My name is Bermet Koshoeva, and I’d like to show you how I started with very little money on Amazon, doubling it to $2000 within six weeks. By sharing this, I encourage you to pursue your own Amazon store. So I will break down my analysis process and show you how I overcame these limitations that you are likely to face.
I hope this helps you pursue the dream of owning your own business. Thanks for reading, and let’s get started.
The idea that a business can be 100% run by one person is inspiring. The freedom to control my work hours and try different projects is excellent. The financial independence thing is also a fantastic addition.
In the beginning, I found out about Amazon’s low barriers to entry and the FBA (Fulfillment By Amazon Program). Even a few years ago, Amazon allowed almost anyone to join in. You don’t need any business understanding.
I took about $1000 from my savings to start, which was a pretty decent amount. However, this amount wasn’t so much that I felt like I would lose anything huge by investing. Many people start with little money, but the best thing you can do is get started.
When I was first looking for products on Amazon to launch my own brand, I followed all of the advice from Amazon gurus. But all of that advice didn’t matter until I established a process.
To start an Amazon business, I broke my plan down into these five steps:
- Finding a profitable product
- Creating your prototype product and making it unique
- Profitabily analysis
- Product sourcing (Using Alibaba to produce the products cheaply and send the shipment to an Amazon Fulfillment Center)
- Creating my listings, running Amazon advertising and ready to sell
Step one delves into a later section I’m going through to analyze products.
During the early days of starting an Amazon business, I had this product advice:
- Do not sell electronics (they are expensive and might malfunction)
- Avoid selling any breakable items (glass or ceramic)
- You should avoid heavy items (to reduce the cost of shipping)
- Do not pick a product with a lot of variations (one or two at most)
- Clothing is a bad entry point because of variations and seasonal issues
- It would be best if you avoided anything that has a high likelihood of a product return (anything requiring complicated instructions)
Following these guidelines allows you, the seller, to focus on selling items. This was good advice to avoid most customer service issues of more complicated products.
There is also the issue of understanding market analysis. Here are things to keep an eye out for:
- Demand – the number of people who want a product (usually dictated by search counts). You want this to be high.
- Supply – the quantity of inventory from suppliers. Ideally, this is low until you enter the market.
- Competitors – the number of fellow sellers in your market. Stick with underserved markets with few identifiable sellers.
- Marginality – The benefit of adding the product or changing an aspect of your strategy. (i.e., will having more inventory be worth it?)
- Market saturation – the number of people selling your product (or similar products). Making your product unique will reduce this, but you do not want to sell in a market with a high number of fellow sellers.
I found that using third-party analysis tools was the best way to collect its data. I used AMZScout, a powerful analysis tool, to quickly see if the product has high potential.
AMZScout’s analysis tools address many of the factors mentioned above. I like to focus on the quantity of sales measurements and the number of reviews, both showing me signs of the competitiveness of the target.
Here is how I use it to find ideas and analyze products on Amazon:
1. I start by setting filters in the AMZScout Product Database. In my case, I’m looking for specific filters in the kitchen niche. I typically look for items with over 100 sales per month and with under 30 reviews.
2. Next, I use the AMZScout PRO extension to narrow down profitable products in my niche. AMZScout provides a niche score detailing how many sellers provide similar products in the niche alongside a number of reviews (which show how competitive the product is). Historical data shows whether this product has consistent potential.
3. I then use the “find on Alibaba” feature to search suppliers. Alibaba has numerous suppliers that know how to meet Amazon’s unique shipping requirements.
I tend to void reading too far into sales revenue or Best Sellers Rank (BSR), which often leaves you with a skewed perception. While you want a product that gives you a high income, this will not help you if you enter an oversaturated market.
It will take several weeks to find a successful product in ideal circumstances. For me, this was about three weeks, following the advice of Amazon gurus reminding me to keep things simple. My first stop was cork coasters. It hit everything I needed and was a low-saturation product. The numbers had great potential, but I made this product unique by placing a mandala design, which I purchased as a stock image.
I had a bundle of eight coasters, which were straightforward to customize. Given that this was cork, it also had a low product defect chance and inexpensive manufacturing costs.
These coasters hold a special place in my heart but were (inevitably) copied by fellow sellers on Amazon. When having an Amazon FBA business like mine, you can expect people to duplicate your success.
While it’s unfortunate I had to move on, I did use the experience to expand into the kitchen niche. While “kitchen” isn’t known to have many trending products, it is a solid category to be a part of.
I started with $1000, a good investment amount. I did my calculations on a per-item basis, which I recommend you do to identify your profit margin with greater ease. I also recommend having a complete cost breakdown using available FBA fee calculators to keep it simple.
In my case, the calculations broke down like the following:
The breakdown of what each category means can be found here:
- Manufacturing costs are costs to produce your products. This might include research and development but does not include transportation.
- Shipment costs are costs for shipping products from manufacturer to Amazon FBA warehouse.
