What to do with $1000 and no FBA Experience?
In today’s blog post I am going to answer a question that was sent to me by a reader. That question is:
If I had to start all over again with $1,000 and no prior knowledge of FBA what would I do?
She then asks some related sub-questions that I will answer as well. For those of you who are new to selling, I definitely recommend reading my guide where I outline how to sell on Amazon for beginners.
The first thing that I would do is get a scanning app so that I can make buying decisions to find out which products will be good to resell on Amazon.
Whether you are an Android or an iPhone user, I would recommend starting with the Amazon Seller App. It’s completely free and is offered directly by Amazon. This app will give you the information you need in order to make decisions on any products that might be good to resell. Here’s a link to the app for Android users, and for iPhone users.
The app allows you to use the camera on your phone to scan the barcode of items. It can even recognize items without the barcode, but it’s not quite as accurate as scanning the barcode. My recommendation is to scan the barcodes to make sure your items are a complete match to the Amazon product pages.
I would then go to retail stores to begin looking for products to resell online. This practice of finding low priced items in stores and selling them online is known as Retail Arbitrage.
Retail arbitrage is the sourcing method I recommend for almost all beginners because it is the fastest and easiest way to get started selling on Amazon, especially when you don’t have a lot of money to start with. It is also a low-risk way to learn more about selling on Amazon, and that knowledge is very valuable when you go to try other sourcing methods in the future.
The guide I referenced above goes into more detail about retail arbitrage, and so does the free course you can sign up for on the homepage.
The sub-questions begin below and cover the majority of my other answers related to starting again with $1,000 and no prior knowledge of FBA.
The first sub question is: what niche or sub-niche of products are you getting into and why?
I would not try to focus on a specific niche or sub-niche.
I would instead focus on what items I have available in my area that I can find at a price that allows me to make a profit.
So let’s say I have $1,000 and I’m to go to Target to look for products to resell. I’m not going to pick the toys category and only try to find toys that I can resell. What I would do is look at all of the different clearance and sale items throughout the store and see which products I can buy that allow me to make my desired return on investment.
Next question: What criteria would you look for when selecting products?
The first thing that I would look for is the potential return on investment (ROI) of a product. Typically the minimum ROI that I recommend to people just getting started is 100%. For example, if I spend $10 after all fees, shipping costs, etc. I want to end up with $10 profit.
If you are more risk tolerant you could go as low as a 50% return on investment. The higher the threshold you set the more cushion you will have for things to go wrong and still make some money.
The Amazon Seller App will allow you to easily calculate your return on investment for any item that scans.
The next thing that I would look at is the sales rank of an item. This gives you an idea of when the last time an item sold on Amazon. The lower the sales rank number, the better. My typical recommendation for people just getting started is to look for items with a sales rank lower than 100,000. Over time you will likely want to base your decisions on much more than sales rank, but this will get you started.
The ROI and sales rank would be my top 2 factors. You really could stop with those 2 if you want when setting your buying criteria.
I will continue on with some other factors of items that you might also want to take into consideration. These are more “wants” than “needs.” First, the smaller the item the better because then it’s easier and cheaper to send to FBA warehouses.
I would try to avoid products with expiration dates. I would tend to stay away from the grocery and health and beauty category because many of those products expire. In addition to that, these product categories require approval to sell. I think you are better off focusing on categories you can sell in rather than going through the approval process right out of the gate.
The main categories that require approval are Grocery, Beauty, Health & Personal Care, Clothing, Shoes, Jewelry, Luggage, and Automotive.
That might seem like a lot of products you can’t sell, but here is a short list of large categories that you will be able to sell in: Toys & Games, Home Improvement, Lawn & Garden, Home, Kitchen & Dining, Books, Electronics, and Video Games, among many others.
A couple other things I would look for are items that are not breakable and are good name brand. Fisher-Price would be an example of a good brand people are buying all the time in the Toys category.
Those would be some of the other factors that are I am considering beyond the sales rank and the ROI.If you would like to learn the exact buying guidelines I have my employees use when sourcing products for my business, check out How to Make $1000+ Per Month Selling On Amazon.
Next question: How many items would I buy in any one category?
I wouldn’t really be too concerned with what categories the items I found were in. If I found $1,000 worth of toys that I could resell on Amazon that’s completely fine with me. I wouldn’t have any issue with all $1,000 being invested in the toys category. As you continue to grow your business, this wouldn’t necessarily be the case, but when you’re just getting started, I wouldn’t be overly concerned with diversifying between categories.
Next question: how to price the items when you list them on Amazon?
I am going to assume we’re using Fulfillment by Amazon for this answer. I generally like to price items a little bit higher than the lowest FBA competition. I find I still get the buy box occasionally when pricing in this manner. In addition, I’m not creating a race to the bottom or causing other sellers of freak out and lower their prices.
So at the lowest, I would match the lowest FBA price and in general, I would probably price slightly above. About 1 to 5% higher than the lowest FBA price. I find that I will still get sales at that price. You can read a couple other posts I did on pricing items on Amazon and my two primary pricing strategies for selling on Amazon.
Next question: How many items would I send to Amazon in a week?
This would largely depend on the price point of the items that I was finding. My top priority would be to invest the $1,000 in inventory and get it sent to Amazon warehouses. Whether that is 10 different items that cost $100 each or 200 different items that cost $5 each wouldn’t be overly important to me.
Once I hit the $1,000 in spend I would then send those items to FBA warehouses. If I didn’t have $1,000 in inventory after my first week of going sourcing regularly, then I would send in the items I had found so far to get the ball rolling.
If you’ve never created an FBA shipment, you can download a free pdf that walks through the entire process by clicking the button below.
The next question is how to pack items to send to Amazon?
The main thing with packing is to put the items in a box and make sure you have enough padding so the items arrive safely. You want to use a small enough box so that there is not an excessive amount of empty space. If there is empty space you will want to use void fill to take up the extra space. The void fill I use is kraft paper, which can be found on my resources page.
However, I wouldn’t recommend paying for void fill right out of the gate if you can help it. The $1,000 would be better spent on inventory. Overall though, I wouldn’t overanalyze how to box up the items. Use your best judgment and pack carefully.
In terms of boxes, I’d recommend looking for free boxes if at all possible. Go to Wal-Mart, a grocery store, or somewhere like that and see if they have any used boxes you can have. If you want to buy them, Home Depot, Lowes, and U-Haul are all good options.