This is a guest post by Tom Buckland.
Amazon Business. Despite the slightly clickbait title I wanted to talk about how it is actually possible and in most cases quite easy to setup a semi-passive business inside of Amazon utilising their FBA platform with a loan as small as $10,000 using Bitbond’s Amazon loan services to get started.
When it comes to the Amazon FBA platform it is an incredible platform that allows people (without a lot of startup capital) to build million-dollar businesses within 12-24 months, we’ve helped dozens of Amazon sellers optimise their listings and skyrocket sales to 7 figures a year through our optimisation and marketing services. But of course these platform advantages come with issues.
Amazon is becoming more and more competitive, meaning ranking inside their search engine is becoming more and more difficult. Having success with Amazon is still possible, but we have to have capital to do this. A few thousand isn’t going to cut it, even if it were possible we would be slowing down our growth as a result and putting our startup at risk.
Financing an Amazon business
There are only 2 large costs to starting an FBA business.
The first is the initial stock order.
As we will be manufacturing a product (likely in Asia) and shipping this stock over to an Amazon warehouse, we will have to pay a large amount of money to get a certain number of units we can initially start to sell and promote inside of Amazon.
The number of units you decide to create is usually down to what product you are selling but also is usually a result of how much you can afford to invest upfront.
This is the first area where getting a loan would potentially be very important.
Key Advantages of Funding Upfront
Getting a small loan allows you to order more product at once and have a lower per unit cost.
For example if we only had $1,000 to invest into a product, including shipping and product production costs, our per unit fee could be 20% higher than if we could invest $3,000-5,000 into initial product production.
Many people say that you should start with a small amount of stock, and to some degree I agree with them, but there are a few issues with ordering a very small amount of stock.
Issues With Tiny Initial Stock Orders
The first is the one we just mentioned – It increases the price per unit drastically, meaning we aren’t going to be able to make a profit in the competitive, price-orientated market that is Amazon.
Another issue is that if you do sell very well in the early days, then you will have to wait for your supplier to create your product again and as a result you will be losing out on a lot of potential sales when you simply don’t have the stock in an Amazon warehouse!
This is a real issue when we factor in elements such as a decrease in organic rankings through lack of sales. This is something I have seen personally and unfortunately is very common with start-up clients we work with.
Getting stock orders right is a difficult skill, especially when you are starting up, because Amazon does have high long-term storage fees, these are additional fees if you do not sell your stock within 6 months.
Which is why competition analysis is extremely important, as well as understanding how much you actually could sell per day or month and reverse engineering this into a stock order.
Investing into Your Marketing
Once your stock is inside an Amazon warehouse you are ready to sell. But remember you won’t just suddenly start selling your product on Amazon from day 1. Just because your product is live doesn’t mean anyone is going to buy it!
Marketing costs can get extremely expensive and you should be very aware that you will need to spend a lot of money upfront to rank inside of Amazon.
If you fall into this viscous cycle you will never make it as an Amazon seller.
You have to rank organically for your keywords in order to make sales, and in order to make sales…. You need to rank! (OR you need to spend money on external advertising and marketing.)
There are several methods to spike best seller rank inside of Amazon and avoid this struggle to rank/struggle to make sales cycle.
Easy Methods to Spike Best Seller Rank
Spiking best seller rank early is the key to a successful Amazon business in general.
Of course you need a good product and great customer service, but if you don’t spike best seller rank then no one will know about your product and it doesn’t matter how great your product is if no one hears about it!
Spiking best seller rank results in higher organic rankings which results in more revenue. Let’s discuss a few ways you can spike best seller rank.
Remember you can take a slight loss upfront in your marketing to spike best seller rank!
Technique 1: Facebook Advertising
We’ve used Facebook ads for every new product launch since day 1. This is an area of expertise for us but even if you haven’t used it before it’s very easy to learn within a few days.
This strategy simply involves creating a simple advert with the benefits of your product and linking either a.) Directly to your amazon product page or b.) to a squeeze page where you collect an email and then sending the confirmation page to the Amazon listing page.
Both techniques work well, but remember the key of spending a lot upfront. We spend £200/day upfront with Facebook ads for 2 weeks to spike best seller rank.
This usually results in a decent ROI but not actually positive (on the face of it).
For example a £3,000 spend in Facebook and about a £5,000 in product sales (but after Amazon fees and manufacturing costs this is a slight loss.)
This does something far more important, this £5,000 in product sales spikes our best seller rank for long enough to rank us for our primary keywords.
Once we rank for those we start making organic sales from people typing our keywords into Amazon’s search engine and we release the real passive potential of Amazon.
This is the end situation we want to reach and what makes Amazon such a passive business model once fully set-up.
Technique 2: Email Marketing (Pre-launch list)
If Facebook isn’t your thing then you can build something called an email list. I’m sure most readers will be familiar with this but for anyone who isn’t, this is simply a list of people who have agreed to let you email them about your product or business. This is a great way to spike best seller rank as we have control over when we send this email to people.
But of course we have to build the email list in the first place. I don’t want to explain the methods of how to do that now as this post will be 10,000 words long, but you can see some good guides on this at kissmetrics and duct tape marketing.
Technique 3 – Influencer Marketing
This is one that is working incredibly well for us and actually gets us the highest ROI on average of any Amazon marketing technique.
This technique simply involves reaching out to influencers in your industry (or sub niche) and asking them if they’d like to review your product in return for some money or just a free product.
Most of the time people just say yes and then you get in front of their audience (who should be your target audience) for as little as $100 in some cases.
Depending on your marketing budget, depends on how much you can invest into influencer marketing, but when done correctly and timed correctly this can spike best seller rank perfectly, you just have to make sure you send out your product to the influencers all at the same time so you spike BSR as high and for as long as possible.
If You Run Out Of Money…. It’s All Over!
I don’t want to sound to overdramatic here, but if you run out of money for either stock or marketing then your business is over. Even if you have a lot of money tied up in stock or you are generating sales, if you run out of cashflow your business will fail. This is the #1 killer of businesses, and it’s probably the #1 killer of Amazon businesses too.
Building an Amazon business is a lot like building any business. There are relatively high costs upfront, but these are outweighed by the potential profit once the business is set-up. Amazon is becoming more and more competitive but with the introduction of platforms such as shopify, it is now easier than ever to start an Ecommerce business on a budget.
Getting a small loan of only $10,000 and investing $6,000 into stock and $4,000 into marketing upfront will give you enough to kick start any online business and potentially build up to $10,000/month in sales from as early as month 2-3. We’ve seen this with clients and it is 100% possible to do it with almost any business type, just remember to research the niche and your products before investing.
Thanks for reading.
By: Tom Buckland,
Amazon Optimisation Speclist.
Thomas Buckland is an Amazon SEO consultant who specialises in content marketing & influencer marketing through Amazon & Shopify. He lives in the UK and is a proud founder of his own digital marketing agency which now has numerous excellent clients. Tom’s business not only turns over £120,000+ a year, but also brings him extraordinary sense of fulfillment and the contact to fascinating individuals.
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