Are you interested in selling on Amazon but concerned about investing too much? We have wonderful news for you! It's probably much less expensive than you think.
According to studies, new sellers who started a store on Amazon from scratch invested an average of $ 3,800, which included sample costs, manufacturing, shipping, Amazon fees, initial infrastructure costs, and other expenses.
The initial investment range is wide. It actually starts at less than $1,000 and can reach tens and hundreds of thousands of dollars, depending on the issues at hand. Some of these issues may be — whether your product already exists or is it a brand new product, number of products put up for sale, branding level, and branding envelope on Amazon.
It is important to understand that this is typically an initial investment, followed by additional inventory, improved listing, marketing expenses, and other expenses, so we recommend a minimum initial capital of $5,000.
We are frequently asked, "Are sellers who invest more money in an Amazon store more successful than those who invest less?"
The answer is emphatically no!
Starting an Amazon business with a larger investment does not necessarily result in greater success or profits.
It all depends on "how you do it," just like any other physical or digital business. It is possible to "waste" or lose money in any way.
So many items are on their way to selling on Amazon, and they may or may not lead to increased success or sales.
On the road to Amazon success, it is critical to understand what to do, how to do it, and when to do it.
First, how do you sell on Amazon?
Most Amazon sellers find suppliers and opt to produce their own private label, selling as a "private label."
In a nutshell, here's how it works:
Market Research: Examine Amazon sales data to identify product categories and niches with high demand and low competition. (There is a whole Torah about this, but that's what most sellers do.)
Finding a product and a supplier: Once you've decided on a niche, look for a supplier or a manufacturer who makes similar products, and then create a product under your own private label.
Launch: This involves product registration and uploading to the Amazon website, product formation and creative thinking on how to market the product
Your way is the most effective way possible.
Sponsored Advertising: Using Amazon's advertising tools to reach your target audience within Amazon to attract traffic to the product page via additional external traffic sources.
Contact us for a free consultation to see if it is worthwhile and appropriate for you to become Amazon sellers.
* Below, we will go over the essential costs of opening a store and selling on Amazon, as well as how these costs increase your brand's, thereby also increasing your profits.
How much money does it take to sell on Amazon?
Now, let's get into the specifics of the costs associated with opening an Amazon store.
For the average seller, we will define a number of discounts:
The product will be available for purchase on Amazon.com.
Private label product
Amazon FBA - Fulfillment by Amazon
Product cost = $4 (until arrival at Amazon FBA warehouses in the US - Landed cost including taxes and shipping)
The product is of standard size (the size of a shoe box)
We will aim for a profit of at least 100% on the ROI investment.
We'd like to stock at least 500 product units.
Distribution of 50 units / promotions and coupons
The costs for the Amazon sale will be divided into three categories:
Necessary Costs: To begin selling on Amazon, these are the expenses and costs that are needed to be incurred.
Recommended costs: While these costs may be dispensable when starting a successful Amazon business, it is best to invest in them to accelerate your chances of success.
Additional costs: Depending on your goals and objectives, these costs enable your business to grow even more.
1.) Necessary costs
Product sample ordering costs - SAMPLES: approximately $ 100 per sample * 3 samples = $ 300
When we want to sell a product under our private label, we prefer to order samples so that we can compare, test, photograph, and try the product ourselves. This way, we can sell it precisely based on our own experience.
Furthermore, there can be a significant difference between the product image and its specifications displayed on sites, such as Ali Baba and others, and the actual product.
It is therefore important to order samples from several suppliers to verify the specifications and product quality.
We recommend ordering at least three samples from three different suppliers after the initial conversation and inquiry so that you can compare and feel the differences.
The samples will arrive in about two weeks via express shipping at an average cost of $ 100 for the product and shipping. Some vendors offer a credit for the sample cost when you order your first mass production.
After receiving the samples, you can select the product and supplier that best meets your needs.
