There has been a lot written over the last few years regarding earning an income by selling products on Amazon, primarily with their FBA program or partnering with Amazon Associates (Affiliate Program) and promoting any of their products on your website, and I’m here to help you separate the fact from the fiction and go in with the right knowledge.
Amazon FBA (Fulfillment By Amazon)
In the last couple of years there has been a bit of a renaissance with Amazon, and especially for Amazon Sellers. When Fulfillment By Amazon (FBA) was introduced, seemingly the entire world opened up to individual sellers. It’s not that retailers and wholesalers couldn’t sell product online before FBA, it’s simply that when Amazon opened this market up on their platform it did 3 very amazing things for sellers.
1.)End-To-End Fulfillment: It allowed a seller to keep all of their inventory at Amazon distribution centers across, theoretically acting as a drop shipper for the seller. This means that when orders come in 1-by-1, Amazon handles the entire process.
2.) Amazon Payments & Returns: Amazon not only handles the storing and shipping process, but also the payment processing! Think of it like this, you only need to get Amazon your product (which can sometimes even be shipped from your outsourced manufacturer direct to Amazon!) and Amazon quite literally takes care of the rest. From receiving, to shipping, to processing the customers credit cards and even handling returns!
3.) Amazon’s Brand: The other 2 things are amazing and definitely a seamless way to sell products online, but nothing was stopping you from doing the first 2 things yourself. Before Amazon FBA most retailers housed their own inventory, processed payments, shipped products and handled customer support. What they didn’t have was millions of shoppers every day looking for products just like theirs!
This is the game changer. The one thing that pushes everything over the top. And it needs to be clear. The most difficult part of selling products online isn’t the overall process, it’s customer acquisition. Amazon, in essence, fixes this. You no longer “have” to market the traditional, very hard way. You just have to learn how to market to the millions of Amazon shoppers on their platform and you’ll have access to a seemingly unlimited stream of sales!
Does all of this sound to good to be true? Well, it isn’t. If you’ve got the right products, they’ve got the customers. However, much like anything there is a catch. The competition is going to be vying for these customers just as hard, or possibly harder than you are! I’ll go into Amazon FBA marketing more below, just know that you do have to put in effort, with high quality listings, reviews and competitive pricing to get the maximum amount of sales volume.
How Does Amazon FBA Work?
Why use words when a video can accurately sum up the entire Amazon FBA process? Exactly, I’m all about easy!
How To Get Started With Amazon FBA
Amazon isn’t about making things too difficult. If you’re interested in signing up to sell products on Amazon and use their fulfillment program, sign up right here! They will guide you through the process step-by-step, though – signing up isn’t the hardest part, figuring out what you’re going to sell is!
What Products Should I Sell On Amazon FBA?
General rule? Whatever you can get cheaply and reliably with at least a 100%+ profit! Yoga mats have a great markup, as do things like hoodies, but ultimately it’s going to come down to where you find an edge. It’s a competitive market, so do as much research on products as possible, don’t hesitate to research Chinese manufacturers (please, please research well here!) and locate a product that you can get in bulk and reliably. The last thing you want is a great product once. If it’s successful you need shipments coming in on the regular or your competitors that have inventory will beat you badly.
Cash flow is important! I’ll talk more about that.
How Much Money Can I Make With Amazon FBA?
Many, many sellers are doing 7 figures per year in revenue. Instead of worrying about the revenue, focus on your profit and more specifically, your profit margin. The average margin is somewhere around 30%, in my opinion this is the bare minimum of where you should start. Amazon can really end up being a price war, so you need some room to move and you certainly don’t want to be down in the 10% profit range. Be smart here and the sky is the limit, we’re talking millions and millions of dollars.
One guy I know makes $5,000,000+ per year selling yoga mats, so find that product niche, get a reliable supplier, make sure you’ve got a great profit margin built in and put in the work!
How To Market Your Products On Amazon
This could really be the trickiest part of anything that you do regarding Amazon FBA, because how you “market” on Amazon has everything to do with how easy your products are to find. Rarely are you going to be the only product in a specific vertical, especially if you’re buying a product wholesale. There will likely be many competitors, often for the exact same product.
