
How To Start An Amazon FBA Business - landfall
http://www.arbing.co.uk/amazon-fba-business/?post=awesome
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cm2012
I've worked with quite a few old school manufacturers that have expanded their
business by selling direct on Amazon.

Amazon's easy to use marketplace is the only online medium that has ever
worked out so well for companies that make products but are not savvy in
e-commerce. The profits from Amazon are giving these businesses the
opportunity to dip their toes in e-commerce.

The real advantage to the world from all of this is just starting to appear:
In every example that I know, the manufacturers are now getting the confidence
to start seriously selling directly outside of Amazon, because of their
experience on Amazon.

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mooreds
> the manufacturers are now getting the confidence to start seriously selling
> directly outside of Amazon, because of their experience on Amazon.

Hmmm. Are they concerned about marketing? That seems to be where Amazon
provides a ton of value--aggregating a tremendous number of customers that are
shopping. A manufacturer's website won't have the same traffic, right?

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cm2012
Precisely.

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mooreds
Err, maybe I misunderstand. Is it possible that their confidence is misguided,
or are they aware that Amazon provides a tremendous platform that, if they
sell direct to consumer, they'll have to replicate in some way?

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cm2012
Sorry, yeah, misread your question. It is really hard to expand beyond Amazon
because marketing is so hard. But the few that do succeed can then control the
customer relationship, so its worth the risk and investment.

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mooreds
Ah, yes, that makes sense. Thanks for clearing it up for me.

To me, it's a bit like the relationship between an author and a platform like
FB or twitter. Whoever owns the customer relationship is in the driver's seat.

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thirdsun
Very interesting, great guide. As a seller, it's actually very tempting.

On the other hand however, this is everything that's wrong with Amazon. This
feels messy and like wild west ecommerce. If I, as a customer, wanted to shop
with little to no curation I'd do that at eBay. Since I'm rarely interested in
buying that way I'd prefer Amazon to focus on quality products instead of
setting up a free for all environment.

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brianwawok
Amazon has never had curation. Other places such as Jet have curation but much
fewer products.

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komali2
Wouldn't user reviews technically be a form of "curation?" It's not like when
I search "SD card 16gb" I go past page 2 on the search results.

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brianwawok
Sure, crowd sourced curation.

The problem is, what happens when someone buys 100 reviews? If there was
marketplace curation - wouldn't matter, still only 4 listings for SD card
16gb. But with 600 people competing and buying reviews for SD cards? Who knows
what shows up as the highest reviews...

FWIW Amazon has 1,826 results for that query, and Jet has 35. I am sure Amazon
has more unique products, but not that many more.

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IanCal
Really interesting. I also followed on to this:
[http://www.arbing.co.uk/create-sell-physical-
product/](http://www.arbing.co.uk/create-sell-physical-product/) which is
worth a read.

Nice to see all the steps laid out, it's impressive how smooth the process can
be for manufacturing and selling something these days.

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ivank
How risky is it to ship straight from the factory to Amazon? It seems like a
supplier could switch to shipping duds/rejects, Amazon would sell them for
you, and you'd get a pile of 1-star reviews on your listing. Do FBA businesses
do anything to deal with supplier risks?

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Vibrelli
For a quality supplier, it's not in their interest to sell you rubbish. If you
make money and are successful, then so are they. Get to know them really well
but make sure you get lots of samples. In saying that, some just don't sell
quality products, it's up to to filter them. You can also hire people to do
Quality Assurance testing at the factory on your orders.

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arbingsam
As Vibrelli says, I use an extra step where the freight forwarder quality
check every item before sending them to Amazon.

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bambax
How does that work? Do they open 1 in 10, 1 in 100, etc.? Are products sealed
at the factory? Or does the freight forwarder seal them for you?

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arbingsam
They open and repack everything. Amazon requires a specific Amazon barcode,
you can either pay them to do it for you for 20c an item or pay someone else
to do it. I found I could get the item quality checked and barcoded for the
same price as Amazon would do it.

