Is it worth doing Amazon FBA full time

Amazon FBA: Free Life or Burned Capital?

One way that has become increasingly popular in recent years to generate passive income is Amazon FBA. Many advertisements promise that you will get rich with it. The questions we are clarifying today are whether it really is that simple. And if so, what must be considered in order to be successful and what are the challenges? In the end, you can decide for yourself whether Amazon FBA is also your path to financial freedom.

What is Amazon FBA and how does it work?

FBA is short for Fullfilled by Amazon, freely translated into German "handled by Amazon". The way it works is that you have a product and Amazon takes over the logistics and invoice processing and a certain amount in return Percentage as a commission retains. So you only take care of one product, have it produced and send to the Amazon warehouse. The rest is then with Amazon. You always make money when someone orders your product, even while you sleep. Sounds tempting, especially because sales and the market on Amazon continue to grow.

Infographic: Amazon's revenue in Germany and worldwide from 2019 to 2018

Successful FBA companies are, for example, “Snocks”, “Coffee Gator” and “GlobalTra-de”. They offer high quality products in specific niches. You set yourself apart from the competition with a branding and a brand and thus achieve high sales every year. As you can see, you basically have the option Make money through Amazon FBA. It is important that you master the following challenges.

5 challenges in the Amazon FBA

1. The product

First of all, you need to find a suitable product. For that you should Analyze niches and research carefully. Most take it easy on themselves and try products like cell phone cases, water bottles, etc. and copy the design of the competition. This might have worked 5 years ago, but today the competition is stronger, so your product should have something special and stand out from the competition.

EXTRA: SEO for Amazon: 5 practical tips [+ infographic]

Once the product has been found, it goes into production. You can manufacture cheaply in China or Pakistan, for example. You may have to Cutbacks in quality do. Alternatively, you can also have higher quality products produced in Germany or Spain. The quality has an impact on the rating of your products.

The Ranking is crucialhow quickly customers find you and order you. Depending on the location, production and subsequent transport to the Amazon warehouse take 5-8 weeks.

2. Legal aspects

Depending on the product, you will need certificates or similar attestations. Regardless of where you produce, you trade from your home country and are subject to its guidelines. There are especially children's items or food supplements strict guidelinesthat you have to stick to. Therefore, you may have to send your products to certain laboratories for testing.

When it comes to branding, you should also think about possible trademark rights. Using a name that is trademarked can get very expensive for you. Please also check in advance in which form you have a Register commercial activity have to, so that you can even sell products.

Book tip: Amazon FBA Step by Step Guide

From business registration to the perfect product

Paperback: 200 pages
Released on: June 05, 2019
Price: 12,99 €

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3. Competition & Ranking

The market has grown rapidly in recent years and the competition has become significantly stronger. A good and cheap product is no longer enough. You have to create a distinctive recognition value, a brand with which your Identify customers can.

Another very important aspect is the ranking. Your product should be on page 1 and as high as possible. So it will be from potential buyers seen immediately.

A product on page 4 or even further back receives hardly any attention.

Think for yourself when you last bought something from Amazon and how many pages you needed to find the right product. Who goes back further than 3 pages? The following statistics clearly show how competition is increasing:

4. Capital investment and post-production

The initial capital investment is very high compared to other passive income options. You have to do the production and the transportation pre-finance, Have product images made and invest in further marketing. Often, production is only possible from a high quantity of 10,000, for example.

If the demand for the product is high, you should reproduce early, as Amazon penalizes an empty warehouse in the ranking.

Fewer visitors mean less sales. So the first year in particular is often over Reinvest embossed. It may also be that you have to experiment with different products before you can see your first successes. That can quickly drive costs up.

5. Entrepreneurial thinking

In view of all points, it becomes clear that the whole thing resembles a small company and only the logistical part is handled by Amazon. You are responsible for the start-up capital, you have to analyze the market, find a manufacturer, clarify legal aspects, build up the branding and so on.

EXTRA: Selling on Amazon: 5 important trends

Amazon FBA is not a quick methodto make a lot of money. It means work and entrepreneurial skill.

Conclusion: make money with Amazon FBA?

Yes, it is possible to earn money with Amazon FBA and you also gain financial freedom with it. If entrepreneurship is in your blood and you have start-up capital, Amazon FBA is a way to help to make money in the long term. Just keep in mind that if there is a smart approach, there is a chance of a quick win, but it is realistic too several years can last.

Just keep in mind that if there is a smart approach, there is a chance of a quick win, but it can realistically take several years.

If your entrepreneurial skills and marketing know-how are limited, you should think about other options. It is also important to know that passive income cannot be realized within a few days.

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Thorsten Wittmann, born in 1983, is an international financial author and speaker. Although he started as a frustrated dropout at the age of 16, after a lot of trial and error and self-study on the street, he is now living his vision of life "Living financial freedom ..." Thorsten Wittmann generates significantly more passive income than he needs to live. He travels the world and researches the best investments and financial tips for his Klartext community on site.