Inventory & Shipping - Inventory & Shipping: approximately $ 4 * 500 pcs = $ 2,000
There is a Minimum Order Quantity (MOQ) for each supplier and product. Although the minimum quantity and the price of the product are negotiable, we keep in mind that these are the costs and the minimum quantity.
An additional $ 2,000 will be charged for inventory production and shipping to Amazon warehouses in the United States.
Promotions, coupons, and distributions cost $ 200.
When launching a product on Amazon, many sellers drastically reduce the price from the target price in order to generate initial sales that will boost their ranking in the Amazon BSR index.
The best way to do this is to use Amazon Seller Central to create a promotion or coupon.
Furthermore, the product can be promoted through other channels such as opinion leaders on Instagram and other platforms, Facebook promotion, and more.
The cost of promotion will at the very least increase the cost of the product, which is $ 4 * 50 = $ 200.
Amazon Professional Seller Account: $39.99 per month
Regardless of what product you sell on Amazon or how you opt to ship it to your customers, there is a cost that you have to pay to register your product on the site.
Think of it as virtual real estate where the website is the Amazon-hosted virtual mall and you use it to "present" your product to a variety of customers.
Therefore, a professional seller account costs $ 39.99 per month, with no cost for those who sell less than 40 units per month.
If a seller has no fixed cost to Amazon, the seller will pay a total of $ 0.99 for each sale made on Amazon. If you sell more than 40 products, it is best to set up a professional account to enjoy more options on the Amazon platform.
The seller's account costs are updated monthly and do not include the costs of storage, handling, or shipping (we will expand on these in another chapter).
This fee will be deducted from your earnings during the subscription period.
In total, we spent $2,540 on essential costs.
2. Recommended costs
These are expenses that we recommend to include in weighing your initial budget because they can dramatically increase sales.
Sponsored Promotion - PPC Expenses: Around $300 in the first month
If professional work has been done and you begin to generate sales through distributions and promotions, then start to accumulate positive product reviews, you will gradually see it rise in the organic ranking of the product keywords and niche.
However, it is also wise to consider the costs of sponsored promotion in the Amazon PPC advertising system.
Using the promotion tool can help to increase product sales more quickly.
It is possible, and even recommended, to begin with a daily budget of $ 10 and a monthly budget of approximately $ 300.
Depending on demand and supply, a daily budget of $10 will allow for approximately 15-30 clicks and an average of 3 - 8 sales per day.
If you want to set up your own advertising campaigns, read this guide to learn how.
Brand Registration in the United States - Brand Registry: approximately $ 350
By registering your brand as a US trademark, you will be able to use Amazon's brand registration service.
Amazon's brand registration program enables you to own another brand, thereby protecting your listing and avoiding competition for the Buy Box.
Aside from that, registering your brand on Amazon gives you access to additional options such as opening a brand store with all of your products and custom design, more advanced promotion options, and so on.
The cost of registering the brand includes the services of a local U.S. attorney as well as the fee paid to the U.S. Patent and Trademark Office (USPTO). The average price is $ 350.
Total recommended costs amount to approximately $650
3. Additional expenses
These costs are not required at any stage, but are recommended to create a good and prominent brand over the competition.
Graphic Design: approximately $ 200
A valuable and strong brand requires graphic design. A good graphic designer will be able to create a brand language, select appropriate colors, design a logo, packaging, postcards, infographics, and more. All of these things will help your audience connect with the brand, identify with it, and even specifically look for it the next time they buy a similar product.
There are a plethora of graphic designers with connections to various content worlds who can add value to your brand. Look them up on Fiverr.
Professional product photography - Product Photography: approximately $300
Making your product stand out in the main image is important, especially when competing with other sellers who sell similar products. Quality photo photography is, therefore, becoming essential.
You can also look for photographers on Faber, Google, or contact us and we will recommend Israeli photographers who specialize in creating Amazon content.
Total additional costs of approximately $500
In conclusion, the minimum cost to open an Amazon store in this example is $3,690. However, don’t be overwhelmed by this because the optimal benefits will be worth it.
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