FBA. Selling on Amazon

You can’t start selling without an Amazon FBA selling account. To start from scratch or buy an FBA store, you must decide.

You have two choices:

1. Buying an FBA Business

Open stores can give you an edge. The store already has inventory, customers, and revenue.

Buyers must assess capital risk. An FBA store’s typical value is 2-4 times its annual EBITDA.

An investor would need $20,000-30,000 to buy an FBA firm that earns $10,000 net profit per year.

It’s also critical to investigate the company’s finances.

Some Things to Consider

Observe the following crucial points:

Gains and Losses. Examine the store’s net profit for inconsistencies, trends, and growth opportunities.

Account Health. Examine the firm’s reputation. As an example, Amazon expects vendors to:

  • Order Defect Rate: below 1%
  • Late Shipment Rate: below 4%
  • Pre-Fulfillment Cancelation Rate: 2.5%
  • Valid Tracking Rate: 95% or higher
  • Inventory Performance Index: below 350
  • Invoice Defect Rate: below 5%

Suppliers. Get information on contract terms and conditions. Are they partners? Find out the terms and any hidden fees.

Accounting Records. Assemble all accounts and taxes to analyze the FBA store. Check that all Amazon fees are recorded in the books. Verify that the seller is not inflating earnings.

Use Empire Flippers or Thrasio to locate the most profitable FBA stores. Then contact the seller to negotiate.

2. Building an FBA Business from Scratch

It takes time & effort to create a profitable FBA business, but persistence pays off.

Here’s what you’ll need:

  • Startup Capital. Amazon estimates that new sellers spend $ 3,836 on inventory, orders, and promotions.
  • Research. Contact existing FBA sellers to get into Amazon. Get to know the difficulties they’ve had in their lives. This will help you plan your FBA strategy.

Setting Up Your Amazon FBA Business

Setting Up Your Amazon FBA Business FBA Seller Central

Sankt-Petersburg, Russia, April 10, 2020: Amazon seller application icon on Apple iPhone X screen close-up. Amazon shopping app icon. Amazon mobile application. Social media network

If you want to run a successful Amazon FBA business, you should follow these steps:

How to Create an Amazon Seller Account

Choose a Professional seller account.

You’ll pay $39.99 per month, but the items you can sell are unlimited.

Individual accounts are best for more minor sales.

No subscription fee but $0.99 per item sold to Amazon.

Listing Your Products

Log in to Seller Central Account and click “Add a Product” under “Inventory.”

Find your items by name or barcode and send the data:

  • Selling Price
  • Condition
  • Product description

Optimizing Your Listings

No SEO strategy can expose your store.

Make sure your content contains the right keywords for your products.

Put them in the title, bullets, and description.

This is critical to exploiting Amazon’s algorithm.

When users type in your keywords, they have a better chance of finding your products.

Create high-quality visuals, like A+ Content.

Your product’s benefits should be stated in each image.

Activating FBA

Select “I want Amazon to ship my items and provide customer service if they sell.” Then click “Manage Inventory” and then “Actions.” For your eligible FBA items, select “Change to Fulfilled by Amazon.”

Setting Up an FBA Shipping Plan

Choose a shipping plant when you select “Convert & Send Inventory.” What you must do:

Indicate whether you’ll be sending “individual products” or “case-packed products.”

  • Select the items you want to keep in the warehouse (amazon fulfillment center).
  • Prepare for shipping.
  • Begin Shipping to Amazon

Return to “Inventory” and select “Manage FBA Shipments” to send your units.

Prepare and label each package according to Amazon’s instructions.

Finally, schedule the pickup. The rest is yours. Promote yourself and provide excellent customer service.

FBA, FBM, and Seller-Fulfilled Prime

FBA, FBM, and Seller-Fulfilled Prime. third Party Sellers

Sellers must choose between FBA and Fulfillment By Merchant for Amazon shipping (FBM).

FBM sellers fulfill orders on their own. Without FBA shipping perks, they control the entire process.

But FBA sellers get Amazon Prime automatically. Thanks to Amazon’s guarantee, this benefit increases sales and ratings.

