How Much Money Do You Need to Start an Amazon Business

This is a question my Amazon FBA-curious friend asked me, and the short answer is: 

It’s as expensive as you want it to be.

Don’t worry, that’s not a cop-out… In this article, I’m going to explain why launch costs vary from Amazon business to business and break down the main expenses of launching a product on Amazon.

Let’s do it!

  1. Stock

Your product is the number one cost for any Amazon business and this can vary wildly

You order 100 units at $5 an item that’s a cost of $500 (I’m terrible at maths, but even I can do that one!) On the other end of the scale you might sell high-ticket items (typically items that sell for over $200), so your inventory costs will be much higher.

When you’re starting out I recommend keeping your risk low and choosing a product with a lower cost. 

  1. Shipping costs

The shipping, or freight, costs are what you pay to get the stock from your supplier to you. 

Firstly this depends on where the item is coming from – It’s cheaper for me to get items shipped domestically within Australia than from China for example. Note: Normally items are much cheaper from Chinese suppliers so this would be outweighed with the unit costs. 

Another thing to consider is how you’re going to get your items shipped. Sea freight is cheaper than air but is waaay slower. 

The size and weight of the item is another factor. The bigger and heavier the item the more expensive shipping will be. 

  1. Packaging

How important is the packaging to your product?

If it’s a low-end item that people open and immediately throw the wrapping away then the packaging doesn’t matter so much and will be cheaper. On the other hand, people who buy a high-end item are going to want a nice box or bag. The same goes for items typically sold as gifts, for example, a fountain pen. In this case, the packaging is a key element of the product and will cost you more.

  1. Samples

When choosing a supplier, I always order a sample first to test the quality of the product, the shipping time and the supplier’s customer service. I typically order from 3 different suppliers.

Now, these aren’t free samples. Because I’m ordering a small number of items from 3 different suppliers, I’m not benefiting from any price breaks in the shipping costs. 

If you’re ordering samples from China, a quick and easy way to save money is to use a company like Sample Checkers or China Division. They will consolidate your samples in China and send them overseas to you in one shipment, saving you a few $s in shipping fees.

  1. Your listing

A good question to ask yourself: Are you going to write the listing and take the photos yourself? 

You can hire a freelancer to write your listing or do it yourself for free. Writing a good, SEO-optimised title and product description takes skill but it’s definitely worth learning. Check out my other articles on how to do this.

Images are a bit trickier. Quality images are vital to your listing, in fact, I’d say they do 90% of the heavy lifting for you. If you’re a budding photographer and have a good camera then, by all means, do it yourself, otherwise, I’d consider paying for some professional shots. It’s an investment that’s likely to pay off. 

  1. PPC advertising

Amazon PPC (pay-per-click) advertising is a possible expense. It’s not essential and depends on your budget, marketplace and niche.

If you’re thinking of launching on Amazon.com then competition is going to be higher and advertising will be more important. 

However, if you’re launching on Amazon Australia then PPC is not so important. I recommend focussing on optimising your listing in the ways I talk about in this blog.

  1. Trademarks

This is another optional one. Not everyone needs or wants to trademark their business, BUT if you have the budget, it can be very beneficial to do so.

I’d recommend trademarking your brand when you’re sure your product is a good seller – when you’re starting it may take a while to find those products that make money. 

Personally, I don’t trademark my brand until I see real evidence my product choice is a good one. If an item starts making me $5,000 in sales a month I can confidently say this business works and go ahead and trademark my brand.

Another situation where I’d recommend getting a trademark is if you want to go into Amazon Brand Registry. Brand Registry has a range of benefits including protection and enhanced brand content – it’s been shown to increase sales by around 10%.

If you plan on being in Brand Registry, I’d recommend registering your trademark ASAP as it can take between 6 and 9 months to finalise. 

As you can see, costs vary depending on your goals and budget. My advice would be to keep the costs low when you’re beginning and build your skills. As the money starts rolling in you can splash out a little.

There you go guys and gals! I hope I’ve given you something to think about and keep coming back for more articles to help you and your Amazon business succeed.

Hugs x

Stacey

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