The True Cost of Selling on amazon… What the Gurus are not Telling You.
So you’re interested in getting in on Amazon’s FBA program. Have you seen a bunch of kids in their teens and early twenties talking about how they are now making hundreds of thousands or even millions of dollars selling on Amazon?
Facebook, Instagram, and Youtube are flooded with Amazon “gurus” these days, and they all generally have the same pitch. All it takes is $1,000- $1,500 to get started and within a less than a year you can be making over $10,000 a month… Also this is not a get rich quick scheme…
That sure sounds like a get rich quick scheme. These “gurus” are not lying, but they are not being completely transparent about the time and money it takes to actually start and successfully grow an Amazon store. Below I am going to cover all of the essential costs for successfully selling on Amazon, as well as many of the growing pains you are likely to experience as you begin your e-commerce journey.
The Dollar Costs
Jungle Scout- product research software
Chrome Extension Pro $197 One Time Fee
Chrome Extension Lite $97 One Time Fee
Web App $29-$69 Monthly Fee
- Unless you create a new product you will need to research what to sell. Jungle Scout is a web app and Chrome extension which aids you in discovering new products and monitoring competitors on Amazon. Jungle Scout does this by using an API to data scrape Amazon’s website in order to show you data on every single product.
The Chrome Extension
The chrome extension allows you to see the characteristics (sales, titles, reviews, revenue, ranking, and fulfillment method) of every product of the Amazon product page.
The Web App
The web app will give you thousands of product ideas and allow you to track competitors sales. The price of the web app depends on how many products you want to track at one time
- Some type of product research tool is essential when private labeling or wholesaling on Amazon in order to figure out what you are going to sell, how competitive it is going to be, and how much you will need to order to stay in stock.
- There are several other product research tools that can be used to fulfill the same purpose as Jungle Scout… Some of the most popular alternatives are Viral Launch, Sellics, and Unicorn Smasher (free but unquestionably the most inaccurate)
Most sellers agree you really do not need the web app, but the chrome extension is an absolute necessity for private labeling and gives a lot of help for wholesaling. Either way you are going to pay $100 for product research tools at a minimum.
Jump Send – email marketing software
Starter $29 Monthly Fee
- As an Amazon seller, you are going to live off of customer reviews. Customer reviews are second only to sales in Amazon’s ranking algorithm. If left to their own devices most customers do not leave a good review if they like your product. They will typically only leave a bad review if they disliked your product for some reason. When you are selling hundreds or thousands of units bad reviews are just a part of life, and the only way to combat them is to drown them out with a bunch of good reviews. This is where the email marketing becomes essential to almost every seller on Amazon. If you are wholesaling a product that already has a lot of reviews it may not be necessary, but if you are creating a new listing it is essential to rank. Jump Send will automatically send personalized emails to get reviews based on various triggers you set up. These triggers can be when a product is purchased, when it is shipped, or when it is delivered. There are a lot of email softwares out there to use but for entrepreneurs just starting out, this is the cheapest option that will work.
Fetcher – Accounting Software
Startup $19 Monthly Fee
Business $39 Monthly Fee
Enterprise $99 Monthly Fee
- One of the greatest allures of selling on Amazon is the whole “passive income” theory. Unfortunately, Amazon does not keep track of your financial records. Sure you could keep track of your sales in an excel spreadsheet, but if you actually grow your business and launch multiple products this becomes unrealistic. Spending an hour or two every night trying to figure out how much profit you made can get messy very quickly. For $19 a month Fetcher will use an API to integrate with your seller account in order to calculate Profit & Loss Statements, expenses, sales, refunds and much more.
Splitly – Split Testing Software
- As a new seller, you are going to need to optimize your listing in order to get the most sales possible and rank effectively. In order to do this, you will need to try multiple titles, keywords, images, and prices. Spiltly will allow you to set up different tests in its own platform in order to change different variables in your listing automatically. Splitly will also keep track of the number of clicks and purchases in your listing for every variable you are testing. While this is not an “essential tool” for FBA sellers it will end up saving you money by figuring out what will convert.
PPC Advertising $?
- Unless you get incredibly lucky when picking out your product you will need to spend money on ads in order to give your product visibility on the first page. This is a variable cost depending on the product, but starting out your ad spend should probably be around $10 a day, although in some cases it can be much more competitive and require 3 to 10x as much per day.
Pro Seller Account $39.99 Monthly Fee
Did you think opening a seller account on Amazon was free? Guess again. Amazon does offer a free seller account, but the fees are incredibly high. If you plan to sell more than $200-$300 a month (If you’re not you should probably be on ebay) then you need to pay for a Pro account.
Your Product $?
Your product’s cost really is the million dollar question. A lot of gurus say you can start selling on Amazon for $1000 to $1500. If you live in the private label world you will probably spend this at a minimum on the product alone. This does not include everything else I just listed. Quite frankly find a $4-$5 product on Alibaba is on the low end for Amazon FBA. You may find a product that costs $9 to manufacture. Want to buy 300 of them so you can sell 10 a day? 300 units x $9 per unit= $2700. If the sales look great, it is not super competitive, and you have a great idea for a bundle no one is using you better jump on that product.
A Brief Recap on Cost…
Jungle Scout $97 (at a minimum)
Jump Send $29 (Monthly)
Fetcher $19 (Monthly)
Splitly $49 (Monthly)
PPC Advertising $5 (Daily)
Amazon Store $39.99 (Monthly)
1st Month Total: $2,384
Recurring Monthly Total (Not Including Product): $287
Some other things to consider…
What about when you sell out?
- It usually takes 20-30 days for an Alibaba supplier to manufacture and ship your product to an FBA center.
- Also you have to pay in advance for the supplier to begin making your order.
- Amazon only pays you every two weeks.
- Going out of stock kills your listing’s ranking and gives other sellers the opportunity to start selling under your listing and potentially steal the buy box.
Hopefully, this post helped shed some light on the actual startup costs it takes to sell on Amazon. This post ended up being a lot longer than I intended, so I will write another post about the actual amount of time selling on Amazon takes in a later post. I will make sure to attach the link to the bottom of this article.
Thanks For Reading,
P.S. In order to see all of the Amazon Courses we have reviewed click here