A lot of you want to start the side business so you can make a lot of money. Of course, we all want to. But a lot of you have not even taken that first step to start the sourcing process, why? because of fear.
I understand completely, so in this article, I’m going to give you some practical advice about how to start Amazon FBA safely and help you start the first sourcing step with minimal risk.
Before we talk about the first sourcing step, let me just say that anybody who has higher aspirations for their career and their life should start a side business at least one in their life.
You don’t have to be so successful at it, but the experience of starting a business, owning a business will give you so much insight and perspective. And it’ll help you to succeed at a particular function if you’re so passionate about.
According to our experience in the sourcing field, the best advice we can give it to you for your first sourcing step is to start small. There are 5 elements to the starting small, the whole idea of it is to use a very minimum amount of money to learn the entire business process.
From the very beginning of starting Amazon FBA, you will go through these process: identify the products and suppliers, build the foundational relationship with your suppliers, issuing the purchase order, control quality, managing the entire shipping importation process. Then launch your product on Amazon, do the product gave away and do the PPC to promote your product and eventually receiving money from the Amazon.
From the financial expected view, if you can break even, you win, because you learn the entire process.
So let me elaborate on the starting small.
The first element of starting small is to buy a smaller quantity.
Never buy a big quantity on your first purchasing because you don’t know how the sales are going to be. If the sales are not going as well as your expectation, it might take you a long time to sell them out or it will become a stock in the warehouse, so there will be additional costs arise.
Buy a smaller quantity is safer and less risk, you can use them to test the market and decide the next order quantity according to its feedback.
Of course, all the suppliers will ask you to meet the MOQ requirement(minimum order requirement), can you negotiate the MOQ from 1000pcs to 300pcs? If you know how to negotiate with suppliers for a small quantity, that’s good. But if you’re new and you don’t know how to negotiate, you can refer to our another post “How to negotiate with Suppliers for MOQ“, it’s a step by step guideline to help you go through the entire negotiation process. After reading this pose, I’m sure you can negotiate a lower first order quantity.
If you are researching the product between 2 suppliers, one is costing 2 dollars, another is costing 5 dollars, you just go with the 2 dollars one. Because your goal is to learn the entire process and hoping that you won’t break even, so you can win.
The entire process is the same as selling a 2 dollars item or 5 dollars items. And the whole impact could be huge if you don’t negotiate the MOQ. For instance, a supplier quote you 1000pcs at 5 dollars per unit, your exposure is 5000 dollars. But if you negotiate MOQ for a smaller quantity to 300pcs and you choose a 2 dollars item, the exposure is only 600 dollars.
You can see the gaps is 4400 dollars for you to learn the entire process for your first product. Therefore, smaller quantity plus lower price, your order value is at the minimum cost, that means you’re at minimum risk.
It’s obvious that you want to minimize your shipping cost. When you’re doing the market research for your first product, keep in mind that you need a small, light item, so you don’t have to spend a lot of money on shipping.
Shipping cost is calculated based on its size and weight, the bigger/heavier of the products, the more expensive shipping. Especially when you have to ship the products through air shipment to launch the product quickly on Amazon, you will find the air costs are incredibly high. You’re going to lose money in this situation. And if ship the products via ocean shipment, it takes longer to deliver and you lose the good timing to sell the products.
But if you have a very light, little item and they are packed in a smaller box, the air shipment will cost you very little, you could quickly move fast to Amazon and start as soon as you launch your product.
Thus, keep in mind when you’re researching your first product, keep it light and small.
The smaller factory is between 30 to 100 employees, try to find a smaller factory. Because for your first order, you want to be a little flexible, you want them to pay attention to your smaller order.
If you place this order 300pcs to a large factory who is used to run 100,000pcs at a time, they won’t give a damn. Your goal is to learn the entire process, therefore, find a smaller factory to start first. After you get the product launch, you can adjust and change your sourcing strategy completely.
Another benefit to finding a smaller factory is that to the big factory, your order may be just like sample order for them, but to the smaller factory, you will be their VIP customer and you get totally different services. They reply to your questions quickly and they’re willing to do more change on your request.
Another safe and practical ways to start Amazon FBA business is to have a good sourcing agent on your side to help you. If this is your first product from overseas, it will be very helpful if you have a sourcing partner to handle all the import process for you. They can arrange factory audit and check the product quality, and make sure the products are produced exactly to your requirements.
So you can focus on the more important work like sales and marketing, and leave the rest of repetitive works to your agent. It saves you lots of time and helps you launch the products to the market more efficiently.
And, when you have multiple products from different suppliers, sourcing agent can collect it all and deliver together to you, save you lots of freight cost. If the products need to be repacked, they can also easily do it.
Although there are many uncertainties when starting the Amazon FBA business, when you make a decision for it, you do it. If you do not take a step, you never know what it will be like. But if you follow these 5 safe and practical ways at the beginning, you will be more likely to succeed.
In our another post “8 Mistakes Amazon Sellers Make When Importing From China“, we have disclosed some of the common mistakes you may have made when you import from China for the first time, you might as well go through it and learn how to avoid these mistakes.
If you have other questions, feel free to reach us or leave your comments below, we will help you to be as successful as the other big sellers on Amazon.