And even if you’re the only one with that specific product, like say – a board game, the reality is that you’re competing against A LOT of other board games! So, successfully marketing on Amazon can really be two-fold. You’ve got to rise above your competition and then you’ve got to get attention/buzz to your specific product. That being said, let’s focus primarily on how you can get more sales off the Amazon platform.
Winning The Buy Box
There is quite literally nothing more important on Amazon than the buy box. For those that are unclear what a buy box is, I’ll use an image to show you, because it makes complete sense when you see it and it’s not hard to understand why you want it.
Do you see the “Add To Cart” button? Well, that is tied to just one company! When a customer clicks that button, the item is added to their cart and that’s that.
How easy do you think sales would be if you were the company Amazon used for the buy box on a popular product? There are millions of people each year looking for iPads, and to have the buy box on this listing would mean that more often than not the customer adds your product to their cart and buys. You didn’t spend a dime marketing to them, Amazon did it for you!
So, what’s the catch?
There’s always a catch, isn’t there? Well, the catch isn’t in the buy box itself, it’s in winning it! I’ve just explained why you’d want the buy box (easy sales, high volume, no work) so it doesn’t take a genius to realize that your competition is going to want it to! Yep. Winning the Amazon Buy Box is like a #1 search listing on Google and when I say that everyone is gunning for this, I mean it.
Alright, I get it. It’s very competitive. So, how do I win the buy box?
Here’s how it’s done.
- Pricing: You have to stay on top of pricing, and often the lowest price wins – even if it’s a penny! Prices can change at a moments notice so you’ll need to update accordingly. Though, don’t think price alone is the difference, that would be too easy and a lot of shady companies could just lower prices and win the buy box. Price is a big part, but not the only part.
- Shipping Performance: What is this? It’s the internal metric that Amazon uses to evaluate how effective your shipping and product quality is. Note, if you use Amazon FBA this less of an issue, but selling on Amazon doesn’t require an FBA account, so this metric matters. Amazon cares that you get orders out on time and your product isn’t damaged or returned at a higher rate than competitors. Put it this way, even if you use FBA there’s a chance you could have a lot of damaged products that would spike your return rate – Amazon isn’t going to reward you for that!
- Seller Rating: Industry experts say that if your seller rating is below 90%, you’re not going to win the buy box. Don’t understand what a seller rating is? I’ve included Amazon’s description below.
How Is Your Seller Rating Calculated? (Link)
Each of your orders in the last 365 days is assigned a score, called an Order Quality Score. If an order is fulfilled without any problems, it receives 100 points. Orders with associated problems lose points. Your Order Quality Score takes the following events into consideration:
- Order-related buyer messages that do not receive a response within 24 hours
- Orders where the actual ship date is later than the promised ship date
- Cancelled orders (does not include buyer-requested order cancellations)
- Orders that are not confirmed shipped within the required time period
- Seller-faulted credit card chargebacks on an order
- Seller-faulted A-to-z Guarantee claims on an order
- Negative feedback on an order
So, that’s the gist of winning the buy box. Nothing easy about it. You have to be an awesome seller, which means in a true catch-22 form you need to establish a good track record before they give you the buy box and then of course – you need to stay on top of pricing! Exhausting!
In addition to the buy box there is one more very important way to get sales on Amazon.
I can’t go into too much detail because this section alone could be a 5,000 word post, so I’ll make sure to create a separate article with all of the latest tricks, however, I’ll touch on some of the key points.
People search for products on Amazon over 3x as much as they do on Google! Think about that. There’s millions of product searches each and every day on Amazon all from customers looking to buy, or at least research products. Saying that’s a huge market is an understatement! If you have any dream of being competitive on Amazon you need to understand what influences search ranking so your product is at or near the top of product search results.
Thankfully, a lot of the key components of winning the buy box apply to kicking butt on their search results as well. Amazon isn’t Google, they aren’t interested in answering questions, they rank products based on a customers likelihood of purchasing. So this should tell you that you probably won’t rank well right from the start because you need to have some kind of track record of purchases, successful fulfillment and positive customer feedback as well as a low return rate.
In a nutshell, this is what Amazon wants to see.
- Conversion Rate: Customers buy your product over competitors. This means high conversion rate (CVR) which is when you turn a visitor into a customer.
- Bounce Rate: Customers spend more time on your product page than competitors. Your “bounce rate” matters. It’s hard to convert a customer when they leave your product page!
