How much money do I need to start business on Amazon
Starting own business will always require certain amount of initial budget. Depending on business type and location start up budget will differ dramatically. Thanks to Amazon, anyone has a way to start their own full or part time business with probably the lowest budget required.
It is clear that even with Amazon you can find a niche that will require enormous stacks of cash. We will look at the case that will allow you to start business with as little money as possible.
The best thing is to start with something little in size and price. If you have no ideas you try looking at things like cloth or portable device accessories(cables, adapters, headphones, bluetooth gadgets etc) or similar. They can be found for pretty cheap price and fit into standard amazon box. Small size also allows to ship items by air from manufacture, so you will be able to start faster.
Visit alibaba.com or any similar portal and do a small research. You will be able to find a product with the cost around 1-4$ a piece. You will notice that there is a minimum order quantity. For smaller items can be 2-5 hundred pieces.
So if you will decide to purchase 500 pieces of $2 items that will be your first $1K to invest. Of course you can start with less or more, but $1-2K is the amount that will allow to see the results fast enough. You can start even with $200-300 by finding really cheap products but it will be hard to analyse and understand if you are doing good or changes need to be done to your model.
Make sure you request few samples from manufacturer in order to check product’s quality and avoid further problems with your buyers.
To start working with amazon.com site as seller you will need to have an account. Your 2 options here are: Individual or Professional account. Amazon will charge you $1 per item sold if you are selling under Individual account. Professional will cost you $40 a month. That’s the part where you will have to make a decision. If you can not estimate your monthly sales, you should go with Individual account. If monthly sales will be good enough, you will simply switch to professional account. This also allows to avoid extra $40 of investment in the beginning.
Now let’s talk about such expense as storing all the stock. Of course if you have spare space at home to store products and packaging materials you can have all items shipped there. But you will also require (assuming that you already have computer\laptop, regular printer and a smartphone) to purchase label printer, package materials, scanner, scales and much more small things and consumables. You can find used equipment, but it will still come down to additional $300-400 in expenses, plus monthly expenses on paper, labels etc.
Another option is to work via Amazon fulfillment (FBA). In this case Amazon will charge you a different fee amount depending on product parameters (price, dimensions, weight, product department etc). In exchange manufacturer ships all items to Amazon warehouses. Amazon will also take care about packaging and further shipment of the merchandise to your clients. This will lower your profits but reduce amount of startup budget. That is why this is the best choice for a new seller with limited funds.
The last thing that we would like to mention are product reviews and advertisement. We will cover them in details in further posts. Main point is that you can get free reviews using powerfull Amazon seller community on facebook. You can easily get high quality reviews by providing reviewer with sample at a lower price or for free. Reviews will attract more visitors to product page and make their decision to buy from you easier. It is a good investment, since only a very low percent of organic buyers leave any feedback or review.
Amazon is great platform to start you own business with really short budget and low risks. Any mistake will not cost you a fortune that will allow to try different niches and see which is most comfortable and works best for you. Reinvesting your profits will allow to scale your business and convert your small selling hobby to full time employment.