You’d think FBA sellers couldn’t reach Prime Customers. But FBM sellers can join Seller-Fulfilled Prime (SFP).

Sellers can use this program to manage customer orders and use Prime shipping. Assuring FBM brands meet Amazon’s high shipping standards

What makes FBM and SFP appealing to some sellers?

  • Savings. This is great for heavy and bulky item brands. Lower shipping costs save profit margins.
  • Convenience. Manage stock levels and quality with Amazon FBM. No long-term storage fees to worry about.
  • Quality control. You’ll handle all refunds. To check for possible resales and replacements, use this method.
  • Brand Protection. No more mixing stock. Sellers can store inventory however they want, without worrying about similar items from other brands.
  • Customer Service. Personalize customer relationships. Thanks to SFP, you can provide better shopping experiences for buyers.

Aside from Prime shipping, SFP sellers benefit from direct brand protection.

But it takes more work. Eligibility for Seller-Fulfilled Prime requires 99 percent distribution.

Also, your cancellation rate must be under 1%. That’s why most brands use FBA.

SPF is a great way to get the Prime badge if you sell low-cost or oversized items. Plus, no fees.

FBA vs. Non-FBA

Enrollment in the FBA program is optional. Seller-Fulfilled Prime (SFP) allows sellers to use the Amazon Prime name and shipping guidelines while storing, picking, and packing their own products.

The FBA program charges fees based on services and product volume, whereas SFP requires you to pay for all shipping costs. Amazon also stated that the fees are subject to change.

Also, Fulfillment by Merchant (FBM) allows sellers to control every aspect of the fulfillment process. Choose this option to avoid FBA fees and monitor the entire process.

You must follow Amazon’s guidelines for any program you use. So, if you decide to handle fulfillment yourself, learn the rules for returns and exchanges.

Maximizing Your FBA Sales Like a Pro

  • Using analytics tools. 
  • Selecting the right product.
  • Bundling products. 
  • Building your Brand.
  • Answering questions.

Is Amazon FBA A Scam?

Is Amazon FBA A Scam

So, is Amazon FBA a scam? Not technically. You can make money with this program, but it’s definitely not as easy as Amazon makes it sound.

There’s a ton of work to be done upfront, no real guarantee of success, and – most importantly – you need to do a ton of volume to make any real money.

Now, there’s nothing wrong with front-loading the work and making the money later.

But if you’re grinding it out for 3 months and then your reward is 15% profit on a $12 product (which comes out to $1.80), it’s not really worth it.

What if, instead, you could do that same 3 months of work (in your spare time), and your reward was a $500 to $2,000 payment that came in every single month (recurring revenue)?

And what if you actually didn’t need to wait 3 months? What if you could get started today and have your first payment in a week?

And what if you could double it next week?

Well, that’s the power of Digital Real Estate

And, unlike with Amazon FBA, you can legitimately do this from anywhere. It’s a true lifestyle business.

Your laptop and an internet connection is all you need.

Some of the most successful students in this program run their entire 6-figure businesses from:

  • A camper in the middle of the woods
  • A beach chair on the water in Mexico
  • A small villa in Greece

TESTIMONIAL - SAYING GOODBYE TO OUR JOBS

They’re able to travel around, living their lives first, and focusing on their income second.

Because even if they stop working for an extended period of time, the money keeps coming in.

So adventure, memories, and experience are the top priority.

And they never have to worry about how to pay for the next trip, or consider asking for time off.

If this sounds more like the type of life you want to lead, just click here to find out more about Digital Real Estate.

Are There Alternatives to Amazon FBA?

Yes, there are plenty of other business models to choose from if you want to pursue making money online.  Here are just a few:

Our #1 Recommendation For Making Money Online In 2022?

Make Money With Digital Real Estate

Our review team has spent months researching, reviewing, and vetting dozens of business models and thousands of programs.

While there may be no “perfect business”, the research IS conclusive:

Digital Real Estate is the #1 online business model for those just starting out.

Whether you’ve never made a dollar online, or you’ve been in this space for a while but never really “made it,” Digital Real Estate is for you.

Why?

