How Much Does it Really Cost to Start Selling on Amazon
Have you been thinking about investing in Amazon? With a few extra bucks in your account just waiting to be invested in a profitable venture, one can’t ignore the cash cow that is Amazon. However, keep in mind that for every success story and claim that investing in Amazon was the “best decision of my life”, there are many who wish they had done their homework. The moral of this story: you need to do your own research before you invest your hard-earned money. The market has become really competitive and you will find more independent sellers on Amazon now than you would’ve imagined. With that in mind, you need to be extra thoughtful about spending your savings, and it begins with asking some key questions before you take the plunge: Is it profitable enough?
- How much do I need to invest?
- Are there any risks and/or hidden costs?
As the CEO of AMZ Savages, I’ve launched more than 700 products. I always urge newcomers to hold off on their investments until they are truly comfortable investing at least $6,000, which will cover all of the initial expenses and a few unexpected turns that you may have to face in the first few months. I have always found this to be the most stable, sensible and stress-free formula. So, let’s start with the expenses - first on the list is:
Expense # 1: Trademark
An Amazon trademark is basically a phrase, word, design or symbol that helps identify and distinguish your product or service from the others. You may think applying for the Trademark. This way you establish your brand name to allow customers to easily identify you and associate with you. Without a trademark or a brand name, your customers may move on to other Amazon sellers since they will not be able to easily locate you. It costs between $450 and up to $900 to apply for a trademark that will be legally established - allowing you to build your brand and a loyal following of fans.
It's not mandatory to have a registered Trademark to start selling on Amazon, but for those willing to take this risk should be aware that they could lose their business when others start selling fake products under your listing (aka Hijackers). This can lead to the worst possible outcome from negative feedback to 1-star reviews and even to get the account suspended. If you aren't Brand Registered with Amazon, there is nothing you can do to protect yourself when this happens. Without a Trademark, you also can't apply for Brand Registry. Budget $450-900 USD for Trademarking
Expense # 2: Samples
You need to know what you’re selling. Beyond the photos and product description, you want to be sure you know what you’re paying for before placing an order. You want to confirm the quality meets your business’ standards, and you want to be sure it doesn’t have any of the 1 star mistakes your competition made.
You will likely be obtaining samples from more than 1 factory or supplier and will want to keep approximately $200 aside for samples (shipping fee included), since these will play an important part in building your online customer list. Budget $200 USD for samples
Expense # 3: Photography
Photography is another important factor that will go a long way in establishing a strong brand presence. Amazon brings together sellers from around the world, and when the competition is this tough, you need to be sure your product (the basis of your business) is represented professionally ensure you reap the benefits in the long run. With professional photos of your products, you will be in a better position to attract online shoppers and increase your sales. It will set you back somewhere between $700 to $900, but it will definitely be worth the shot (no pun intended!) Budget $700-900 USD for photos
Expense # 4: Main Picture Split Test
Main features split test helps you compare two different versions of a product/ page, and makes it easier for you to decide which one to focus on. If you are having difficulties figuring this out, or are not Internet savvy, I can help you out! Click here to get an accurate reading of your goods! Budget $100 for main picture split test
Expense # 5: Branding
Branding is all about having a unique logo, packaging, and design that helps your customers identify you. Branding also builds a perception of quality and reliability, which is materialized through your offerings. Therefore you need to be smart about these aspects to keep your customers engaged. Designing a logo may set you back roughly $250 USD. Getting a top-notch packaging for your product costs around $400. Budget $650 USD for Branding
Expense # 6: Shipping Labels
If you do not like to think about technicalities, Amazon is not for you. Logistics is key to turning Amazon into that cash cow we referenced earlier... The Amazon fulfillment center may handle the physical execution of this, but bringing the products back to the warehouse post-production, rechecking the weight, assuring quality packaging, and pasting shipping labels on both sides of the cartons that explain weight and dimensions are some of the many factors that you’ll need to be prepared for. And, let’s not forget about delivery. Shipping by air is often expensive but it does come with its perks, and it is a lot faster! Products shipped by sea often arrive late and therefore impact your inventory management, not the customer's experience. Remember, Amazon FBA (Fulfilled by Amazon) means Amazon is taking care of the product delivery to the end consumer. The cost of freight is dependent on the size/volume* and weight of the goods delivered. The budget will be directly correlated to weight, distance, product size, and freight choice.
AMZ Savages Tip: If you are careful to time your launch against your projected sales velocity corrected we actually recommend using both methods, air, and sea, to beat your competition to the starting line.
Expense # 7: Production & Inventory
When you are a seller at Amazon, you never know when the demand will rise, which is why you need to have inventory. Demand (sales velocity) increases or decreases according to the ranking of your product for any relevant keyword. The more keywords which are ranked well, the more sales (aka demand). Planning for an increase in demand for your niche of business will help to ensure you do not fall short. You will want to have an extra budget for inventory in case there is a sudden spike in demand. Budget $500+ USD for production and inventory
Expense # 8: Listing Creation & Optimization
Selling on Amazon requires some knowledge of SEO and a lot of attention to keywords. Before you can even select a product, before even your samples, you need to conduct a thorough research and analysis of keywords to make sure when online shoppers come looking for a specific product, your listing is at the top of search results on popular search engines as well as Amazon.
There are a multitude of ways to do this, which can include using online tools such as Helium 10, Jungle Scout, the AMZ Savages Legendary app, of course (Which is used only for Product Research.) either independently or with the help of a professional. At AMZ Savages, we offer the Listing Creation & Optimization through a separate service on the website directly This may set you back anywhere between $150 and $400. Budget $400 USD
Expense # 9: Advertising
Advertising is important if you want online consumers to notice your product. There are a number of online marketing methods that can be of help. These include pay-per-click advertising, directed advertising, AMZ community, etc. It is not necessary to execute on every online advertising strategy available. Starting from $50 per day to $1,500 a month, you’ll want to keep a close eye on this one as advertising expenses can quickly spiral out of control if not managed properly! That said, the answer to this question is very hard to give without assessing each product against niche, demand, ranking strategy, etc.
If we’re referring to the PPC budget, the goal is to reach 30% or lower from the sales coming from PPC with a 25% or lower Acos.
Expense # 10: UPC Codes
UPC stands for ‘Universal Product Code’, which is printed on the packaging of the retail product you are selling (commonly known as a barcode). UPCs are important to running a structured business. Some services GS1 will cost up to $1,200 a year! You can visit www.nationwidebarcode.com to get more information – I have been using this company for 6 years so I can vouch for their service! Budget $40 USD (Please don't pay more than this!)
It’s a lot of information to take in, and you may be feeling overwhelmed. I get it! Basically, if you were wondering how to sell on Amazon without money --- we can tell you with confidence you'll need to spend $6000, But the good news is, you don’t have to do it on your own. Click here to see how I’ve helped numerous entrepreneurs reach their goals!