- Customer Reviews: Customers buy and review your product regularly, giving positive reviews.
- Fulfillment: Amazon has a low tolerance for fulfillment issues. If you can use FBA, use it. Let Amazon take care of that.
- Questions & Answers: Customers questions are asked and answered. Customers should be asking questions and getting helpful answers.
- Product Descriptions: Quality, keyword-rich product descriptions that help customers understand the product.
- Images: High-quality, large product images (1,000px x 1,000px allows Amazon to use Product Zoom which increases conversion!)
- Price: Here we go again with price. Sorry, but Amazon’s customers care about price, so Amazon cares about is as well. You MUST be competitive, if not the lowest price.
- Product Title: This is key, Amazon allows you to cram keywords into the title. Don’t go wild here, be descriptive, but definitely utilize the keywords you know customers use.
- Product Specifications: Specs are huge with some products. For instance, no one is going to buy a 4k Ultra HD TV without knowing the specs!
- Categories: Having your product in the proper category matters a lot. Look at your competition, see where they’re listing products – mimic that.
Alright, this is a good start. It’s not definitive by any means and I will definitely add new articles with better tips and tricks, including the really sneaky stuff that can help you rank faster, but for now this will have to do or this page will be way, way too long to read!
Amazon Associates Program
EXTREMELY IMPORTANT! There have been rumblings in the affiliate community that Amazon is set to lower the commission structure of their affiliate program substantially! Until this is fact, we can assume the same structure, but rather than learn a very hard lesson in the future, keep this in mind. When building businesses around any affiliate program you’re risking changes that are outside of your control affecting your business. This happens every day, and it’s happened to me more times than I can count. Affiliate income can be huge, up to 7 figures per year, but it can also change at a moments notice. Always keep this in mind and diversify, don’t get caught with all of your eggs in one basket.
What is Amazon Associates?
Amazon Associates is the name of Amazon’s affiliate program, which allows people like you and me to put Amazon product links on their website and earn money when a visitor clicks through and buys a product or products.
How Much Commission Does Amazon Pay?
Instead of writing it out letter for letter, here’s a handy little image from Amazon showing you their current commission rate structure. Most of this should be pretty self-explanatory because they list how many products you need to sell in the left-hand column, and in the corresponding right hand column they list the commission rate. You’ll notice very quickly that the more volume you produce, the higher the commission structure for you. The first hurdle is getting 7 products shipped (that does not mean 7 separate orders!) and you’ll get a quick bump to 6%. This is very likely the range that the majority of affiliates fall into as in order to get to 7% you need to hit 111 products shipped.
You should also notice that the commission rates don’t go any higher than 8.5% and there are definitely restrictions on certain types of products, such as Consumer Electronics which have a capped rate. All of the gritty details are in their Advertising Fee Schedule if you want to bore yourself to tears reading through it.
How Much Can I Make?
Well, don’t you get right down to the hard questions?! No, but really. This is a fantastic question and one that I ask any account manager if I sign up. I want to know where the average is, who’s doing what and how much volume, .etc, because it’s important to me to know that people are finding success with an offer. Now, Amazon is a little different. They aren’t going to give you any stats, or tell you which products convert better or any of that. They’re just too big to do that for a little solo affiliate like yourself and unless you’re at the top of the commission rate structure (8.5%) or close to it, you very likely won’t even get an account manager!
Now, let’s get real here. What you can make is up to you. If you can sell $4,000 worth of products each day then you’re going to clear around $1m in revenue for the full year. Some people reading this may get blinded by the number, or look at that number and say “You can’t sell $4,000 worth of products 365 days per year” and to that last person I say – Oh really? You can’t sell 8 TV’s per day for around 7% commission each month? You’re telling me there’s no possible way to have 50 customers per day with an average cart of $80? Or 100 customers with an average cart of $40?
I say bullshit. You CAN do those numbers if you reverse-engineer what needs to be done. No, you’re not going to sell 1,000 $4 products each day, and you’re probably not going to sell 1 $4,000 item per day either, but it’s possible if you understand what it takes to acquire the traffic necessary to make those purchases.