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bambax
Great answer, thanks! So quality check is 100%? And what is the defect rate?
What happens when a defective product is found?

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Vibrelli
From experience - really really research your suppliers as these will make of
break your business. Many 'suppliers' on Alibaba, are not manufacturers just
on-sellers. Also use other non-alibaba methods of sourcing suppliers, hire
sourcing agents who speak the lingo and help vet the factories for you. Also
focus on quality.. don't sell junk ;)

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nibnib
This looks fantastic. I am curious about reselling Chinese products - why do
Alibaba sellers value FBA businesses? Why don't they just set them up
themselves?

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arbingsam
Hello. I'm the guy who wrote the article. Just created an account as I saw I
was getting some traffic from Hacker News.

In answer to you question: They do sell on Amazon FBA themselves. More and
more so in the last year. In fact, in the seller center there are two choices
for language, English and Chinese. That is why I suggest focusing on creating
your own products or improving on existing ones rather than just reselling
stuff from Alibaba.

Even then you need to do your own marketing. As a consumer in your own market
place you should have an advantage over a Chinese seller who can only speak
broken English.

It's also worth pointing out that these factories aren't in the business of
creating brands. They're in the business of mass producing other people's
brands. As such the more people who work with them the better, regardless of
where they plan on selling the final product.

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petecooper
Constructive suggestion: make a note of which URLs are affiliate links, or
have a referral/affiliate disclaimer on the article.

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rbustamante22
I have been selling on Amazon for about a year now.

If you have not sold on Amazon you do not understand the scale of their
platform.

If you are interested in getting started I would recommend going the retail
arbitrage approach first. It is a great way to get your feet wet without much
risk. Trust me you will be amazed.

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mooreds
Here's the same author discussing retail arbitrage:
[http://www.arbing.co.uk/retail-arbitrage/](http://www.arbing.co.uk/retail-
arbitrage/)

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ilamont
The article glosses over a critical element: Getting Amazon reviews and
positive ratings.