1) It’s Flexible: got an hour a day? You can do this. Ready to drop everything else and dive in full time? You can do this. Yes, the more time you put in, the faster you see results. But even with a little time each day, you can move the needle in a Digital Real Estate business.

And because this system is so flexible, you don’t have to constantly be working to make more money. It’s called PASSIVE INCOME because if you stop working, the money doesn’t.

Imagine taking 3 months off to just tour around Europe, rent a cabin in the woods to write a book, hike the Appalachian Trail, or live on the beach and surf all day.

This is only possible if you have an income stream that’s not tied to your time.
TESTIMONIAL - JUMP ALL IN

2) You Own & Control EVERYTHING: With Amazon FBA, you don’t really own anything. Yes, you technically own the products before you send them into an Amazon warehouse, but that’s it.

You don’t own the sales platform, you don’t own a brand, and you don’t own the customers.
Not to mention, Amazon can literally shut you down at any time if they believe you’ve violated their constantly changing terms of service.

So you’re building a business that could be completely taken away from you in the blink of an eye.

With Digital Real Estate, you own the assets, which means you have all the power and all the control.
TESTIMONIAL - FEELING BLESSED

3) Little To No Startup Costs: It’s possible to get into Digital Real Estate with zero dollars upfront. Because, using the strategies outlined in this program, you can get a client to pay you BEFORE spending a penny out of your own pocket…even before you do any work.

Even without getting paid in advance, you can have your first Digital Rental Property up, running, and generating profits for less than $100.

TESTIMONIAL - LANCE LEAD GEN

4) No Inventory: As mentioned above, spending 4-5 hours a day prepping and packing products to send to Amazon is a huge time commitment.

Plus, you constantly need to be buying new products if you want to maintain your business. You need to spend even more money if you want to scale up.

With physical products, you’ll always have limits on your time and freedom.

With Digital Real Estate, a 100% online business, you never have to worry about that.

TESTIMONIAL - SCOTT LEAD GEN

5) Easy To Duplicate: Ok, here’s the best part: once you have your first Digital Rental Property up and running, you can literally DOUBLE your income with a few clicks, a couple keystrokes, and a single phone call (and you don’t actually need the phone call).

Remember: each Digital Rental Property is worth $500 to $2,000 a month in semi-passive income (over 95% profit). Every time you decide to create another one and increase your income, it gets easier.

Because you have more knowledge, more experience, more results, and more momentum. 

If you wanted to double your income with Amazon FBA, you’d have to double your inventory OR your profit margins. And, guaranteed that’s a lot harder than a few clicks and a few minutes of your life.

TESTIMONIAL - ANNA DONE DEAL

6) Make Money Helping Real People: This part is what makes it all worth it. Amazon FBA is a decent way to make yourself money, but it doesn’t improve anyone else’s lives.

After all, there’s always someone else selling rubber spatulas and umbrellas. That might be fine in the short term, but in the long run you may feel like you’re missing a purpose.

With Digital Real Estate though, you’re actually helping people by solving your clients’ biggest problem…

Small, local businesses need more customers, and with Digital Real Estate, you are unleashing a flood of happy, paying customers for these businesses.

You make money by helping them make money.

Not a big, faceless corporation either…a small business owner who’s using that money to put food on the table for their family, start a college fund for their kids, or take care of a sick parent.

Once you see how Digital Real Estate makes a real impact in the lives of real people, you’ll sleep like a baby with a big smile on your face.

TESTIMONIAL - BOSS OF MY FUTURE

Now, the choice is yours. You could continue browsing, looking at opportunities like Amazon FBA which could one day make you money.

You could continue researching, never making a decision.

OR, you could take a look inside, consider what you really want, and join a program that makes your dreams a reality. At the same time, joining a community of over 2,000 successful students that are living life on their own terms thanks to Digital Real Estate.

A consistent, reliable, semi-passive stream of income that doesn’t depend on you or your time to keep producing profits.

All while genuinely helping real people who are grateful and happy to pay for it.
If this sounds more like what you want out of life (or if you just want some nice side income), click here to learn more about Digital Real Estate.

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