- Amazon’s commission is fees that Amazon gets from each sale, including FBA fees.
- My price was what I sold my products for. This was within the range of other sellers (which varied from $10 to $20).
- Net margin is a profit that I will receive after deducting investments and expenses. This does not include advertising costs, they are not divided on a per-unit basis.
The earnings above meant I could justify its investment pretty easily. My next step was putting in the legwork.
After determining this would be a worthwhile investment, I put the effort in and searched for a manufacturer on Alibaba. My manufacturer went through these steps to get the product to me:
- Design and development
- Sample testing
- Order production and shipment
It isn’t an overnight process, taking them about a month to get through everything. But the importance of testing samples cannot be understated, as you do not want your customers to get a low-quality product.
Given my timeframe, I missed Black Friday’s sales potential but found more possibilities with the upcoming Christmas season.
Once your items reach the website and your listings are ready, Amazon will immediately load the inventory for you. From this point, I started a standard PPC (Pay-per-click) campaign with automated targeting. PPC is Amazon’s preferred method for advertising goods, where you appear in a sponsored spot for search results, but only pay if someone clicks your advertisement.
Once I made my first sale on the second advertising day, and all of my doubts went with it. This proven success emboldened me to take further action.
To simplify matters further, I set up a third-party email marketing campaign. This automated system enabled me to request customer reviews without creating out individually. Product reviews are critical.
During this time, I had a manual campaign based on data from where most of my sales were. For several months, I was on the top slot of Amazon, making up to 13 sales a day.
Eventually, this effort put me on the top slot for “mandala coasters” and “cork coasters.” I was able to turn off advertising once I got this ranking but owned the top space, meaning my sales were virtually unaffected.
By the first week of January (from early December), I had run out of stock. My experiment was a success. My total sales earned me $5,980 in six weeks, which (in reality) was about $1,928 once you factor in the costs of production, sourcing, and advertising. I would have gone back for another round, but the field had become much more competitive at this point, drawing me to the kitchen sales category.
My results reminded me that it would be easier to duplicate because it was easy to create. While it was a neat product, your unique element can’t always find the right stock image. However, that might be a good start.
When I started on Amazon, I had a Bachelor’s Degree in Business Administration. I was studying for a Master’s degree and had five years of experience in marketing. My college education was mainly in a South African village in Eastern Cape.
Of course, just because I started with a bit of experience doesn’t mean everyone needs this. Most of my knowledge came from YouTube and the internet.
I remember living in South Africa and constantly struggling with finding decent videos. I had to be incredibly careful to stay within stringent data limitations.
The biggest challenge I faced came from not having enough data and analysis. This focus bled into most things I did, resulting in a few unfortunate incidents.
I had bought a new product in one case, not knowing how competitive the market behind it was. Numerous sellers were in the product listing, causing me to make heavy PPC campaign investments.
Eventually, I had to drop the price of my product until I undercut my competition. So I made no profit, not overcoming my break-even point. So be careful to focus on places that only have about two or three sellers when you start.
My weak data also led to me questioning whether people would buy from me. This trepidation is entirely natural because fear is a typical emotion with something new.
It is vital to find popular products and be decisive once you get evidence that you have an excellent product to overcome this. Research using Google Trends and third-party analysis tools can help provide answers.
My last challenge relates to a struggle you might share with me, social anxiety. As an introvert, the idea of communicating with people and making connections doesn’t appeal to me.
However, Amazon provides me with a way to overcome that social anxiety, sticking to email and chat communication. Having traceable contact also allows me to track business communications easily, so this is a win-win.
There are three tips I want you to go home with.
First, I want to emphasize the importance of analysis. Knowing your data enables you to build a strategy on Amazon better. Much of that data comes back to keywords and niche specifications, both of which I find using AMZScout.
My second tip relates to some of the nuances of selling. Having a basic understanding of your product helps you better identify how to sell. Like with my niche (kitchens), it isn’t known for “hip” and “trendy” products, but there is a lot of room for growth given the countless numbers of kitchen products.
By focusing on what you do (and not chasing trends), you can establish a firm baseline. Focusing on supplementary and complementary products to what you offer gives you a natural way to expand and make money.
Finally, know that having an educational background does give you some advantages. I used my financial and operations management knowledge to reach success. If you can’t afford an education, you can use free online resources. But if you can, going to university can help establish a solid business foundation.
My Amazon FBA business has given me the free time to try many things. Through this, I consulted other companies, participated in community workshops, and even had a chance to work as a lecturer at my local university. I’ve even thought about creating a product line and brand.
The one piece of advice I’d like to end is understanding market analysis. It is imperative to know how your product will work. Preparation to be ready for any situation that may arise due to what may happen with your product is essential.
To start a business on Amazon takes persistence, and most people don’t get their first product release right. However, a bit of effort will enable you to achieve your Amazon business goals.