If you are looking to add another income stream to your business, and one that I personally find the most fun, you might be interested in Fulfilled by Amazon, or FBA. Every time I talk about FBA on my Instagram Stories or YouTube I get questions about it, so I thought it was about time that I wrote a blog post about it. Here is an introduction into Fulfilled By Amazon.
What is Fulfilled by Amazon
After starting our reselling journey in 2017, FBA became one of my favourite income streams. The idea is really simple: you source items to sell on Amazon, then you label them and ship them to Amazon and Amazon does the rest!
That's right, Amazon do everything else!
Amazon will list your product(s) in the marketplace, but because they are dispatched by Amazon, Prime members get benefits like free next day delivery.
Here are some FBA items listed in the marketplace (amongst Amazon's own listing):
Benefits of Fulfilled by Amazon
For me, the biggest benefit of Fulfilled by Amazon is getting the items out of my house really quickly. A lot of the items I send to Amazon are quite big and bulky, so getting them out of the house is a big priority to me.
Another is the sales rankings – these are almost magic numbers that tell you how quickly an item will sell. More on this later, but these numbers mean that when you are looking for products to sell, you know the likelihood of them selling, and when they will sell.
Amazon is also one of the biggest online retailers in the world, meaning that you can reach millions of customers.
What are the downsides
Before you head off to your nearest supermarket or charity shop to buy everything to send to Amazon, you do need to know about some of the downsides.
The first one is that the fees are really high. If you thought that eBay's 10% final value fees, alongside Paypal's cuts, were high, then look away now.
The fees will change depending on the size and weight of your product, but let's say you sold a DVD box set for £29.99, your fees on that would be £6.35. Ouch.
On a Lego Juniors Fire Patrol suitcase selling for £14.99, your fees would be £4.16.
This is before you take into account the cost of getting your items to Amazon, which at the moment is £5.06 for a box weighing up to 15kg.
Another downside is the additional fees that you can potentially incur.
Long term storage fees will apply when your items don't shift for over 6 months. These fees are incurred twice a year (February & August). For small time sellers like myself, these fees are a pain and quite a chunk of my earnings, however for other sellers they are just a cost of doing business.
You can avoid these fees by reducing your prices or having your items returned to you or even destroyed.
However, having your items returned to you or destroyed obviously come with more fees!
You can expect to pay 60p per item returned to you, and 20p per item to be destroyed.
Another massive downside is that some categories are gated, meaning that unless you go through stringent processes to get it lifted (such as finding wholesalers and submitting invoices) you can't sell products in those categories.
Amazon are also really picky about the condition of items. If an item is new in cellophane, however there is a small rip in the cellophane, you cannot list this as new.
How I find items to send to FBA
Step one is to always have your phone charged as much as possible because you will be using it a lot! You might want to invest in a portable phone charger.
I simply use Amazon's seller app and I can in the barcode of a product that I am considering buying. I do this anywhere – the supermarket, charity shops, car boot sales, etc.
Immediately after scanning a product I am given this brief overview. Let's assume that this game is £5 in a charity shop, second hand. I can immediately see that the second hand/used price is much more than £5, plus it has a decent ranking.
I then click through to find out more.
Sometimes the ranking doesn't appear on the front screen, but I can see it here. Make sure that you switch to ‘used' if a product isn't new, and from here I can see if anyone else is selling it on FBA.
From here I click through the £11.50 gross proceeds to get my actual total.
I've clicked the tab to show me how much I will make from an FBA sale.
In this scenario, it will be £10.16. Since I am buying the game for £5 and it has a good rank, I would go ahead and buy this.
What is ranking and what is a good ranking
Amazon's sales ranking tells you how this item has performed recently. The higher the rank (which actually means the lower the number), the faster it will sell.
Amazon assign sales ranks to their categories. After an item has sold, the rank will start to rise until it sells again. The longer it takes to sell, the higher the rank will go until it sells again.
I typically aim for products in the top 3-5%, although if the product is cheap and there is a big profit to be made, I will sometimes go higher than 10%.
How do I know if an item is in the top 3-5%?
I recently found some reduced Monopoly games in a supermarket that at the time had a sales rank of 14. I bought all 5 on the shelf and they all sold within 2 days after Amazon receiving them.
I then have a box at home where I keep my FBA stock, and once it is full I dedicate a few hours to getting my shipment sent to Amazon.
FBA toolkit (everything you need to get started)
Aside from the obvious stock, you will need some other things before you get started with FBA.
First of all, you will need to be registered as a seller with Amazon.
You will need your phone to scan items, the Amazon seller app, and the monthly sales ranking chart.
You might want to consider a portable phone charger depending on how many items you are scanning.
You will need labels to label your products for Amazon, these are the ones we use.
You can also get labels for your boxes, but we just use A4 paper and sellotape it on.
As for boxes, we try to get them for free from supermarkets and other stores, however we have had to purchase some in the past when we haven't been able to get our hands on decent boxes.
Selling on FBA can be really beneficial, but there is a lot to learn that can only be learned by giving it a try. I have made plenty of mistakes whilst learning – the biggest one being not understanding sales rankings and sending in items that will probably never sell.
That said, I really do love selling on FBA. I love getting the items out of my house and sent to Amazon so that they aren't taking up space in my home.