Amazon FBA Startup Cost: Everything You Should Know
Are you looking to sell on the Amazon platform? Are you worried about the Amazon FBA startup cost? Don't panic! Starting selling on Amazon is not as difficult or more costly than you think. Research shows that most of the new sellers on Amazon spend nearly $2,500-$5,000 to begin their selling journey with Amazon, which includes Amazon fees, product costs, and many other critical initial investments.
However, it has also been found that many sellers on Amazon also started their selling journey with $500 or less. It does not matter how much they have spent on Amazon sales because both extremes can achieve success on this platform. In this post, you will learn about the essential selling costs on the Amazon platform and explore various investments that lead to more profits for sellers.
Key Statistics on Amazon FBA Startup Costs
Research shows that nearly 10% of Amazon sellers started their FBA business with between $501 and $1,000 in capital. 12% began with $1,001 to $2,500, 18% started with $500 or less, another 18% began with $2,500 to $5,000, and 22% launched with over $10,000. Therefore, nearly 40% of FBA businesses successfully start with a $1,000 or less budget.
Starting Your Amazon FBA Business
This article answers the key question - how much does it cost to start selling on Amazon FBA? We outline the main costs to consider before launching an FBA business on Amazon:
Inventory Costs
Inventory is likely your biggest upfront expense. You can start with as little as $500 to test products and avoid risk. However, most sellers begin with $2,500 to $3,000 in inventory to have enough product volume to start driving sales right away.
Many have succeeded starting with less. If you begin with a smaller budget and limited inventory, you can reinvest all profits into larger inventory orders. This allows you to steadily increase your inventory and grow the business. Both approaches can work.
Amazon Selling Fees
Amazon offers individual and professional selling accounts. With an individual account, you get a free account but pay $0.99 per item sold. The professional account costs $39.99 per month but you pay no per item fees.
If you will sell more than around 40-50 items per month, the professional account saves you money. But an individual account works well when starting out.
Logo and Packaging
Investing in branding and professional packaging is key. If you have graphic design skills, you can create your own logo and listing images. Or you can work with a manufacturer that offers free basic packaging with private labeling.
For more customization, hiring a freelance graphic designer costs around $500. This gets you specialized support to develop a logo and packaging. Or you can find an affordable designer on freelancer sites starting around $30.
Shipping Costs
Many sellers incorporate shipping fees into their overall product cost. But free shipping estimation tools can give you an accurate quote per unit shipped.
Advertising Costs
Consider free advertising on social media first. As your budget allows, leverage Amazon Sponsored Products ads - Amazon takes a small cut when items sell. Then expand into paid channels like Google and YouTube.
Photography
High quality photos boost conversions. Use your smartphone or hire a pro photographer for $30+ per photo. Focus budget on the main image first.
Recommendations for Starting Your FBA Business
Experts recommend new sellers focus spend on these areas:
Tools and Supplies
You'll need around $100 worth of tape, boxes, labels, a scale, and other supplies. Leverage free tools like the Amazon Seller app.
Inventory
Use an FBA calculator tool to purchase profitable inventory. Retail arbitrage allows you to buy small quantities of unique products.
Training
Optional but recommended. Invest in a course or use free YouTube videos and blogs to learn best practices.
In Closing
Launching an Amazon FBA business takes research and planning. By understanding Amazon's fees and carefully budgeting costs like inventory and advertising, sellers can build a profitable company. Follow the steps here, use resources like Simpl to assist with fulfillment, and your FBA store can thrive!
Recommended: How To Start An Amazon FBA Business Even With Little Money
FAQs
How much money do I need to start an Amazon FBA business?
Most Amazon sellers are able to successfully launch their FBA business with around $1,000 or less in startup capital. However, it's possible to get started with as little as $500 if you start small.
What are the main costs involved in starting an Amazon FBA business?
The main costs are inventory, Amazon selling fees, shipping, packaging & prep, storage fees, and optionally professional photos, logo design, product research tools, and training courses.
How much inventory should I order when first starting out?
It's best to start small, with maybe $500-$1,000 in inventory. This reduces your risk and allows you to reinvest profits into scaling up your inventory once your initial products start selling.
Should I pay for an Amazon FBA training course?
Paid FBA training can be worthwhile, but isn't essential. There are many free resources online to learn the fundamentals. A course may be helpful later on more advanced strategies.
How can I keep my Amazon fees low when first starting out?
Use the Amazon FBA revenue calculator and choose products with high margins. Minimize storage fees by turning over inventory quickly. Consider the Amazon Individual selling plan first.
What tools do I need to start an Amazon FBA business on a budget?
All you really need is a computer, smartphone, printer, scale, tape, labels, and boxes. Free tools like the Amazon Seller app can help with product research and creating shipments.
How much money can I make selling on Amazon FBA?
Income potential varies widely based on factors like your product selection and sales volume. But many FBA sellers are able to generate over $1,000 per month in profits once established.