OK, so let’s jump off the cloud a little and come back to Earth. Most affiliates that are doing big volume without a core focus (think: ThisIsWhyImBroke.com) are purported to be doing about $20,000/commission per month. That’s a pretty high traffic website that’s not doing a hell of a lot of money for the amount of products they sell. Now, their numbers are private, and it could be closer to $50,000 per month, but that’s beside the point. What’s the problem you see here?
There’s no explicit focus on higher ticket items!
You’re going to be traveling a steep road if your goal is $20,000/mo with a list of “best selling” or “interesting” products that cost under $50. We’re talking $9 books, $19 gadgets, $39 clothing .etc. Even at the highest commission structure you’re only bagging 8.5%! If your average order per cart is $45 you’re going to pull a whopping $3.83 commission! Yuck. I’m not saying it’s worthless, but yuck. You’d need 1,000 customers per day to hit the big goal of over $1,000,000 in earnings per year!
What if instead you built a niche website around a product like 4k TV’s where the average price is $1,000 – $2,000, with a high of over $20,000 and a low of $127? (Click Here To See What I Mean!) I’d say if you don’t mind working your butt off part-time for a year building the website out with proper SEO, you just might see 4 – 5 sales per day. In fact, “Best 4k Ultra HD TV 2017” is just begging to be written by you, or even better, video + article!
So, if anyone tells you that you can’t make $1,000,000 per year as an Amazon affiliate, then please, just show them some simple math on how it’s possible. You may never get there, but it’s possible and you would not be the only person doing it. Yes, the average is probably around $300 – $500 per month, however, they’re not doing it right. They’re not aiming high enough and soon someone will take their traffic and customers and they’ll be left with nothing.
Competition never sleeps! You’re all promoting the same products, so you better work your butt off!
What Is The Best Way To Promote Amazon Products?
Let’s just keep this simple, because it is simple. You’re not allowed to buy traffic for Amazon, so you need to get organic traffic. There are 3 main sources of this traffic…
- Search Engines
Now, in the first one, Search Engines, we’re talking about SEO, organic (FREE) listings. This is one of your primary areas of attack and a good website with great content goes along way towards your goal. Something using WordPress is just fine, and quite honestly, one of the best possible options. Oh, and it’s free to use. If you can write, you can create articles and those articles can rank well for certain search terms and drive traffic to your site and then, hopefully, Amazon.
In the second one we have social. I’m mainly talking about Facebook, Instagram & Pinterest. They all have their unique marketing angles, but most revolve around impressive images and awesome articles. You should definitely work this angle to help build a brand and increase awareness of your website. It’s not so much about pitching Amazon products on them, because that’s frowned upon, however, if your website has written a helpful article on Hottest Christmas Toys For 2017 it’s in your best interest to get that out on the social networks.
The 3rd one is my favorite – Video, and when I say video, I mean YouTube. This is free traffic people! If you can make a video and build a quality channel with thousands of new subscribers each month you’ll be kicking butt in no time! There’s a lot that goes into video filming and production and as of this date I haven’t created anything that really dives deep into the production-side, but I will – I promise. It’s not as difficult as it seems at first and once you get the hang of it you could really find that the best traffic comes from the great product reviews you have on YouTube.
Ok, so those are the sources, but what is the best “way” to promote Amazon products?
In my opinion, it’s with a review website and corresponding YouTube channel + social media account. As an example, let’s use the 4k TV’s again.
- I Buy A Domain (I buy all of my domains at NameCheap. GoDaddy is a complete ripoff, $15/yr for a .com? GTFO. $10/yr is as much as you should pay.)
- Get Cheap Website hosting. ($3.95/mo + 1 click WordPress Setup!)
- Download & Setup a WordPress Website. (Note: If you use the hosting link above, you not only get a rock-bottom rate, but installing WordPress takes 5 seconds)
- Start Writing Awesome Articles!
After this I get my YouTube channel (and some decent camera equipment) and start filming! No, this isn’t easy, but as I stated above, I WILL write articles that will help you here, hopefully by the time you read this! It will cover good camera setups, editing software and YouTube “SEO” so you can rank videos.
With those 3 steps, repeated on a regular basis, I would expect to start ranking well for top terms in 12 months or less. I may not be well on my way to 7 figures per year, but I know that I’ll be doing at least $4k/mo by the 13th month because…well, I’ve been doing this a long time and that’s how it’s done! Just take my word for it…