Unfortunately, many sellers of new products take the easiest way out, and go
to Fiverr or a similar service to pump up their product with dozens of fake
reviews. A few also use fake reviews to bring down competing products. It's a
broken mess that misleads buyers and hurts legitimate vendors.

~~~
arbingsam
I'd always recommend new sellers to not buy or fake reviews. Not just from a
moral view point, but also from a business one - if Amazon catch you (which
they're quite good at now) that's it, no more selling on Amazon for you.

I totally agree with you that the Amazon review system needs a complete
overhaul. I've had fake reviews from competitors damaging my sales, and have
seen people get hundreds of reviews in a few hours. The issue is that it's too
easy to leave a fake review (you don't even need to buy the product), and too
few customers leave a real one. Less than 1%.

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gregpilling
I have a small factory in Arizona, and we sell products on Amazon as well as
through multiple other distribution channels. A few thoughts came to mind
while reading this:

1\. China isn't the only place to get stuff made. Look locally. We manufacture
our products, as well as products for two other companies who also sell
partially on Amazon. You probably have local contract manufacturers like us
who would appreciate a chance to compete with China. We use lots of
automation, and we are cheaper than China on heavier metal goods (over 20
lbs). We are also cheaper in small runs, or MOQ is typically 1; in China it is
often 1000. You probably have someone near you that can do the same.

2\. Getting a hit product isn't easy. Mostly it seems to be luck.
Manufacturing is like software development; sometimes you have to iterate for
a while before it all clicks with the customer. Once it clicks, its off like a
rocket. One basic path to a hit product is to create a product that is a
combination of others. I have a friend who makes a kit out of a bunch of
specialty tools for EMT. His is the only kit on the market and is a great
seller for him. Another friend had great success with an automotive accessory
this Christmas season on Amazon. He sold up to 50 units a day, that season he
sold 3000+ units. He was #1 on the “top seller” list. Don’t forget that he had
to have 3000 units in stock before this; that is a huge gamble if you are just
starting out.

3\. Having a hit product isn't easy to manage. Once you get a hit product it
goes 0-1,000 real quick. I had to manage 50-100% growth per month in the first
year of manufacturing. Per month. With a product made out of steel. If your
hit product is coming from China, I hope it is lightweight because you will
end up air freighting it constantly. I once air shipped a 1000 10 mm bolts
with a special head from China and it cost me $1000 in fees, $1 in shipping
per $0.13 bolt. If you ever run out of stock, you will fall of the "top
seller" list and your volume will plummet. China can take 3-6 months for a
restock order to get made, shipped, through customs and onto Amazon warehouse.
How do you keep stock for 3-6 months on hand? My friend who sold 3000 units
before Christmas, he had to ship those units to Amazon FBA well before then
and pay storage the whole time. The storage is sold by the cubic foot, and he
had thousands of cubic feet to pay for at elevated Christmas rates.

4\. Single Point of Failure. If Amazon suddenly decides that they don’t like
you, sales can go from 100-0 instantly - and now you have money tied up in
product, fees in storage, and no cash flow. Even if you have multiple
channels, Amazon will be a BIG customer. They are about 10% of our business,
and if they disappeared tomorrow it would hurt. If they are over 30% of your
business, getting shut off could mean bankruptcy for you.

5\. Building a brand is hard, and a different skill set than manufacturing.
The article is correct that there are thousands of manufacturers wanting to
build stuff for you. How well could you build a brand in a foreign country?
Especially if you are a manufacturer (focused on efficiency) and not a
marketer (focused on A/b, Social, advertising)? This is why the Chinese
manufacturers are happy to let a marketer take on the risk of developing a
brand, seeking out a customer base. As a USA based manufacturer I am happy to
make whatever you want too! We take Visa, Mastercard, Paypal, Bitcoin …..

The article is fairly complete though, I believe the author has actually done
this stuff.

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abbasaamer
Serious question about point #1: I've thought about contacting local
manufacturers, but I don't know where to find people such as yourself.

Do you also get discovered through Alibaba or is there some U.S. equivalent
version of the site?

I'd love to try someone local for some prototypes I'm building.

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tomkinstinch
Picking up a phone book is one option for finding local manufacturing firms;
one benefit of dealing with someone local is that you can pick up a phone and
speak to them in your own language. Another is that it significantly reduces
the iteration time during the prototyping stage, since you can drive over to
inspect things yourself.

Another is by web search: "contract manufacturing <city name>", "injection
molding <city name>", or "machine shop <city name>".

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awqrre
While it's true that you can find them using a phone book or any search
engine, it is not a similar experience to using Alibaba.

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bambax
Great article.

I'm in the process of making a physical product: a new quick-release plate for
DSLRs; I did find a manufacturer in China for CNC machining and had a couple
of prototypes sent to me (in France), which were of very good quality.

The problem is however, the final product will be made of several parts from
different manufacturers: the plate, a rubber pad, screws, washers, a box for
"clean" packaging, etc.

Are there factories that specialize in assembling/boxing a product, and what
would the proper keywords be in order to look for them?

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louprado
Have you asked your current suppliers if they could perform the assembly or
find someone who can ? That's what my company does and it has worked well.

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bambax
No, not yet, but I will.

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TeamMCS
Quite enjoyed this. I've been toying with the idea of using Amazon
distribution to increase scale.

Very helpful to see the steps laid out. Thank you

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kristianp
I don't buy stuff on Amazon because I'm in Australia (the shipping from US or
UK is too expensive), but I use Ebay and there are a number of local resellers
for any small electronics items I want to buy. Does anyone know of a similar
site about 3rd party fulfilment centres that can do Ebay shipping?

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wyager
It's incredible how efficient the market is these days. Great article.

